Can reducing ads really change users? ,WPS announced the closure of third-party commercial advertising
On December 20, WPS announced that the domestic personal version of WPS Office will officially close third-party commercial advertising. From now on, after users update WPS to the latest version, they can get an office experience that is “uninterrupted by ads”.
WPS's commitment to shutting down third-party commercials began last year. In July 2022, Kingsoft Office CEO Zhang Qingyuan stated on Weibo that “it plans to completely shut down the advertising business by next year at the latest.”
According to the financial report released in October, Kingsoft Office’s revenue in the third quarter of this year was 1.1 billion yuan, an increase of 9.4% over the same period last year; net profit was 290 million yuan, an increase of 0.18% over the same period last year. This is the first time Kingsoft Office revenue growth has fallen to single digits. Why did Kingsoft Office still choose to turn off third-party commercial advertising despite the slowdown in revenue growth?
A reporter from Jiefang Daily and Shangguan News learned from the Jinshan office that shutting down third-party commercial advertising is one of its long-term business strategies. "In the past few years, WPS has been preparing to close the third-party commercial advertising business." The person in charge of Kingsoft Office said that advertising was once an important source of revenue for Kingsoft Office. Despite this, the company believes in providing high-quality product and service experience. More importantly, its third-party commercial advertising revenue has begun to gradually shrink after 2019.
Kingsoft Office said that since it reduced its third-party commercial advertising business, the company has focused more on technology research and development to improve user experience in terms of products and services. Data shows that from 2020 to 2022, Kingsoft Office’s R&D expenses were 711 million yuan, 1.082 billion yuan, and 1.331 billion yuan respectively, showing a rapid growth trend. In the first three quarters of 2023, R&D investment reached 1.076 billion yuan, accounting for 33% of total revenue.
Reducing advertising and replacing users has become Kingsoft Office’s long-term strategy for the future. Public information shows that in the first half of this year, WPS adjusted its membership system and integrated the original WPS members, rice husk members and super members into WPS super members. After the adjustment, the overall unit price of WPS has increased. At the third quarter performance briefing, Kingsoft Office stated that WPS membership income has returned to the normal rhythm, breaking the ceiling of the original membership system. Analysts believe that WPSOffice currently has a low payment rate and will gain greater room for growth in the long term after adjusting its membership system.
In addition to adjusting the membership system, Kingsoft Office also hopes to achieve future revenue growth by providing large language model services. In April this year, Kingsoft Office's artificial intelligence application WPSAI with large language model capabilities made its debut; in November, WPSAI launched a public beta test and gradually opened the experience to all users, and plans to start paid testing in December. "WPSAI is positioned as an application side of large language models, anchoring the development of three strategic directions: AIGC, Copilot, and Insight." Zhang Qingyuan introduced.
Currently, WPSAI can provide users with multiple capabilities such as one-click content generation, AI formula writing, and one-click generation of PPT.
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