Zhi Tong Cai Jing·2025-08-13 09:08Group 1 - The overall advertising market in mainland China is showing slightly weaker performance than expected, with online advertising projected to grow approximately 12% year-on-year in Q2, which is above overall consumption growth but below prior expert expectations due to trade uncertainties affecting merchants' confidence in ad spending [1] - The growth forecast for Q3 is further slowing to about 8%, influenced by high base effects, e-commerce subsidies affecting ad budget allocation, and a downturn in advertising sentiment in the fast-moving consumer goods and automotive sectors [1] - Key bright spots in the industry include short dramas, mini-games, local services, fintech, learning hardware, and 3C electronics, while automotive, e-commerce, and application games are relatively weak [1] Group 2 - AI technology is beginning to show advertising benefits, enhancing the entire advertising cycle from strategy formulation to traffic acquisition and post-evaluation, with average click-through and conversion rates improving by 5% to 15%, leading to mid-single-digit annual price increases [1] - The advertising and e-commerce ecosystem is becoming more closed-loop, with platforms like WeChat Mini Stores, Douyin, Kuaishou, and Bilibili offering ad prices approximately 1.5 times higher than external ads, benefiting from accumulated user transaction data for more refined user profiling and long-term growth [2] - Tencent's search business continues to grow in daily active users, with WeChat search generating new ad revenue and user intent insights, while the development of mini-programs and mini-stores promotes a closed-loop ecosystem [2] Group 3 - UBS's industry preference remains Tencent as a core recommendation, with Kuaishou and Bilibili expected to perform relatively well in the future, as Tencent is anticipated to outperform peers due to multiple long-term growth drivers [2] - The Chinese advertising market is expected to grow by 10.2% year-on-year this year, with online advertising projected to increase by 10.7%, while Tencent's advertising is expected to grow by 17% [2] - Alibaba and ByteDance's advertising is estimated to grow by 6.3% and 14.4% respectively, while Kuaishou's advertising is projected to grow by 14% and Bilibili's by 18.2% this year [2]