China's new microblogging rules to make Weibo more attractive

New real-identity rules to be imposed on China's Weibo are likely to make the country's most popular microblogging platform more alluring to advertisers, as Sina Corp seeks to start generating revenue from its product later this year.

On Friday, Beijing-based users on Weibo will need to be registered with their real identities in order to post online. Other major cities, such as Shanghai and Guangzhou, are expected to adopt similar rules.

Analysts said the move was unlikely to cause a steep drop in user engagement and may actually see an up tick in advertiser interest, as the identity rules would weed out spam accounts and give Sina precious user information that could turn the platform into a money-spinning crown jewel.

"It's not going to have a major impact on user engagement because there's nothing else that does what this platform does in real time," said Shanghai-based marketing consultant T.R. Harrington.

"From an advertising targeting perspective Weibo has the potential to become much more valuable," Harrington said.

Weibo, dubbed the Twitter of China, allows users to post short messages, gather fans and follow other users. It is valued up to $4.5 billion by analysts, compared to Twitter that is valued at $8 billion based on its latest round of financing.

China's online advertising market rose 57 percent to 51.2 billion yuan last year, surpassing traditional newspaper advertising, according to Beijing-based consultancy iResearch.

Sina was the fourth-largest advertising platform after Baidu Inc, Google China and Taobao.

Target advertising
The new regulations, which require users to pass personal information to Sina, could empower the firm to target users with advertising and to collect useful data on them, analysts said.

Sina on Monday estimated that 60 percent of its 300 million users of Weibo users would have registered their real identities by the deadline.

Harrington said he estimates that new rules could see a pent up demand for big brands to advertise on Weibo.

"If I could tell all my customers tomorrow that they could buy their brand keywords on Weibo, they will buy them immediately," he said.

Chief Executive Charles Chao said in an earnings call last month he expects to start monetising Weibo effectively in the second half of the year through advertising.

The real-identity rules would also make it harder for spam accounts to operate. Chao told local media late last year that Sina recently removed tens of millions of spam accounts.

When the real-identity rules were announced by the Beijing city government on December 16, Sina shares plunged to its lowest in 15 months on concern that the rules would neuter discussion and engagement on the lively platform.

The company said during the earnings call that the rules would have a negative impact on user engagement but analysts said the rules would not affect the platform's popularity in the medium to long term.

"I would expect it to trend down just a little bit but probably not dramatically," said Michael Clendenin of RedTech Advisors.

China has repeatedly criticised microblogs for spreading what it calls unfounded rumours and blocks social networking sites such as Twitter and Facebook, citing the need to maintain social stability.

"The vast majority of users are not publishing sensitive information, they are using it as a documentation of their daily lives," said Sam Flemming, founder of Shanghai-based social media consultancy CIC.

"I don't see that this would really impact their use of the platform," Flemming said.

Copyright Thomson Reuters 2012