Tencent Holdings Ltd, a leading Chinese tech giant, is using artificial intelligence (AI) to transform the digital advertising space. In an exclusive interview with Benzinga, Derek Yan, senior investment strategist at KraneShares, explained how Tencent is positioning itself to stay ahead in this rapidly evolving landscape.
Tencent’s AI-powered initiatives are supercharging their marketing efforts. Yan explained that Tencent’s proprietary AI models are driving impressive advertising revenue growth by enhancing ad targeting precision and attribution tracking. These AI models allow advertisers to reach the right consumers more effectively, leading to higher click-through rates. In a space where precision is paramount, Tencent’s AI-powered solutions are proving invaluable.
Tencent is taking its AI integration even further by equipping advertisers with generative AI tools. These tools allow advertisers to create dynamic, customized ad visuals tailored for different ad placements. This capability enables them to produce more engaging, personalized ads on the fly, potentially supercharging their marketing efforts and driving even more revenue.
Tencent’s flagship platforms, particularly WeChat and its video account feature, which rivals ByteDance’s Douyin and TikTok, still have substantial untapped potential for further monetization. Yan highlighted that integrating AI technologies could unlock new opportunities to capitalize on this potential. In fact, Martin Lau, Tencent’s Executive Director and President, mentioned in a recent earnings call that AI is expected to provide a near-term boost in ad revenue.
Yan believes that even a modest 10% increase in ad load within the WeChat and video account ecosystem could generate an additional RMB 10 billion (approximately $1.4 billion). Most of this revenue would go straight to profit, showcasing the powerful potential of AI integration.
With AI driving both operational efficiency and revenue growth, Tencent’s advertising game is getting stronger. The real question is whether Tencent can continue to outpace its competitors and fully capitalize on AI’s potential or if rivals like Alibaba Group Holding Ltd will close the gap. One thing’s for sure: Tencent is betting big on AI to maintain its digital dominance.
