Spring Festival Gala Might be the Vent for New Third Party Payment
COVID-19 and China
Piggy money bank. Photo: Credit to Duxiaoman

On February 4th, Baidu, the exclusive red packet sponsor of Spring Festival Gala, spent CNY 900 million (USD 132 million) on one night. At the same time, Super Bowl was held at Mecedez-Benz Statdium in Atlanta, GA. The money that Baidu spent during the Spring Festival Gala was tantamount to the price of 26 pieces of 30-second Super Bowl commercials, which was estimated 5 million each. The accumulated Baidu app interaction reached 20,800 million times and made a new record considering the total population is 1.4 billion in China.

Spring Festival is a traditional holiday in Asian culture, and also a strategic time for companies to market themselves and attract eyes of customers or users. In China, Spring Festival Gala is a TV show that has billions of audiences at the eve of lunar new year. According to the official data, total 1.17 billion people watched the show. Relying on the tremendous influence of Spring Festival Gala, third-party payment providers who acquired the exclusive commercial spot can swiftly made their names big from the north to south and have boost in user size -at least, this is the situation for Wechat Pay and AliPay.

Wechat Pay was the exclusive red packet sponsor of 2014 Spring Festival Gala, and the sponsorship is the milestone that signals for the coming of a dual-giant third-party payment time – AliPay and Wechat Pay. Before 2014, AliPay was the only giant in third-party payment area while Tencent’s Wechat had stayed at a sprouting status. The eve of 2014 spring festival gave Wechat Pay a rise, and on that day, the counted number of users using Wechat Pay to send red packet excessed 1,000 million times but AliPay had only 240 million. Plus, Wechat is an integrated product but roots in social network. The power of social network accelerated the growth of Wechat Pay’s customer pool. Wechat has 10 million active users, and hence the potential size of Wechat Pay’s user pool. The 2014 Spring Festival Gala introduced the third-party payment function embedded in everyone’s Wechat, and the cost to use Wechat Pay was low – Wechat is a social network app with high penetration rate in China and the popularity is similar to Line for Japan and Facebook for the U.S.

Since 2014, the third-party payment market has been dominated by social-network-based Wechat and e-commerce-based AliPay. According to Analysis (易观), 92.71% of the third-party payment transaction volume in 2018Q1 were attributed to AliPay and Wechat Pay. The room left for other players in the market was less than 10%. It is hard to achieve that Baidu app wants a chunk from the third-party payment cheese considering Baidu’s nature – search engine. Wechat Pay swiftly taking over the market is due to its social network property; Alipay’s growth relies on Alibaba’s e-commerce development. Search Engine is a use-and-go function in people’s daily life and Baidu app is a nice-to-have but not a must-have. If Baidu wants to create a tri-giant third-party payment game, how to make nice-to-have become must-have is a critical step for it to shaken the positions of AliPay and Wechat Pay.

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