Why are used car e-commerce companies so keen on "advertising"?

Starting from a few days ago, you can already see some advertisements of "Guazi Used Car Direct Sales Network" (hereinafter referred to as Guazi Used Car) endorsed by Sun Honglei. The style is still the same, simple and straightforward PPT-style advertisements. Although they are not beautiful, they will definitely leave a deep impression on you.

This is the spokesperson that Guazi Second-hand Car has just hired. In the coming year, you will see the words Sun Honglei and Guazi Second-hand Car appear together countless times. According to its founder Yang Haoyong, from now until the end of this year, Guazi will also run TV advertisements covering 5 billion people and outdoor advertisements covering 213 million people, with an average of 100 times per person.

Yang Haoyong said that Guazi Used Car will invest 1 billion yuan in the brand in the next year. The company just announced today that it has completed a financing of 250 million US dollars, setting a record for the highest single financing amount in the used car e-commerce field. Another competing C2C used car e-commerce company, Renrenche, just announced a $150 million Series D financing a week ago and said that it has not yet been completely closed.

No exception, Du Xiyong, vice president of Renrenche, also told Titanium Media that Renrenche will invest 500 million yuan this year in brand promotion, including buildings, elevators, etc.

A fierce advertising war has begun again. Imagine walking on the street, and hearing Sun Honglei's "If you want to buy a used car, go to Guazi.com" in your left ear, and Huang Bo's "Renren Car" in your right ear. The degree of brainwashing is comparable to that of "Hengyuanxiang Sheep Sheep Sheep" and "Give Melatonin as a gift". However, compared to last year, "Youxin Used Cars", which won the naming rights of "The Voice of China" in one fell swoop, seems to have faded in advertisements.

So why are used car e-commerce companies so keen on advertising, especially C2C used car e-commerce companies?

Let me tell you a true story first. 58 and Ganji also experienced a protracted advertising war before the merger. After the merger, Yao Jinbo said in an interview with the media that if he could go back to that time, the first thing he would do is to invest heavily in the market and brand, leaving Ganji and Yang Haoyong no chance at all.

When the same question was asked to Yang Haoyong, his answer was the same, because for information classification websites, advertising means traffic, and traffic means users. Yang Haoyong is now competing in the used car market with a similar strategy, which is why he said a year ago, "If spending money can narrow the gap with competitors to 8:2, then it is definitely worth a try."

Even for used car e-commerce, where the situation is slightly different, advertising does not mean traffic, but it also means brand. Yang Haoyong told reporters that in the face of a trillion-dollar market opportunity, if advertising and branding can be equated, the investment is worthwhile.

The reality is that advertising can indeed bring traffic and brand effects. When it comes to used cars, they are almost synonymous with advertising, but when it comes to used car brands, most users can only name the ones that are advertised. Regardless of user accuracy, data provided by Guazi Used Car shows that when it comes to buying and selling used cars, 58% of people will think of Guazi Used Car first. In mainstream cities, 8 out of every 10 people know the Guazi Used Car brand.

Li Jian, founder of Renrenche, told Titanium Media that in the traditional impression, the used car model is heavy, low-frequency, and has a low advertising conversion rate , but in fact, after a round of advertising last year, advertising has played an incremental role in promoting Renrenche's traffic by about 20%.

On the other hand, from the perspective of the market environment, the domestic used car market also needs advertising investment. Unlike the used car markets in Japan, South Korea and the United States, domestic consumption concepts have led to users with car needs rarely purchasing used cars in the past few decades. They tend to choose new cars. One reason is the misunderstanding about used cars, and the other is that there are too many scalpers, so the used car trading market environment is indeed quite chaotic.

However, with the improvement of consumption power, people change cars more frequently, and the condition of used cars has naturally improved a lot. In addition, the C2C model is relatively new and requires greater vehicle acquisition costs and advertising investment, so that the fact that "you can directly sell/buy used cars" is gradually recognized. For companies, this is an essential step in cultivating consumers in the early stages of entrepreneurship .

In terms of traffic acquisition, advertising investment is also necessary. According to Titanium Media’s interviews with Renrenche and Guazi, the C2C model mainly purchases cars from individuals, but they do not have a large number of offline sales staff, so online and advertising are their main ways to obtain traffic. For any Internet company that has gone through a tug-of-war, early land grabbing is the top priority. For Yang Haoyong, who has had this experience, it goes without saying.

According to data provided by Guazi Used Cars, it has covered 179 cities, including 28 first- and second-tier cities and 151 third- and fourth-tier cities, with more than 120,000 individual cars on sale and a monthly coverage of 5.184 million people. The data for its rival Renrenche are 400,000+, 50,000 and 2.476 million respectively.

Of course, another necessary prerequisite for brand building is service. No matter which used car e-commerce company it is, it needs to build its own offline services as a foundation. At present, the penetration rate of used car e-commerce in China is low and there is no sound system. Even if the advertising war is fierce, neither Guazi nor Renrenche can independently provide a complete set of services and take over the market.

In addition, for used car e-commerce companies that are in the midst of a capital winter, being involved in an advertising war will be a huge test of their financing capabilities. In this case, instead of spending a lot of money on advertising, it is better to focus on business and generate your own income. After all, it is not easy to get investors ' money.