, Columnist
Tencent Gets a Taste of Its Own Marketing Medicine
A big slowdown in advertising hurt revenue, though its own belt-tightening saved it from worse earnings.
A flag bearing the Tencent Holdings Ltd. logo is displayed outside the company's offices in Beijing, China.
Photographer: Giulia Marchi/BloombergThis article is for subscribers only.
Tencent Holdings Ltd. did itself a great favor in the second quarter by cutting its marketing budget 26% from a year earlier.
The Chinese games and social media giant recorded a 21% growth in revenue for the period, the third lowest rate in a decade. Yet it managed to post a very healthy 35% rise in operating profit. That fiscal discipline was key: had it spent on marketing at the same ratio to sales as a year earlier, operating profit would have been around 11% lower.