Finding a niche in the market will be crucial for news apps if they are to survive.

At Zaker, Li has worked hard to cultivate a distinctive brand since setting up the company in Guangzhou in 2011 with the help of $10 million in investment.

Today, Zaker has 12 million daily users and the majority of them are from first-tier cities in China, such as Beijing, Shanghai and Shenzhen. Most have at least a college degree, drive a car, buy luxury brands and travel extensively, according to company data.

"Eventually, each player will cover a specific group of users and provide news and content in line with their demand and taste," Li said. "That is what we are doing."

Toutiao is moving in a similar direction. Big data, a broad term for processing vast amounts of complex statistics, which can be boiled down into market and consumer trends, will be vital in working out the right strategy.

The company already uses 4,000 servers to crunch the numbers and will add another 2,000 by the end of the year.

"We first analyze all news content, label it and sort it by keywords," Lin, vice-president at Toutiao, said. "Then we analyze our users and match the content to their tastes."

This in turn should help drive customized advertising by matching the right brands with the right consumer, Wang Shicong, an analyst at Analysys International, pointed out.

"Advertisers are looking for a target audience and big data can do that," Wang said.

In January, Analysys International reported that the online advertising market in China grew 53.5 percent last year to 153.52 billion yuan compared to 2013. It predicted that the sector would grow to 319 billion yuan by 2017.

Zaker, which has yet to release detailed financial figures, generates most of its income from advertising.

But CEO Li is looking to expand the company's revenue base. In June, Zaker launched a range of new services, including online movies and travel packages.

"The news app sector cannot live happily ever after through advertising income alone," he said. "We have to explore new models and opportunities to grow in the future. You have to stay ahead of the pack."