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Phoenix New Media Limited (NYSE:FENG)

Q4 2012 Earnings Conference Call

March 6, 2013 20:00 ET

Executives

Matthew Zhao - Investor Relations Director

Shuang Liu - Chief Executive Officer

Ya Li - Chief Operating Officer

Lily Liu - Chief Financial Officer

Analysts

Alex Yao - Deutsche Bank

Julia Chung - Morgan Stanley

George Meng - Macquarie

Eddie Leung - Merrill Lynch

Martin Bao - CICC

William Huang - Barclays

Jiong Shao - Macquarie

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Phoenix New Media Fourth Quarter and Fiscal Year 2012 Earnings Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advise you that this conference is being recorded today, Thursday, March 8, 2013.

I would now like to hand the conference over to the Investor Relations Director, Matthew Zhao. Thank you, sir. Please go ahead.

Matthew Zhao - Investor Relations Director

Thank you, operator. And thank you and welcome to Phoenix New Media fourth quarter and fiscal year 2012 earnings conference call. I am joined here by our Chief Executive Officer, Mr. Shuang Liu; our Chief Operating Officer, Mr. Ya Li; and our Chief Financial Officer, Ms. Lily Liu.

For today’s agenda, management will provide us with a review on the quarter and also include a Q&A session after the management’s prepared remarks. The fourth quarter and the fiscal year 2012 financial results and webcast of this conference call are available at Investor Relations sections of www.ifeng.com. A replay of the call will be available on the website in a few hours.

Before we continue, I refer you to our Safe Harbor statement in our earnings press release, which applies to this call, as we will make forward-looking statements. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in renminbi.

With that, I would like to turn the call over to Mr. Liu Shuang, our CEO.

Shuang Liu - Chief Executive Officer

Thank you, Matthew. Good morning and good evening everyone. We are very pleased to report strong fourth quarter results in terms of both financial and operational performance that help us complete a challenging, but solid year of strengthening in our overall foundation to year 2012. Because of the strengthening of our convergence technology platforms, unique and sought after content as well as our strong execution during the tough year, we were still able to achieve a major milestone of reaching annual revenue of over RMB1 billion.

In addition, we grew net advertising revenue by over 31% to RMB610 million. This growth clearly demonstrated the deepening of our relationships and increasing awareness among advertisers about our fast growing, highly educated higher income readers and viewers would depend on iFeng for obtaining news, finance, technology, entertainment and the lifestyle content.

With that today, I would like to discuss three key focus, which is one, elaborating on user base expansions on premium company offerings; two, our year end activities in promoting our iFeng brands and expanding our media footprints; and three, our strategy to further expand our mobile internet business. First, our strong user growth and continued expansion, throughout the year 2012, our web portal continued to significantly outpace our peers’ growth rates and narrowed the viewership gap which according to iResearch, our daily unique visitors grew by over 43% year-over-year reaching 33 million viewers.

Likewise, monthly unique visitors grew dramatically by over 64% reaching 262 million. This growth was significantly faster than any other major portal websites in China, and means that over 50% of all Chinese internet users came to iFeng to consume our premium content, this average out to over 338 million page views per day throughout December alone. We believe that our coverage of major domestic and international news events like the 18th CPC National Congress, which generated over 38 million page views or the Taiwan Golden Horse Award with over 93 million page views, and of course, the famous wedding ceremony of the Diving Queen Guo Jingjing, which generated an amazing 167 million page views clearly demonstrates our differentiated focus on highly desired media in China.

On the video front, we experienced even greater growth, because of our unique focus on short-form professional made new contents. iFeng view grew its daily unique visitors count by over 94% year-over-year. This was over 30 million viewers watching over 60 million videos per day in December. This strong growth in our video business accounted for 18% of overall ad revenue in the fourth quarter, up from 12% in the third quarter. We continued to acquire the significant traffic growth for two primary reasons. One media consumption had us continued to involve at portal and mobile access points, we are monitoring and involving with it. This is necessary in order to provide improved and innovative constant formats that make it easier for Chinese readers to connect and consume our content.

In addition, we continue to experiment with these formats to improve the advertising possibilities on ROI for our advertising clients. As an example, we have a new video program called iFeng Daily News or (indiscernible) in Chinese. This show leverages our audience appetites for updated news by providing attraction of 15 most followed stories twice a day. This segment is provided in the stimulus format that can be easily and quickly viewed by audience.

In addition, it is exclusively sponsored with a $1 million contract over the course of several quarters. This sort of innovativeness demonstrates our ability to involve with our audience leveraging our media-centric DNA, plus one our parent, Phoenix Satellite TV’s premium content enabling us to offer Chinese viewers a more balanced perspective on real-time global news coverage on in-depth feature stories in new and convenient ways. The second reason is because we continue to show iFeng commitment and the dedication in providing an un-biased journalistic voice in the online media world with other portals focused more on social networking or entertainment videos and online games. We remain focused on what matters providing Chinese a well-granted perspectives of the world as it is.

As an example of our attention here on December 28, iFeng Video hosted the Year of Pritzker award, to honor the best video news and documentaries produced by amateurs in China. To quickly define, Pritzker is a U.S. equivalent to CNN iReport. Currently, iFeng has more than 2000 nationwide Pritzker contributors offering us exclusive firsthand semi-professional video news. We believe our talented Pritzker correspondents would provide us with a significant advantage in garnering and delivering the best onsite video news to our Chinese audience.

Next, moving on to our year end activities in promoting the iFeng brands and the strengthening of media reputation. As a part of strengthening our reputation and exposures throughout the Chinese media sphere, year 2012 was a year of brand building for the iFeng media platform. During the fourth quarter, we held a series of marketing activities to further improve our brand awareness among both the Chinese viewers as well as advertising clients.

On December 1, we hosted Chinese Business Leader Annual Award, which was co-sponsored by Audi to honor the most influential and outstanding entrepreneurs in the Greater China area. Since its inception in year 2009, we have awarded more than 40 business leaders this title. On December 16, we partnered with our parent company, Phoenix Satellite TV to host the year 2012 iFeng Financial Summit. This year’s theme was New Power of Reform that focused on key areas of reform needed to help China sustain its growth for years to come. The summit was streamed live on internet, leading figures including government officials, academics, and entrepreneurs offer their options and solution in helping address these major issues faced in China.

In addition, we hosted thousands of internet viewers also joined the discussion with guest speakers through iFeng’s interactive online forums and blogs. As a part of our effort to diversify audience and attract more female users, on December 16, we hosted the iFeng Fashion Leader Annual Award Ceremony. This was an event to acknowledge, nominate, and reward Chinese fashion leaders crossing global boundaries and helping China emerge on international fashion scene in multiple areas, including clothing, jewelry, watches, art, hotels, entertainment, culture, and many others. These events continue to help differentiated iFeng’s companies on the exposure on many levels and it significantly enhanced our brand equity.

Lastly, our strategy about mobile internet business. As we have discussed before, we continuously strive to improve the customization and seamlessness of accessing on premium content from any internet enabled devices. In choosing so, we have realized much success with two of our most popular free downloaded news applications, iFeng News and iFeng Video, which have already been downloaded over 25 million times as of the end of December.

In addition, our app iFeng FM, which offers audio news and other audio components, has also become one of the most popular non-musical audio apps available for both iOS and Android devices. We’ll offer new innovative means for advertisers to advertise alongside all audio contents. In addition, our effort to streamline our overall editorial department, we recently merged the mobile internet department editors with our overall editorial department. We believe this will provide additional leverage of our media resources in offering seamlessness content to our mobile internet users. Going forward, we’ll continue to invest more on developing innovative ways for users to access and interact with our content and increase advertiser spending expanding media platform.

In conclusion, we are fortunate to stand at the crossroads of TV, mobile and internet convergence. With the support of the convergence model, we have implemented while able to realize increased cross-selling opportunities, enhance cost synergy, and improve cost savings across all cross-media platform. Because of this, we are confident in maintaining our profitability level as well as achieving further market penetration. We aim to continue leveraging our unique media content while further developing our media convergence across internet-enabled devices to enhance our user expense and ease-of-use in accessing our content wherever they may be. We believe that by investing in branding, talent acquisition, and technology will further strengthen iFeng platform and remain the media gateway of choice for Chinese internet users.

With that, I would like to pass the floor to Lily to go over our fourth quarter and fiscal year 2012 financial results.

Lily Liu - Chief Financial Officer

Thank you, Shuang, and thank you all for joining our conference call today. Let me take you through our financial highlights for the fourth quarter and full year 2012 results. The amounts mentioned here are all in RMB unless otherwise noted. iFeng total revenues for the fourth quarter came in at RMB302 million, which exceeded the high end of our guidance by over 9%. Non-GAAP net income for the fourth quarter was RMB25.8 million or RMB0.33 non-GAAP net income per diluted ADS.

Let me now run through the other key financial highlights. Starting with net advertising revenues, net advertising revenues for the fourth quarter came in at RMB193 million, which beat the high end of our guidance by over 13% and represents a respectable year-over-year growth of 28%. Our top five industry contributors for this quarter are auto, food, beverage and wine, e-commerce, financial services, and medical services.

Turning to paid service revenues, for the fourth quarter, iFeng generated a RMB109 million paid service revenues, which beats the high end of our guidance by over 4%, and it represents a sequential decline of 16%. As the market in China shift toward mobile internet, we expect traditional WVAS revenues will continue to decline as a percent of total revenues, but that it will in turn be offset by growth of our 3G data services such as mobile video, digital reading as well as webpage games, going forward.

Turning to gross margin, our gross margin for the fourth quarter was 45.4%, up from 41.4% for the same period in 2011. The four components of cost of revenues are revenue-sharing fees relating to paid services, content operational cost, bandwidth cost, and sales tax. On a GAAP basis, revenue-sharing fees as a percent of total revenues declined to 15.6% from 28% in the fourth quarter of 2011. Content-related costs or operational costs as a percent of total revenues increased to 24.2% from 19% in the fourth quarter 2011, primarily due to increase in staff-related cost and acquisition of the third-party content.

Bandwidth cost, as a percent of revenues, increased to 6.3% from 4.4% in the fourth quarter of 2011 reflecting the websites a strong traffic growth. And lastly, sales tax as a percent of revenues increased to 8.5% from 7.1% in the fourth quarter of 2011.

Turning to operating expenses, on a GAAP basis operating expenses for the fourth quarter were RMB118 million compared to approximately RMB90 million from the same quarter – same period of last year. The increase in operating expenses were primarily due to increase in staff related costs, sales and marketing expenses associated with the company’s marketing and promotions and increased office rental fees. iFeng’s operating margin for the fourth quarter 2012 was 6.2% as compared to 9.3% from the same period of last year, but it has improved significantly from the third quarter, third quarter of 1.3%.

Adjusted sales and marketing expenses as a percent of revenues increased 22% in the fourth quarter compared to 17.7% in the fourth quarter of 2011 due to an increase in staff-related costs and marketing and promotional events. Adjusted G&A expenses as a percent of revenues increased to 9.4% from 6.9%. And adjusted R&D expenses as a percent of revenues increased to 8.0% from 6.2% in the same quarter last year. Non-GAAP income from operations for the fourth quarter was RMB16.6 million compared to RMB30.8 million from the same period last year.

Turning to net income, non-GAAP net income attributable to iFeng for the fourth quarter was RMB25.8 million compared to RMB40.4 million for the same period last year. Non-GAAP net income per diluted ADS for the fourth quarter was RMB0.33 compared to RMB0.50 last year.

Turning to balance sheet items as of December 31, 2012 iFeng’s cash and cash equivalents as well as banks term deposits totaled RMB1.2 billion or approximately USD185 million. Maybe briefly run through the key figures for whole year 2012. Total revenues for 2012 were RMB1.1 billion representing a year-over-year growth of 16.9% from 2011. Net advertising revenues grew by 31% year-over-year to RMB610.2 million. Paid service revenues grew by 3.3% year-over-year to RMB500.8 million. This shift in product mix in our paid service revenue is a reflection of resource allocation away from traditional WVAS through our 3G data services such as mobile video and digital reading and webpage games going forward. Total 2012 non-GAAP gross profit was RMB480.7 million, which represents 43.3% non-GAAP gross margin, which was stable as compared to a 43.7% in 2011.

Non-GAAP operating income was RMB91.4 million, which represents a non-GAAP operating margin of 8.2% as compared to 16% in 2011. The decrease was primarily due to our increased staff related costs, content and bandwidth costs as a result of very strong traffic growth. Increase in marketing and promotional activities as well as the increase in rental fees. Non-GAAP net income attributable to iFeng for 2012 was RMB114.1 million or RMB1.42 non-GAAP net income per diluted ADS. Non-GAAP net margin for 2012 was 10.3% as compared to 17.7% in 2011.

Lastly I would like to reiterate our business outlook for the first quarter 2013. We are targeting total revenues to be between RMB271 million to RMB280 million representing an increase of 13.4% to 17% year-over-year. For net advertising revenues, we’re targeting between RMB161 million to RMB166 million representing a growth of 25% to 29% year-over-year. For paid service revenues, we are targeting between RMB100 million to RMB114 million representing a decline of 0.2% to a growth of 3.5% from the first quarter of 2012.

This concludes the regional portion of our call. We are now ready for questions. Operator, please go ahead.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from the line of Alex Yao from Deutsche Bank. Please go ahead.

Alex Yao - Deutsche Bank

Hi, good morning and good evening everyone. And thank you very much for taking my questions. I have a two question number one is on the operating expense side, this quarter our revenue mix continued to shift towards online advertising which is a high margin business and also gross profit increased. But operating expense increased much faster than the revenue. So the operating margin declined, so this suggests that the operating efficiency is weaker than one year ago, how should we think about operating efficiency in 2013. And second question is on the paid service outlook in 2013, given the structural challenge to the traditional mobile value-added service. Can management talk about the solutions you identified to grow the paid service and what are the initial feedback from these initiatives? Thank you.

Lily Liu

Alex, I’ll take that question. First question regarding operating efficiency or operating margin. In the fourth quarter our operating margin was approximately 5.5%, which is down from last year. Most of that is due to increased marketing and promotion activities, increased staff related cost as well as increased rental fees. Going forward for 2012, we actually increased our sales and marketing efforts. So, in the fourth quarter we have two new industry wide marketing events that we do not have in 2011. We believe that these two events significantly increased our brand awareness and industry penetration especially for our finance vertical as well as fashion vertical. Going forward for 2013 we expect to at least maintain the same level efficiency if not improve that slightly as time goes. So that’s for the first question.

Second question regarding our traditional mobile value-added services, you are right mobile value-added services within that our traditional wireless value-added services which is specifically SMS and MMS related the products will experience a decline for the first time in our company’s history for 2013. However, we believe that business this is – this will not have as much impact on our bottom line, we are growing our 3G related data services such as mobile video and digital reading going forward which for both of these areas still carry a healthy growth rate going forward. And we are – we also launched a gaming platform in 2012 which is growing much faster. So, going forward for 2013, we don’t expect our total paid services to decline. We are expecting our total paid services to maintain at least the level in 2012 or even grow a little bit.

Alex Yao - Deutsche Bank

Thank you very much. I’ll get back to the queue.

Operator

Great, thank you. And our next question comes from the line of Julia Chung from Morgan Stanley. Please go ahead.

Julia Chung - Morgan Stanley

Hi, thanks for taking my question. Can you please provide a breakdown of your sales of your advertising sales by sector and can you please also share with us your view on the outlook of this – of the major sectors. Do you think the advertising recovery is across the board or just focused on few sectors? Thank you.

Ya Li

Thanks Julia. This is Ya. Yeah, our top five sector breakdown is auto by 29%, food, beverage and wine 15%, e-commerce 10%, financial service 8% and medical and healthcare services 4%. And right now we are cautiously optimistic about the advertising outlook and we believe that the economy is better than we feared. And apart of the strong growth of our fourth quarter advertise revenue also came from the completion of our realignment of our sales force as well as the news video ad strategy. And for this sect, among our top sectors, we believe the food, beverage, and wine will still enjoy a relatively stronger growth than auto and e-commerce and financial services, because last year’s CCTV auction, the food, beverage, and wine accounted for 44% of the entire auction revenue. And that’s one of our focus. For auto, we believe that the mixture of the Japanese auto ad revenue, ad budget concern, and also the policy restrictions from the concern for pollution or traffic jam will keep the sector remain where it is today. So, overall, I think that’s our outlook for our top sectors.

Julia Chung - Morgan Stanley

Thank you.

Shuang Liu

Thank you.

Operator

Right, thank you. And our next question comes from the line of Shao Jiong from Macquarie. Please go ahead.

George Meng - Macquarie

Hi, good morning everyone. This is George calling on behalf of Jiong. So, I have a couple of questions. The first one is regarding your advertising revenue, can you provide us the video advertising contribution in this quarter to total advertising revenue. And also among the video advertising itself, can you also give the breakdown of – under the banner and the sponsorship as well as the pre-roll?

Ya Li

Okay. Yes, thanks. This is Ya. The video ad revenue accounted for 18% of the fourth quarter revenue, up from 12% in the third quarter and the actual number actually is over 100% growth from the third quarter, and mainly because first the completion of the realignment of our sales force. So, we have a centralized video ad strategy team with the actual sales team across all regions and all sectors. And secondly because of our new video product and video ad product, including the example of iFeng Daily News, which enjoyed $1 million sponsorship support. Thirdly, because improved of video ad technology like the video ad serving system; and fourthly because of the effectiveness of certain sector, including the food beverage, regional travel line, and also relationship with the TV news advertising agencies.

Actually, most of our video ad is sold in the integrated format including both banner and sponsorship and so we are working on two legs. We are fortunate to have the very rich program resources. And so we are selling the video ad by two approaches, one is following the TV program advertising approach, which tends to be more by sponsorship, and at the same time, sale by CPM-based pre-roll or mid-roll. And also our video costs are lower due to the short form factor and the margin structure is different from other non-form video providers. That’s why our video business itself is very profitable unlike the other TV drama or movie focused pure video players. And we believe with the shift of viewership from TV to online or mobile devices, the video ad growth will continue to drive our overall revenue, advertising revenue growth. Thanks.

George Meng - Macquarie

Thank you, Ya. That’s very helpful. And my second question is regarding your web game operations, so can you actually update us on the revenue contribution in the fourth quarter from the web game operations, and in what sort of target going forward in 2013? Thanks a lot.

Ya Li

Okay, thanks for the question. Yeah, at this stage actually, we are still focused on our core existing business. Well, we realized that game is a valid need from mainstream internet users in China. So, with our huge user base and their strong purchasing power is area we are exploring, but we are very careful and at very early stage, I think fourth quarter contribution is still relatively small and this time we are not providing any guidance on that. I think going forward we will update you and it’s more appropriate time. Thanks.

George Meng - Macquarie

Thank you very much. It’s very helpful.

Operator

Thank you. And our next question comes from the line of Eddie Leung from Merrill Lynch. Please go ahead.

Eddie Leung - Merrill Lynch

Hi good morning. Thank you for taking my questions. I have a couple of questions. The first one is about your advertisers. I am curious on the number of advertisers you had in the fourth quarter and then more interestingly, could you also talk a little bit about the (indiscernible) of your video advertising – advertisers. Should we expect almost all of the video advertisers coming from your portal side or are we seeing in the new advertisers that you obtained it purely on the video business? So, that’s my first question. And then secondly could you also discuss your plan on your cash, it seems to be a very big cash balance sitting on your balance sheet, so any plan for dividends or share buyback or acquisitions? Thank you.

Ya Li

Okay thanks. I will address the first question and Lily will address the second one. And yeah for the – our overall advertiser in the fourth quarter was 319 and it represented 7% sequential growth from the third quarter and 1% growth from a year ago. And in the previous quarters couple of quarters and our number of advertisers didn’t grow much. We have disclosed that we proactively tightened our payment terms and with some smaller advertisers during the difficult economic times and also we changed the way we counts more advertisers through third party agencies which cost the overall advertisers to reduce in the second and third quarter. However, the number of brand advertiser mostly remained the same. In the fourth quarter finally we are seeing the growth coming back both sequentially and also over the year ago. And the main driver for the advertiser growth comes from both the video advertising and also mobile advertising which accounts for 9% of our fourth quarter revenue, up from 6% in the previous quarter. And also the new sectors which fixed well with this video and mobile advertising including the ones I mentioned regional travel, food, beverage and wine and there are indeed advertisers who are pure video advertising or mobile advertising clients. And we do expect number of advertisers to grow because of the efforts of high growth in video and mobile advertising as well as from the new sectors. Yeah, and for the second question Lily please.

Lily Liu

Sure for our cash currently the company does not have plans for paying a dividend. We have authorized $20 million share buyback and we’re fully in the process. So, we will wait until that depleted before we go to the Board and decide what to do next.

Shuang Liu

Ya.

Ya Li

Yeah, for the acquisitions, let me just add to that we are very careful how to use our cash, our overall goal is to maximize shareholder value. And we are actually looking at different investment or acquisition area mostly fall into two categories. One is to increase our profitability by investing in certain vertical areas whose revenue model is already clear such as the online travel, online healthcare, online vendor services. The second category falls into for future growth especially for the wireless internet, for example mobile reading, mobile SMS and mobile video. And but overall as I mentioned we will with – try to maximize shareholder value-add and using the acquisition and investment we go.

Shuang Liu

Few more words I want to add. Our goal is to be with a nice smart portfolio of media assets, of course, all kind of the media platforms. Our priority is to build these assets organically, but we don’t want to do our possibility of acquisition and the new target got to be supplemental to our existing business, got to help us to expand new share, new market shares and can create huge synergy. So, the bottom line is to maximize shareholder value, but the priority is to build our business organically.

Eddie Leung - Merrill Lynch

Understood, very helpful. Thank you.

Operator

Alright, thank you. And our next question comes from the line of Martin Bao from CICC. Please go ahead.

Martin Bao - CICC

Thank you for taking my question. Two questions regarding – and the first one is on the traffic growth within our mobile segment. And second question is which – what kind of mobile advertising format you’ll see will grow the fastest in the 2013? Thank you very much.

Lily Liu

Martin can you repeat the first question.

Martin Bao - CICC

Actually the first question is, yeah. The first question is regarding the traffic growth trend with our mobile business and what the mobile ads and all the other 3G mobile services?

Shuang Liu

Yeah, Martin, yeah I will take this question. I think we have experienced very rapid traffic growth on our mobile platform, but the product we have a nice portfolio of media applications and wireless products. The product I think is still at the developmental stage. So, it’s probably not the best time to elaborate too much on the exact numbers of the mobile traffic growth. But we feel comfortable with the graphic growth. And on the PC side, tablet side we also experienced the same kind of rapid growth. I think a lot of factors behind this. First, our media driven approach towards content aggregation is different from other players. We are the one of very few internet companies in China openly advocating serious journalism in internet world.

We are proud of the media DNA, we believe in value of professional, organizing professional generated content. And we are committed to in speeding media spirit in our product. So, if you look at our portal you will find very strong media type of user interface and very sharp viewpoint commenting world events and intensive use of online interview and offline investigator report and unique angle in selecting news. So, this fundamentally set aside us from other players and also plus our blending power of premium content. These are all helpful for our traffic growth.

And second thing as I mentioned in my opening remarks, our portal as a product is involving, we involve our portal to get adopted to market changes especially the changes of consumer habit. You will find a lot of unique features on our portals like user friendly format targeting at recommended consumption of media and I emphasize on our user interaction especially online survey and lots of micro level innovations.

So, unfortunately we are still we are committed to involve our product. So, while the other players are losing focus, are distracted by some SMS stuff, but this will help us well. Going forward we are still very confident about the future traffic growth. I think the outside market changes are in favor of us. The new cabinet leadership changes further arouse peoples’ interest in political and economic life in China. And as rise of middle class further enhance peoples demand for quality news and lifestyle content. And all of these are very helpful for our future traffic growth. I think so across all these platforms I think we are going to continue to grow our traffic, continue to grab shares from competitors. But given the huge size of our user base I think growth rate – that the growth rate will slowdown, so the next priority will be on manifestation.

Ya Li

Martin, this is Ya let me address your second question about mobile advertising format. In early days our multiple formats flowing to banner mini sites and but we are integrating along with our industry peers. And we have noticed that the loading page advertisement the mobile video advertisement and also the newly emerged native advertising format could become – could grow much faster, I think for the mobile read advertising mostly especially for the pad, pad screens I think that’s one area we are experimenting and for the native advertising, this area which – the portals or mobile portals can maintain its CPM rate while seamlessly includes the advertising message within the information flow. And so we are carefully learning and also cooperating with our peers to innovate and to better monetize, but as Shuang mentioned and our current focus is still on the content user experience and user growth.

Shuang Liu

One more thing I want to add we didn’t see that much cannibalization or user migration from our PC side to mobile side. This is very – this equation is fundamentally different from other players. We see very robust traffic growth on every major front on PC, on tablet, wireless, so that provides further room for our future manifestation on both PC side and mobile side.

Martin Bao - CICC

Thank you very much, that’s very, very helpful.

Operator

Alright, thank you. And our next question comes from the line of William Huang from Barclays. Please go ahead.

William Huang - Barclays

Hi, thank you, thank you for taking my call, just want to – first question is a follow-up on mobile monetization, in terms of the mobile ads format you just commented I just – we are just curious have we talked to any advertisers previously or what kind of the mobile ads format owns the highest interest from advertisers so far, such as mobile (puzzle) or mobile video ads and what is their feedbacks or concerns right now and when do we expect a meaningful ramp in terms of the mobile advertiser revenues? Thank you.

Ya Li

Yeah, thanks for the question. This is Ya, actually we are at the very early stage of mobile ads monetization. So, we are experimenting with all kinds of advertising formats and different times, different format will emerge as effective way. For example on last November 11th on the so called single stay promotion and the loading page format was the most effective and earned the most dollar revenue for many advertisers – for many media online – mobile media and including us. And so shortly, the short answer is that we are experimenting with all different formats and we believe the ones which I mentioned earlier the loading page format, the mobile video format or the native advertisement format along with the more traditional ones mini sites, they can be very effective for different kind of advertisers ranging from SMCG to e-commerce or to other online services advertisers.

Shuang Liu

This is Shuang, few more words I want to add, what we are very encouraged that even though the product is still at the developmental stage, we see that the advertisers enthusiasm on the mobile advertising is huge. They are trying different kind of pilot projects on our platform. We believe that the wireless competition is a long battle it’s not a six months or one year thing. So, our top priority will be given to improving the product, improving the user experience. So, we don’t want to compromise my ability user experience too much at this stage. So, we want to strike a balance between our market expansion and monetization.

William Huang - Barclays

Okay, just a quick question on advertising, moving to 2013, can you update us in terms of your pricing rate increased for both puzzle and video ads. Thank you.

Ya Li

Okay, thanks. Yeah, we disclosed that we had our price hike on January the 1st. And for the video advertising the inventory grew by 48% and the A plus our price cut increased by 15% and for the long video part the A plus category price hike was 18% on January 1st. That’s our most significant price hike compared to the previous one in 2012. The next one will come is scheduled – hopefully will be on July 1st, but at this time, we have not decided the actual rate.

William Huang - Barclays

Okay, very helpful. Thank you.

Ya Li

Thank you.

Operator

Thank you. (Operator Instructions) Next, we have a follow-up question from Jiong Shao from Macquarie. Please go ahead.

Jiong Shao - Macquarie

Thank you very much for taking our follow-up questions, sorry being a bit late on the call. I just want to have a follow-up question again on the mobile side, could you please share with us some of the user metrics if you are able to, for example, how many downloads you have for your mobile app, what’s sort of the daily DAUs or MAUs, anything you can share will be helpful?

Ya Li

Okay, Jiong, this is Ya. And for the mobile platform, we have two categories of main products one is the 3g.ifeng.com mobile website. It has 235 million daily page views or 17 million daily unique visitors. And for the mobile apps, we have the flagship apps are the iFeng news and iFeng video apps. We have accumulated downloads of 25 million and we are still working on improving the product and user experience and to grow the daily user base for these apps.

Shuang Liu

Jiong, there are few more words to add. I think the product is still under development stage. I think we take a different approach towards developing our apps rather than spending a lot of money on marketing, on advertising campaign, on bus or bus stations. We want to focus on the product itself, because there are numerous ways easily to improve the traffic boost users, but right now at this stage, we want to focus on the product itself. It’s going to be a long battle.

Jiong Shao - Macquarie

Okay. Hey, thanks. And I just follow-up on that now, obviously your strength has been in the news and this media area, but once you get into the mobile, all sort of the media and news area, are there other segments you are seeing in a mobile area either advertising or commerce related, you are thinking about entering down the road, once you build up a very big base of mobile app users?

Ya Li

Okay. Yeah, thanks for that question. I think fundamentally, our competitive advantage comes from the brand’s power and also the future user base, existing user base, and their purchasing power. And right now if you look at overall mobile revenue contribution, even excluding their traditional WVAS revenues. We have mobile advertisement. We have mobile digital rating. We have mobile game and mobile video. Adding altogether is really about more than 20% of our overall revenue and these are all 3G-related mobile revenues. And it leverages on as I mentioned the purchasing power and the brand power. And even just for the apps category, we did mention in our CEO script that we have a audio app, which is now number one non-music audio app in China called iFeng FM. And that’s platform category of application, which provides contents much more than what Phoenix or even iFeng provides online. And so that’s just example of how we are expanding into related areas on the wireless platform.

Jiong Shao - Macquarie

Okay, okay.

Shuang Liu

This year, our focus will be on our two flagship apps, the ones who take a step-by-step approach towards developing our wireless business. I think we need to strike a balance, because between market share expansion and the margin improvement. So, we want to make the investment in wireless also controllable. So, we want to take a step-by-step approach. This year we are going to leverage these two flagship apps to jumpstart our whole wireless business. So, later on, we’ll definitely be aggressive to tap into a new territory like commerce, like some pay driven models.

Jiong Shao - Macquarie

Okay. Sounds like good plan. Thank you very much guys.

Ya Li

Thank you.

Shuang Liu

Thank you.

Operator

Right, thank you. (Operator Instructions) Thank you. It seems that there are no further questions on queue. We’ll just like to hand it back to the management for closing remarks.

Matthew Zhao - Investor Relations Director

Thank you, operator. We have come to the end of our Q&A session and our conference call. Please feel free to contact us if you have any further questions. Thank you for joining us on this call. Have a good day. Bye.

Shuang Liu - Chief Executive Officer

Thank you all.

Operator

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may all disconnect.

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