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Staking a claim to more than 100 million customers -- or 56.5% of all active microbloggers in China -- Sina Weibo's numbers are enough to turn any Internet company green with envy. Called the "Twitter with Facebook-like characteristics," Weibo -- which means "microblog" in Chinese -- has been riding the wave of social networking's popularity in China since its launch less than two years ago. Like the handful of other local Internet companies offering or getting ready to offer microblog services, it's filling a gaping information void -- even a social need, some observers say -- offering an outlet for trustworthy, timely news and public debate that the country's staid media can only dream of providing.

Not only are microbloggers across the country turning to new blogging applications to get the lowdown on, say, the uprisings in the Middle East; they're also generating content with short, snappy real-time postings of their own. For some, it's a fun pastime. For others, there's a greater social cause being served, arguably revolutionizing media more so than anywhere else in the world, as China's microbloggers begin wielding their new technological powers to blow the lid off of local corruption, kidnappings and child-slavery rings, and even recently, providing coverage of a recent deadly fire in a Shanghai apartment block that the major media was slow to pick up.

"The biggest impact of the microblog is that it rapidly disseminates messages that would have been submerged, like events involving social injustice," according to Lee Kai-fu, president and CEO of Innovation Works, a Beijing-based angel investor and incubator and author of the new book titled, Microblog Changes Everything, who was part of a panel about microblogs at the annual Boao Forum for Asia held in mid-April for the region's high-minded thinkers. "Lots of people will now learn about those events and [help] promote more social justice," said the former head of Google China and a celebrity in his own right, with 4.83 million followers on Weibo.com, who forwards his daily posts more than 4,000 times on average.

Against that backdrop, it's easy to see why, according to Chinese technology analysis firm iResearch, the country's microblogs had 200 million unique visitors as of February and monthly page views tripled over the previous six months to six billion. And it's not just Sina Weibo that wants a piece of that action. Joining Sina Weibo is Tencent's QQ microblog, which is an offshoot of its instant messaging service, while portals Netease and Sohu have declared their intention to make social networking part of their strategies. Domestic search giant Baidu, meanwhile, is reportedly in talks with Facebook to bring a version of the US's social network to mainland China.

Yet in many ways, these services, despite their growing popularity, face much tougher challenges than the world's microblog star, Twitter. Five-year-old Twitter now has around 200 million users worldwide, bar China, where it has been banned. But all is not rosy for the California firm, as a recent article in Fortune magazine reports. Its growth is now leveling off, and nearly half the users who have Twitter accounts are no longer active on the network, says the article which cites an ExactTarget report from January. And last year, ad revenue at the company was US$45 million, according to research firm eMarketer, compared with Facebook's US$1.86 billion.

While China's microblog players are also on a quest for greater revenue -- and profitability -- the plans to do so appear to be a work in progress. At Sina Weibo, one model that's been aired in public is to include sharing ad revenue with microbloggers and third-party application developers. Up until now, however, Sina Weibo has been able to use its first-mover advantage and the deep pockets of its parent -- Sina, the country's leading news and entertainment portal -- to stay far ahead of rivals.

What's more, with or without proven profitability, Weibo has also caught the attention of investors. Sina's Nasdaq-listed shares have risen from less than US$20 a year ago to more than US$138 as of April 26. Some analysts say it's largely the enthusiasm for Weibo that's been driving the share price. "Sina is transforming itself from an old-fashioned news portal into a rising web 2.0 hub that is capturing advertiser interest in social network marketing," comments Michael Clendenin, managing director of Shanghai-based independent research firm RedTech Advisors. Phase one of the transformation is complete, he says, thanks in no small part to Weibo. Now, having rebranded itself as a standalone service this spring, Weibo.com is rumored to be crafting plans for its own public offering. But where does it, and its local rivals, go from here?

Friend or Foe?

One factor that China's microblog providers have to handle carefully is their relationship with the government in Beijing. Like other major domestic Internet firms, for example, Sina, founded in 2001, is no stranger to self-censorship -- aka, self-regulation -- that keeps media in the good graces of the Chinese government. Sina has benefited from both a relatively solid relationship with authorities and the banning of foreign competitors -- notably Twitter and Facebook.

But some tech experts say recent events have put the government to the test. On more than one occasion, microbloggers have been faster than the government has been in disseminating news and arousing public opinion. But rather than fight it, some government agencies and officials have opened their own microblog accounts, and on April 20, the Foreign Ministry became the country's first government ministry to begin microblogging. And when unrest began in Libya in February, microblogging helped China's government evacuate Chinese nationals from Libya as their rescue teams microblogged from their mobiles to map out on-the-ground strategies and communicate with one another.

At the same time, the far-reaching role that social networking sites (SNSs) and blogs played in disseminating news at lightning speed across the Middle East and North Africa caused jitters in Beijing. RedTech's Clendenin reckons it's an area where Sina, perhaps more so than other providers, will need to tread carefully. "Sina's management and former managers are close to the government – there's no way that Weibo could get this big without those ties. We don't believe [there is a] risk of an outright shutdown [of its services] is high in the current environment." he says.

However, experts don't expect microblogs to be replacing mainstream media any time soon, particularly given the mixed quality of their content. "The SNS companies are good at making a lot of noise about themselves, which is also part of the reasons why it's getting so hot," says Adele Geng, business development manager of Shanghai-based Origin Advertising Company." However, we have to remember that the Internet is [also] good at creating rubbish every day. There are millions of posts that are just rubbish."

'So-So' Results

At this juncture, it looks like the biggest threat to growth isn't the government, but the ability of the microblog sites to attract ad revenue, even at Weibo. "Weibo is a powerful driver for Sina's portal business and the price for Sina homepage brand ads keeps rising," comments Geng. "In my view, Weibo will be a good growth engine for Sina to maintain its image and keep its brand display ads hot." However, he adds that his firm has yet to post ads directly on any microblog site. "We tried to launch some ads with SNS companies, and the effect has been so-so. There's no doubt that microblogs are a very fast way of disseminating a message. However, the direct impact of this platform has not been verified yet," says Geng. "For microblogs, an ad's impact will be even harder to measure [than on other channels], as it will be more like a mass media. Traditional SNSs, like Renren, have a more controlled population so at least we know who we are talking to."

Pan Jing, general manager of AdChina, a Shanghai-based digital platform that places ads on more than 400 web sites across the country, agrees and says the situation underscores the increasingly urgent need for the entire advertising industry to get to a better grip on new media, including "an impartial ROI tracking model" for microblog marketing.

But according to Kartik Hosanagar, Wharton professor of operations and information management, the key for Weibo and others is to replicate the focus that has been serving other Internet companies well. "Facebook, for example, is excellent for targeting users based on their interests -- advertising a movie to users who already 'like' one of the actors or the movie genre," he says. "Similarly, it is a good way to have fans spread the word that they like a certain brand. It is, however, a less effective means of generating direct transactions in comparison to search engines."

In a March blog, Gady Epstein, the Beijing bureau chief of Forbes magazine, noted that like "Twitter, which is already monetizing, Sina Weibo looks to have a shot at monetizing more effectively because it offers a more interactive experience…. And if there is one thing Sina already knows how to do as a company, it is sell online ads in China; it needs to readjust that to selling on Weibo, but the relationships the company has built, plus Weibo's market dominance, puts the company in a good position to do that."

In contrast, RedTech's Clendenin is circumspect about the medium's profit potential and wonders whether the valuation investors are putting on Sina is too generous. "Sina CEO Charles Chao has done a masterful job in convincing 'the Street' that Sina should be re-rated and judged in the same class as its ostensible peer – the other hyped, and yet unproven, 2.0 darlings like Twitter," he says. "Weibo shares some similarities with it, such as the extent of its unproven monetization model being matched only by the seemingly unshakeable belief that it is the Holy Grailof the decade, which will eventually make oodles of money."