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Chinese artificial intelligence (AI) companies are racking up huge advertising bills, according to figures from a marketing consultancy, as firms search for any possible edge in a highly competitive market. In the third quarter alone, AI firms – from high-flying start-ups such as Moonshot AI and Zhipu AI to tech giants such as ByteDance and Alibaba Group Holding – have spent more than 500mil yuan (RM307.33mil or US$70.
2mil) to promote chatbots and other AI applications, according to marketing analytics firm AppGrowing. Alibaba owns the South China Morning Post . The companies themselves have not published their advertising spending.
AppGrowing said that it estimates spending using public data from earnings reports and third-party marketing metrics such as daily active users, fees, ad loads and effective cost per mille. It combines those data points to estimate an advertising platform’s revenue and advertisers’ placement plans for a specific period of time, deducing the ad spend from those, according tot he company, which calls its figures “for reference” only. The latest numbers have fuelled debate in China over whether domestic AI firms are spending too much too quickly in an effort to monetise their products.
Some in the industry worry that too much prioritisation of marketable products over fundamental research could in the long run widen the technology gap with the US. TikTok parent ByteDance and Moonshot AI, an Alibaba- and Tencent Holdings-backed start-up whose chatbots are among the most popular in China, were recognised in the report as the two biggest ad spenders, splurging 200mil yuan (RM122.94mil) and 150mil yuan (RM92.
20mil), respectively, on AI products in the third quarter. ByteDance declined to comment. Moonshot AI did not immediately respond to a request for comment on Thursday.
A person close to Moonshot AI, who requested not to be named because the matter is private, said Moonshot’s third-quarter promotional expenditure is not as big as AppGrowing suggests. AppGrowing data also shows that Alibaba spent nearly 200mil yuan (RM122.94mil) to put Quark – a cloud storage and online search service that has been integrating generative AI to upgrade its capabilities – in the hands of Chinese users.
Spending on Tongyi Qianwen, the company’s ChatGPT-like service, was a more modest 4.5mil yuan (RM2.76mil), according to the agency.
Tongyi Qianwen said the number is incorrect. Chinese AI firms are spending big to try to stand out in a market saturated with hundreds of chatbots and other generative AI services. “In China, basically all (AI) products will be promoted via online marketing campaigns, which is a very significant divergence from their US counterparts,” Yan Junjie, founder and CEO of Shanghai-based MiniMax, said in a recent webinar.
American AI firms generally rely on the technological capabilities of their products to do most of the promotion, rather than spending big on ad campaigns, according to Yan. The root cause of local firms’ reliance on marketing is technological homogeneity, Yan said, resulting in Chinese chatbots that are not that different from each other. “It’s a conundrum (for Chinese AI firms) to win over customers by relying on marketing campaigns,” he said.
– South China Morning Post.
