Monetize billions of traffic in second, third, fourth and fifth tier cities! The first trick to sink!

Financing against the market trend + growth against the trend

The free model is still the best way to sink

In the App market in 2019, there are two "monster stocks", one is the short video stocks represented by Douyin and Kuaishou, and the other is the novel reading stocks represented by Midu and Qimao.

There are three reasons for the problem: 1. When everyone is clamoring that free reading will die, the free reading market forces paid reading to compromise; 2. With a giant like Yuewen that is invincible, countless new brands have emerged one after another; 3. The growth rate is completely out of control, far exceeding that of other types of apps in the same period.

Let’s first follow Brother Hua to review what happened in the novel reading market in the past year.

More than ten giants joined the battle . They are: Baidu (Qimao Novels), Alibaba (Shuqi Novels), Tencent (Feidu Novels), ByteDance (Qianqi Novels + Hongguo Novels), Qutoutiao (Midu Novels), Lianshang Network (Lianshang Novels), iQiyi (iQiyi Reading), etc.

· Free + advertising reading mode . The user base has increased by more than 100 million in the past year, and most of the new users come from free reading. Among the top 10 incremental users, 7 are based on the free reading model.

· The free track completely surpasses the paid track . Data shows that from 2018 to 2019, the average daily time spent by paid reading app users slightly decreased, while the average daily time spent by free reading users increased, with the latter far exceeding the former. Judging from the number of new installations of the industry's top apps, the free track has surpassed the paid track in all aspects.

Giants are forced to change their strategies . As the pioneer of the era of paid online reading, China Literature is an undisputed giant, but it also had to fight back. In the second half of 2018, China Literature Group also launched Feidu Novels, claiming to have more than 200,000 free novels, as a strategic defensive counterattack.

· Midu’s industry-leading speed In May 2018, Midu was officially launched and completed US$18 million in Series A financing at the end of the year; in January 2019, the DAU exceeded 5 million, exceeded 6 million in March, and exceeded 8 million in October; and it announced the completion of a US$100 million Series B financing led by the China Media Capital; the earnings call showed that Qutoutiao’s goal for Midu is to reach 10 million DAU by the end of 2019 and the beginning of 2020; the Midu team has expanded from only 10 people when it was first founded to nearly 200 people.

User portraits . Nearly 60% of readers are under 30 years old, with an average reading age of 7.9 years. 77% have been reading online for more than 5 years, and nearly half of readers read for more than 2 hours a day. It can be proved that the stickiness of online literature users and fan loyalty are very high, which also provides space and opportunities for monetization.

· The creativity of the people is amazing . In 2018, the total number of online literary works in my country reached 24.42 million, an increase of 7.95 million from 2017, a year-on-year growth rate of 48%. In addition to the huge base of works, online novels are also known for their huge length, with more than 40% of the works exceeding 500,000 words and the average length reaching 650,000 words.

02

Billions of traffic in second, third, fourth and fifth tier cities

Continuously lowering the tolerance level for advertising

In essence, this wave of novel reading craze has utilized the free reading model to tap into potential user demand in second-tier, third-tier, fourth-tier and fifth-tier cities and towns. These young people and middle-aged and elderly users in small towns have a lot of free time, are less willing to pay, and have a high tolerance for advertising. In addition, the fantasy and free-spirited content of novels matches their spiritual life, which together has led to a traffic growth of more than 100 million.

Reading is essentially a mass consumer product, and the industry's starting point of free pirated copies makes "payment the threshold." Today, free reading has evolved from piracy to genuine products. The mobile reading industry has started a virtuous cycle of "good content-good profits-good content", and has promoted the evolution of the online literature industry. At the same time, the reading needs of young people in small towns, which were previously suppressed by the five cents per thousand words, are now filled by the free reading + advertising business model.

Basically, the monetization models of major free novel reading apps are very similar. Ubiquitous advertising space, online money-making by recruiting people, points for completing various tasks, and incentive videos that cannot be turned off.

The following takes Qimao Reading, Midu and Yisou as examples.

(Don't ask why, I just picked it randomly)

These ad spaces include: opening screen, banner, loading page, ranking list, home page, directory page, function area, setting area. All kinds of advertisements are everywhere, especially in the main text page of the novel, where there is basically a screen of advertisements every 4-5 pages. Most of these advertisements are for App downloads, and clicking on them will directly jump to the app store.

Even more unscrupulous are the mandatory incentive video ads. Once the 30-second video starts, there is no close button and you are forced to watch it to the end. Most of them are game and e-commerce ads.

Generally, there will be a traditional online earning model in the settings area, which rewards points for recruiting people, completing tasks, and staying for a long time, which is a tried and tested routine.

On average, you need to click on and watch at least a thousand ads to finish reading a novel. For the platforms, they have been testing the tolerance limits of users in the lower-tier markets for advertisements; for users, being able to read novels for free is a basic need; for advertisers, perhaps these are the precise user groups. From this perspective, this can be considered as a "three-party benefit" situation.

Free reading has a clear audience profile: price sensitive, the vast majority have the habit of reading pirated works, are highly receptive to high-frequency advertisements, and believe that "it is always better than the pirated reading experience." Judging from educational level and city level, the sinking market prefers free reading and gradually extends upward.

In the sinking market, free is still the first entry point. Apart from the legal red lines, the real market is that whoever has the lower bottom line will gain higher short-term profits. How sad.

03

Three ideas about novel x short video

Return to the logic of stock competition

The best bonus period of the novel reading market in 2019 has passed, and the window for hundreds of millions of incremental users will probably no longer exist. In 2020, the market will still return to the logic of stock competition.

As the two incremental leaders in 2019, the combination of short videos and novels is full of imagination. Brother Hua believes that deep thinking can be carried out in these three dimensions.

1. Short video x novel "content"

Brother Hua said a month ago that “Interaction will be the new world of short videos! 》The article predicts that there will be series based on short videos in the future.

Just yesterday, 36Kr revealed that Baidu is about to launch its fourth short video product "FanLe". According to 36Kr, the Fanle App is managed by Cao Xiaodong of Baidu's Mobile Ecology Business Group, who is also the general manager of Haokan Video. This product is mainly aimed at young people aged 18 to 24, and focuses on vertical serial short video content. The episode length is 30 seconds to 5 minutes. It tells good stories to users in the form of videos in the form of 3-5 episodes of serialized micro-dramas, forming a vertical video novel sharing community.

This means that short videos may become a part of a novel, or even become a kind of short video novel. This does not conflict with the positioning of the novel reading platform, and may even add points to the platform's creation of effective interaction.

2. Short video x novel "promotion"

Currently, there is a magical marketing force on platforms such as Douyin and Kuaishou. They neither promote products nor do hard advertising for brands. Most of the content is centered around melodramatic plots such as mistresses, cheating, and quarrels. The body language is exaggerated and the characters’ lines are repetitive. Just when you are enjoying the content, it suddenly stops and an advertisement for a novel app is released. This customer acquisition method with extremely high conversion efficiency, coupled with the degree of matching between the two end groups, is another opportunity to attract tens of millions of users in the red ocean stage when the original incremental growth has disappeared.

3. Short video x novel "monetization"

The consumption structure of free reading users has opened up a new front for second-tier e-commerce. Performance ads appear in various forms within the text, at the end of a chapter, on floating labels at the bottom of the article, etc. Today, short videos have added new monetization opportunities for free reading. Short video interactive advertising formats with the same audience structure, greater experience and conversion potential have become an accelerator for the free reading track.

Compared with performance advertising, short video interactive advertising is suitable for more types of advertising, including high-end women's clothing, trendy men's clothing, beauty and personal care, food and beverages, maternal and child products, and 3C digital products, etc., using content to attract consumers to buy in and effectively increase the immersion time of the interactive advertising module. According to the measured data of the Doumeng short video cloud platform, after the short video was implanted in the APP, the average number of videos watched per person exceeded 30+, and the daily stay time exceeded 10 minutes.

The monetization capability based on short videos+ is also the next must-have for novel reading apps.