Editor’s note: This article is from the micro-channel public number “hedgehog commune” (ID: ciweigongshe), Author: principal context, krypton 36 release authorized.When the industry is in a downturn, we are all chewing on David Ogway’s famous quote-“Advertising is not art, advertising is for sales, otherwise it is not advertising.” On March 18, Tencent released 2019Q4 and the whole yearFinancial report.The financial report shows that in Q4 of 2019, Tencent’s media advertising business decreased by 24% year-on-year.During the conference call, Ma Huateng specifically explained the decline in performance.In the opinion of executives such as Ma Huateng, this decline is acceptable.Media advertising (such as the advertisements seen on Tencent News and Tencent Video) revenue is less than 20% of Tencent’s advertising revenue, and social advertising (such as ads in WeChat friends circles) and other types of advertising revenue have maintained a rising momentum, so the overallHas little effect.Pony’s other words, however, signaled a bad signal of the Internet advertising industry-“the gross profit margin of the online advertising business will be under pressure, especially the media advertising business” and “the recovery of media advertising revenue may take some time.”That said, the hard times will continue.Advertising is an important part of Internet content and business ecology, and is also closely related to the Internet experience of each of us.What is worrying is, to what extent has it been “sad”?Why is this so?Where is it going?That black swan, which turned the slide into the financial data of the falling giants, is also verifying this “bad signal”.Baidu predicts that in the first quarter of 2020, core revenue (advertising) will decrease by 10% -18% year-on-year; Weibo CEO Wang Gaofei is even more pessimistic. He warned that Weibo revenue may decline by 15% -20% in the first quarter of this year.This impact will continue into the second quarter of this year.When the economic environment is not good, many companies’ first cuts in costs often cut marketing and promotion expenses and adjust advertising expenditures.For Internet companies, the “old” profit model of selling traffic to advertisers to collect advertising fees is still an important source of cash flow.Even for BAT-level giants, advertising revenue still accounts for 30-50% of revenue, or even more.”Sales are naturally more difficult.” A staff member close to Tencent’s advertising sales system told Hedgehog Commune (ID: ciweigongshe), “the impact during the epidemic is still relatively large.” In 2019, China’s advertising market is shrinking.This effect is even more pronounced in the remarks of senior executives in the advertising industry.What makes them stand higher is that they are worried that this outbreak is not the root cause of the downturn in the advertising industry. Since 2019, and even longer, the industry has entered a downward range.Unlike the economic environment during the SARS period in 2003, China ’s long-term “economic epidemic” has not ended after the short-term epidemic of new coronary pneumonia.Jiang Nanchun, chairman of advertising giant Focus Media, said, “For companies, it is difficult to deal with the uncertainty of the economic environment after the epidemic, mainly due to two points-the disappearance of the demographic dividend and the end of the traffic dividend.” In 2019, JiangnanThe net profit of Focus Media, where Spring is located, was 1.88 billion yuan, a decrease of 68% year-on-year.In this regard, Focus Media summarized the main reason for the decline in profits in the financial report as “Internet advertisers reduce advertising budgets due to market financing conditions and other reasons, and the advertising revenue of the Internet industry has shrunk significantly.”This is not the poor management of Focus Media, but a common problem in the Internet advertising industry in 2019.Another A-share listed advertising company interacted daily. In 2019, its net profit was 111 million yuan, a year-on-year decrease of 55.38%.Like Focus Media, daily interaction also attributed the reduction in Internet advertising to the main reason for the decline in profits.From the experience of the two listed advertising companies, it is not difficult to see how cold the cold weather encountered in the advertising industry in 2019.The global pneumonia crisis has turned this cold current into a snowstorm.On February 10, Xinchao Media announced a 10% layoff on the first day of work, and asked everyone not to “over-interpret.”CEO Zhang Jixue said, “Although there is still nearly 1 billion cash on the trendy account, if the income is zero, it can only live for six or seven months. To overcome this epidemic, you must step on the brakes, jam the cash flow, and reduce costs.Make sure to live.The long-term increase in user time, which appeared in January-February 2020. Source: QuestMobile’s only “good news” is that Internet users have spent more time, and the traffic market has achieved unprecedented high levels in a short period of time.Growth-Quest Mobile data shows that the total daily use time of users across the entire network rose from 5 billion hours on January 23 to 6.11 billion hours on February 3 (the first day of many companies’ online resumption). For Internet companiesIn other words, this means more traffic, more users, and more online ad slots and impressions that can be sold. But don’t be too happy first. When advertisers shrink, there are more ad slots available for saleIt can only make online advertising less valuable. A person close to Baidu marketing revealed the quote data of keyword advertisements to the self-media Luo Chao Channel-the same key in Baidu search, information flow and good-looking videosThe advertising unit price of words has reached a new low after the epidemic. A typical search engine keyword advertisement Buying keyword advertisements on Baidu is a universal marketing strategy: When users search for specific keywords, advertisementsLink will be displayed first in search results. This is also known as keyword bidding ranking and was once the main advertising profit model of search companies. One of the disadvantages of keyword bidding ads is that there will always be peers to bid and buyExpenses are generally rising like auctions. But during the epidemic, even keyword ads “reversed” and the unit price of ads began to fall. For major Internet advertising companies, how to deal with “extra traffic” is also a problem.Big problem. Excess traffic is not a common commodity. It can be destroyed like milk, but to find a new place. On the one hand, Internet companies have lowered the price of advertising sales to retain advertisers. In addition, a lot of traffic support has also been introduced.Plan to share the surplus traffic with partners. Just recently, Taobao and Ali Moms provided merchants with direct marketing, diamond booths, super recommendations and other marketing resources, and Douyin took out 1 billion live traffic to create a “Zhaijia Cloud Shopping” plan…… Behind the big manufacturers are willing to take out these traffic, there are quite a few reasons because the traffic is large and cheap.Better results than direct advertising. Advertisers are overwintering, what do suppliers do? On February 9th, the Beijing Internet Red Club “K Song King” announced the termination of labor contracts with all employees. Although efficiency problems have been reported beforeHowever, this company that caused Wang Sicong to throw 2.5 million top-level KTV overnight suddenly collapsed, which has become a big news. The king of K song announced the closure, which is a landmark event in the offline industry. This is also the beginning of 2020, the lineA microcosm of the lower industry—survival is no longer easy. Offline entertainment, restaurants, hotels, etc.—the original Internet advertising giants have ceased to place or cooperate in resource replacement. For no other reason,”There will be no guests after the Spring Festival,” a person in charge of a medium-sized hotel in a third-tier city told the Hedgehog Commune, “We have stopped advertising cooperation for Meituan, Flying Pig and Ctrip.”For the offline industry, this blow is global. According to data from OpenTable, an internationally renowned restaurant reservation platform, as of March 19, the number of actual restaurant visitors using this platform has fallen by 98% year-on-year. AffectedAdvertisers are not only in the offline industry, but some online digital and retail are also affected. “Many of our customers are mobile phone brands, and their press conferences have been changed to online or postponed. The impact on us is equivalent to a longer project cycle.a lot of.”Said Li Ou, the founder of advertising studio” Bamboo Dragonfly “. Li Ou once worked for 4A advertising companies and major Internet companies. In April 2019, he established his current studio, which mainly serves digital manufacturers such as mobile phones. They focus on advertising art design,In the industrial chain, it is a downstream production link. Due to the reduction in demand for announcements, the studio has not added many new customers from January to now. Due to the shrinking business, suppliers in the advertising industry in the middle and lower reaches of the industry have also encounteredThe payment period was extended or the contract was adjusted. A project of Bamboo Dragonfly Studio serving Tencent ended in January. “Due to the epidemic, their video was not done, the budget was cut, and the overall project has been postponed to now.”Li Ou said. However, some of the popular online industry affected by the epidemic situation, the revenue and user size rose instead of falling, and put forward higher requirements on the advertising industry.Many companies hope that during the crisis, opportunities in industries and categories will be transformed into opportunities for brands through marketing and advertising, and sales of products will also be increased.Typical large-scale brand advertisements are much less during the epidemic. From the perspective of the effectiveness of the advertisements, they can be roughly divided into two categories: brand advertisements that establish brand image (Brand Awareness, such as UnionPay “The Last Transfer of Datang Mobei” PiggyPeggy’s movie “What is Peggy”), and direct response advertising (Direct Response, please bring in Li Jiaqi, Wei Ya, or Luo Yonghao to bring goods, can also be regarded as generalized effect advertising).More and more savvy advertisers hope to achieve these two effects in one advertisement.The advertising marketing concept of “Integration of Product and Effect”, which started in 2019, has recently been mentioned by more and more advertisers.Among them, the pursuit of “efficiency” accounts for a large part.Advertising investment during the epidemic is very helpful to the brand image of the company.But any advertising expenditure can be regarded as a kind of “investment based on expected return”, and investment is risky.In extraordinary times, many companies are more inclined to realize cash as soon as possible, reduce risks, and have an immediate spread.”Customers are moving closer to e-commerce and sales, and are more pragmatic than before.” Senior advertiser Wang Kai, a partner of Beijing Zanyi Interactive Advertising Media Co., Ltd., revealed such a “trend” to Hedgehog Commune.Advertisers prefer the “direct conversion” approach and demand is closer to “selling”.Wang Kai said that even for brand advertisements such as celebrity endorsements, some customers want to lean towards the sales side.In this way, Luo Yonghao’s choice is simply in line with the trend of the times. The data of Internet advertising in 2019 proves that performance advertising has “reverse periodicity”.The more direct the type of advertising, the stronger the growth.Ogilvy Ogway’s famous saying “Advertising is not art, advertising is for sales, otherwise it is not advertising.” It has also been repeatedly reviewed by advertisers.In 2020, this trend will become more obvious-many advertisers feel that customers’ Internet advertising is more concerned about ROI (input-output ratio), or that the customer ’s perspective on ROI is relaxed.”How many impressions the ad has reached and how many forward clicks have been received are the core indicators that the customer was concerned about before. Our business is also data-oriented.” Said Zhou Dong, a senior media planning manager at a 4A advertising company.When advertisers launch media, in addition to paying attention to traditional core indicators such as cost per thousand and audience reach, they will think more deeply about soft information such as content and creativity.Zhou Dong analyzed, “In the end, advertising communication is the communication between human nature, and the epidemic period is the most test of human nature. This will force advertisers to pay more attention to the establishment of human-to-human relations and touch the inner logic of human nature.”This means that when advertisers measure the effectiveness of delivery, they must further integrate the nature of advertising communication-content, in addition to monitorable statistics, pay attention to the role of advertising in dimensions such as social influence, and value” andPeople really do communicate. “Zhou Dong felt that in the long run, this is also the self-examination and progress of the advertising industry, which is a “good phenomenon.”A retaliatory rebound?Let’s be cautious and optimistic. It’s not difficult to find one or two bright colors from the Internet advertising industry that encountered the “black swan”, but for most companies and suppliers, this is still not a warm spring.Some researchers have warned of a larger-scale macroeconomic crisis map source: Zeping Macro in mid-March, the epidemic situation has improved, but advertising company staff still told the Hedgehog Commune, “Almost all advertisers have reduced their budgets.”As the epidemic spreads worldwide, its impact on the economic sphere has become increasingly unpredictable.Advertisers also understand that, on the one hand, there is no customer source, and no matter how high-visibility ads are, there is no conversion; on the other hand, people ’s concerns are still in the epidemic, and the effect of doing so during this period is not good, a considerable partAdvertisers are in “hibernation” mode.”Most of the industry’s investment in the short term is definitely to be reduced.” Zhou Dong said, “Party A is also waiting for the market environment to warm up, and watch it change.” But like Zhou Dong, many Internet advertising industries workThe judge’s judgment is that when the epidemic situation is completely controlled, there will be an explosive (advertisement) delivery.In the past two months, corporate marketing activities have plummeted, and consumer brand awareness has weakened.Some people in the advertising industry have judged based on this, in order to strengthen the presence in the consumer’s vision and use advertising to improve performance, companies will increase their investment efforts in the post-epidemic stage.For Internet advertising, there is another big plus.For a long time to come, the gathering of offline crowds will be restricted.Large-scale exhibitions, including Apple WWDC and iPad Pro, and Huawei P40 launch conferences, have all moved from offline to online, which provides more opportunities for online marketing activities: this is used for offline advertising and publicityAll kinds of expenses will be invested in Internet advertising marketing.But this round of “rebound bonuses” is not enjoyed by all segments.DataEye, a mobile advertising analysis platform, analyzed 16 major industries and found that the impact of the epidemic on advertisers’ activities is similar to that in the SARS period in 2003, that is, the overall advertising market shrinks and local growth.Dataeye has monitored that the advertising of tourism industry “returns to zero” before the Chinese New Year. The advertising of industries such as catering, wine and tourism fell sharply. The seasonal industry (such as ice and snow sports) posted basically zero. Online education, medical, office, gamesIn industries such as entertainment and fresh retail, which have grown against the trend, advertising has grown significantly.Recently, the length of Internet users has risen, and the price of traffic is relatively low. This is a period of low-cost customer acquisition opportunities to expand the size of advertising.Taking online education, online medical care and other industries as examples, the cost of customer acquisition is usually as high as thousands of yuan. During the period of passive home ownership, users can quickly expand at a relatively low cost.In 2019, Tencent, Ali, Baidu, Toutiao, and Weibo have monopolized nearly 70% of the domestic Internet advertising market; the top ten leading companies in the industry have taken 94.85% of China’s Internet advertising market.These giants are also big Internet advertising players.Zhou Dong analyzed, “Big companies have more resources to mobilize. For (competitive) online office, online education and other B-side businesses, there may be a corresponding wave of investment.” When people discuss the epidemic’s impact on the advertising industryWhen influencing, often remember the entrepreneurial story of Focus Media during the SARS period in 2003.That year, when Jiang Nanchun founded Focus Media, he encountered SARS.Everyone around them tried to shrink to save their lives, but Focus Media entered the office building aggressively and won a large amount of elevator advertising resources at a relatively low price.By the time the peers responded, Focus Media had grown into a leader in elevator advertising.This case is a sign of the company’s “looking for opportunities in a crisis” in the following ten years.Although there are many similarities between the two SARS and New Crown crises, the background and impact of the times they have occurred are quite different-one is a “local event” during the economic rise, and the other is the era of stock competition”Global Crisis”: There are more dangers, and uncertainty about finding opportunities in crises increases.The Internet advertising industry in 2020 was already the Hard model.After introducing the “complex variable” of the epidemic, those who eat the rice bowl of advertising, please prepare a stronger “anti-fragile” cost..
Internet advertising collapses
36 氪 starterAutopilotBlack technologycapital marketcareducationEntrepreneurshipForefrontFrontlinegameGo publicInformationInternet of ThingsinvestmentNet red economyNew businessNew economyOccupationreal estatestockTechnologyTelematicsthe Internetunmanned