written by: Zhu Chenxi, Camilla

Three new functions of QQ red envelopes: location based service (LBS)+ augmented reality (AR ) red envelopes, slide-down red envelopes, face-to-face red envelopes (from left to right) [1]

On January 11th, Tencent QQ announced the new function of online red envelopes during the Spring Festival. Standing out among all the three methods, AR red envelopes attracted massive fans to chase virtual “god of wealth” for lucky money in China somewhat inspired by the Pokémon GO phenomenon. . During the festival, 342 million users used the service, creating 3.77 billion red envelopes transactions including real money and e-coupons.

Ambition of Larger User Base: QQ’s New Positioning as Family Sharing Platform
Ambitiously, QQ tries to design the experience for all age groups to include a more mature/older generation, which is different from its original focus on younger generation. With the roles of money givers, older generation long to eliminate the generation gap with their children or grandchildren by adopting trendy lifestyles. Recognizing their social need, QQ repositions itself as a family sharing platform in this campaign and aims for a larger user base.

Consequently, QQ successfully enhances its positive brand image of social, sharing and enjoyment. By facilitating real connection across generations, QQ demonstrates that it is more than just an online chatting platform – it can satisfy users’ social need in reality. In this way, QQ could engage better with its happy customers.

A Win-Win Situation: QQ celebrates O2O Marketing Success with its B2B Alliance
According to the campaign design, not only users could participate, many enterprises and celebrities are also invited to send red envelopes to the public. The strategic partnership between QQ and other enterprises created a win-win situation.

Adopting O2O marketing strategy, AR red envelopes bring customers from online to offline networks. For example, a retail company may set an AR envelope located inside its store to attract users to enter, and/or send e-coupon by red envelopes, which could create offline traffic and boost sales.

Meanwhile, in favor of QQ, the participation of enterprises provides strong financial support and creates strong motivation for players. Thanks to its AR game, QQ occupies users’ extra time, participates into users’ offline daily life, and establishes a closer tie with users.

Fierce Competition between QQ and Alipay: Threat of Unsustainability
From the bigger picture perspective, QQ is not the only player. Alipay has a similar campaign with “Five Fu Red Envelopes” and “AR Red Envelopes” [2]. They competed fiercely by throwing money crazily: QQ sent red envelopes of 250 million yuan in total, while Alipay distributed 200 million yuan to users [3]. Unsustainability becomes the biggest threat of their price battle. When users get used to the free benefits as a routine, the brand loyalty may decline once the freebies are over.

Another problem is the question of what to do next to sustain the tactical campaign? Novelty will not last long after spring festival passed. QQ is now the third online payment method in China, behind that of Alipay and Wechat. To retain new users to adhere to the online payment trend, QQ needs to develop more value-added services to foster new growth.
[1] http://tech.qq.com/a/20170111/028256.htm
[2] http://tech.qq.com/a/20170128/005141.htm
[3] http://www.thedrum.com/news/2017/01/19/alipay-launches-ar-hongbao-campaign-chinese-new-year
[4] http://mt.sohu.com/it/d20170128/125234491_101845.shtml