How Toutiao is changing the way China reads

FinanceAsia continues its rundown of Asia's hottest start-ups with a look at a $20 billion unicorn that's little known outside China but has more than 600 million users at home.

Virtually unknown outside its home country, Chinese news aggregator Toutiao is a household name inside it. Used by 600 million Chinese citizens, with 120 million logging in every day – covering almost the entire Chinese online population – Toutiao from the outside doesn’t seem all that different from most other outlets. But what makes the five-year-old start-up stand out is its ability to customise news selection for users through applying big data and machine-learning technologies.

Unlike traditional news agencies (even Facebook for that matter), Toutiao, which means headline in Chinese, does not employ web editors to prioritise news and layout its pages. News is customised and displayed based on interest and preference.

Information about user preference is collected and predicated on age, occupation and location, as well as through their previous internet searches and their posts on social platforms such as Weibo and Tencent's WeChat.

Echoing its slogan “only the news you care about makes headlines”, Toutiao’s auto-generated news feed means the information is different between users. The company claims that it is impossible to find two users who share the exact same news list.

Supported by artificial intelligence and cloud computing, the profile of every Toutiao user will be updated within 10 seconds after any unique action performed, ensuring all information provided is real-time and up-to-date.

Such tailored content means Toutiao is able to achieve much higher click-through rates on both its website and its mobile application, while its partnerships with more than 10,000 news sources ensured that it has sufficient content to generate every day.

The result is clear – Toutiao is able to secure sizeable advertisement revenue based on its extensive reach and high click-through rates. The company drew nearly $1 billion in revenue last year – an astonishing amount especially considering that the company does not create any content itself.

Toutiao has about 1,500 staff but most of them are software engineers.

Toutiao, together with food delivery firm Meituan-Dianping and taxi-hailing app Didi Chuxing, are collectively known as TMD, the next version of BAT, the collective name for China’s three biggest Internet giants, Baidu, Alibaba and Tencent.

The company raised an eye-opening $2 billion from US investment firm General Atlantic in August. Other prominent investors include Sequoia Capital, Sina Weibo and CCB International, the investment arm of China Construction Bank.

Toutiao is one of 10 hot startups FinanceAsia will profile as part of a new series running the rule over exciting companies that are changing the game across Asia. We'll publish more such profiles in the days to come.

This story has been updated to clarify Toutiao's user numbers and media partnerships.

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