Tencent-backed Kuaishou plans to spend USD 565 million on marketing to achieve ‘300 million DAUs’

Kuaishou’s latest move to compete with ByteDance’s Douyin.

Photo: Tuchong

China’s second-largest short video app Kuaishou, which has deep-pocketed Tencent among its investors, has reserved a marketing budget of RMB 4 billion (USD 565 million) to achieve its target of gathering 300 million daily active users (DAUs) before the 2020 Chinese Lunar New Year, which will start on January 25, 36Kr reported on Friday, citing people close to the matter.

The money is expected to be used mostly in the form of digital red packets, or hongbaos, offered to the audience of the CCTV New Year Eve’s Gala, also known as the Spring Festival Gala, the country’s most-watched TV show, produced by China’s state media CCTV.

This promotion is also meant to raise Kuaishou against its major rival, Douyin, which registered 320 million DAUs in July this year. Douyin also has a similar version called TikTok for users outside the Chinese mainland.

These red packets can only be grabbed via the Kuaishou app and a light version of it, which was rolled out in August this year. No additional information about the campaign or about how users’ can turn these red packets into cash was given to 36Kr by the source.

The last company that used the CCTV gala to attract users was Baidu, which became the exclusive hongbao sponsor for the 2019 event. With the move, the Chinese biggest search engine did succeed to some extent but also resulted in its first-ever quarterly loss since it went public in 2005.

Baidu offered to the gala viewers red packets for a total value of RMB 900 million, and users were able through the Baidu App to grab different red packets under the guidance from the gala hosts during the live show. The cash in these red packets was later withdrawn to a digital wallet rolled out by Duxiaoman Financial, a fintech company backed by Baidu as one of its largest shareholders.

However, Baidu CFO Herman Yu said in the first-quarter earnings release that “margins were dampened by our successful CCTV New Year Eve Gala marketing campaign, which accelerated the traffic of Baidu family of apps and highlighted better in-app search user experience.”

Baidu App’s daily active users in March 2019 reached 174 million, growing 28% year-on-year and its short video app Haokan’s daily active users in that month reached 22 million, growing by a whopping 768% year-on-year.