What are the strategies and models behind Qutoutiao’s crazy growth?

Qutoutiao can basically be positioned as an advertising profit-sharing platform driven by social fission and profit, and information is just an incidental means of carrying it. Because the content is cheap to acquire and is also a product that Internet users consume on a daily basis, it has become the best business option for Qutoutiao.

2. Brand positioning

It is positioned as an information APP that can make money. It has a different brand recognition from other similar information products on the Internet market. It focuses on earning income by reading news. This is indeed a good strategy that distinguishes it from its competitors. It immediately captured the minds of users and became the first to be recognized in the vertical field of reading information that can make money. It is worthy of recognition. (PS: The best way to be the best is to make what you want to do small, not big, take root in one point and break through!)

3. User positioning

Heavy users are sinking, that is, they basically give up users in first-tier cities and focus on second-, third- and fourth-tier cities. This type of users has the following common characteristics:

1. There is an abundance of leisure time but a scarcity of entertainment resources.
2. They are profit-seeking and have a strong passion for quick and easy money.
3. People have a low ability to learn new things, and once locked in, the migration cost is high.

Therefore, it can be basically judged that for such a blue ocean market, an aggressive approach can be adopted in the early stage, such as crazy subsidies, cultivating user habits, and establishing cognitive barriers; and then the overall content upgrade can be carried out in the later stage to complete the counterattack of the entire industry and the continuous monetization of traffic .

II. Goals and Process

At present, it seems that one of Qutoutiao’s core goals is growth, which includes two parts: user growth and revenue growth.

1. User growth

It started commercialization in 2017 and achieved the strongest dark horse results in the information APP category in 2017:

1. The user growth rate ranks first, with 17 million daily active users and an average daily traffic of 1 billion PV.
2. It ranks No.1 in the information category in terms of average weekly opening times per person, No.5 in the iOS information APP ranking, and No.5 in terms of total APP growth.
3. The user penetration rate is N0.1, third- and fourth-tier cities account for 77%, and the user login rate is 92%.

2. Revenue growth

In March 2018, it received US$200 million in Series B financing led by Tencent Capital and Xiaomi Capital, and went public in September 2018.

Behind the quick-success strategy, cost factors are hardly taken into consideration, and growth is the primary driving force. The company subsidizes the huge financial hole through financing and listing. According to Qutoutiao's IPO prospectus, in 2016, 2017 and the first half of this year, Qutoutiao's operating income was 57.95 million yuan, 517 million yuan, and 718 million yuan, respectively, and its net profit was a loss of 10.9 million yuan, 94.8 million yuan, and 514 million yuan, respectively. The company is losing more and more money, and it remains to be seen whether it can maintain sustainable growth in the future.

However, the overall user overlap between the product and competitors is low, with the installation volume overlap with Toutiao being only 18.3% and the daily active user overlap being only 8.02%. At present, it still seems to have great potential.

3. Core Strategies

The core strategies of Qutoutiao are nothing more than two points: one is to promote user growth through social fission incentivized by gold coins; the other is to increase the advertising revenue of the entire site by opening up a large number of product advertising spaces .

Let's analyze in detail how these two points are done:

1. Master-apprentice fission + task system + risk control mechanism

Master-disciple fission

Different from the traditional method of attracting new users , rewards are given to the inviter as long as the inviter’s mobile phone number is obtained. Qutoutiao also sets a wake-up requirement. The income will only be credited to the inviter’s account after the invited apprentice completes the reading behavior.

In this way, it is possible to cultivate external user- operators at an extremely low cost, and these are people with whom we have close relationships and can better influence new users. The degree of activation can be imagined.

Mission System

Sign-in Rewards:

In 7 days a week, you can get 4056 gold coins, which is approximately equal to 0.4 yuan. Increase the daily activity of the platform and increase the user's silence cost. After having worked hard to complete the first few sign-ins, the subsequent ones also need to be made up, otherwise they will develop a loss aversion emotion.

Newbie task: cash withdrawal task, you can complete the withdrawal with 1 yuan. Let users feel that it is an app that pays real money when they log in to the platform; dispel users' concerns about use, ensure that they get what they do, and provide timely feedback.

Daily tasks:

• Reading information for 60 minutes a day can earn you 900 gold coins, which is approximately equal to 0.1 yuan. This encourages users to read for a long time and ensures the overall retention rate . Currently, the average daily reading time per person on Qutoutiao reaches an astonishing 54 minutes.
• High-quality comments can earn 1,200 gold coins. They need to be reviewed by the editor and adopted as high-quality comments before they can be triggered. This is a post-task reward and cannot be obtained immediately after the operation. However, it can be seen that it is an incentive to encourage the quality of comments and guide the healthy development of platform content. It is very worth learning from.
• You can get 300 gold coins by showing off your income, but it is easy for Tencent to confiscate your account on the grounds of inducing sharing, and problems often occur.
• You can get up to 2880 gold coins by opening and sharing a treasure chest. You can play every day and open it once every 4 hours; but the prize for opening a treasure chest is random, usually only single-digit gold coins.

Overall, there are both fixed expected income rewards and unexpected random rewards in different time periods. The entire reward system is relatively complete, giving users a full range of gold coin bombardment.

I tried it myself, and sometimes I even forgot that I was here to read the information, and I was only paying attention to whether the gold coins had increased in value.

Risk Control Mechanism

The daily floating exchange rate mechanism is achieved by adding a portion of the revenue amount to a portion of the cost savings from attracting new users, minus the unrealized gold coins of users on the current platform, to obtain a dynamic exchange rate. Automatic settlement is completed at dawn every day based on the "gold coin: change" exchange rate of the day. Ensure that the entire platform economic system will not collapse and remains within the overall controllable range.

In the short term, there will be small fluctuations, and users will not feel it strongly, but in the long term, it is estimated that inflation may occur, and the general trend of gold coins is to continue to depreciate. However, the risk control is currently doing well, and the ratio of 10,000:1 has been fixed.

Another point is the anti-brushing mechanism: for example, when recruiting new users, not only do you need to ask them to register, but you also need to let them engage in certain reading behaviors on the platform to obtain gold coins in order to obtain actual benefits.

When users are reading, they need to keep pulling down to trigger the timer, and then they will be rewarded with corresponding gold coins; if they read the same article for a long time, the benefits will be reduced.

For the same mobile device code, if you register and invite people with different mobile phone numbers, they will be identified as the same user and will not be given gold coin rewards or master-apprentice relationship binding.

2. High-density advertising bombardment + precise crowd targeting

Qutoutiao’s advertising space mainly includes seven categories: information flow list page, information flow details page, video stream ads, interactive ads, text link ads, splash screen ads, interactive ads, and app store.

4. How to display Qutoutiao ads

1. List page (home page list): large pictures & group pictures & small pictures

2. Details page (bottom of article details): large image & small image

3. Video information flow advertising

4. Text link ads

5. APP splash screen ads

6. Interactive advertising

7. App Store Advertising

• In the information flow list of information, each time a user views 10 pieces of information, 2 of which are advertisements, and the types of advertisements are similar, which is basically a brainwashing bombardment.
• On the information details page, there is a full-width banner advertisement at the bottom of the article. There are 9 recommended related readings, and there is an advertisement every 3 of them.
• In the video feed, each view is 9 videos, with 1 ad. There are 8 related videos below the player, including 2 advertisements, and the first advertisement is divided into 3 small advertisements.

The overall level of advertising space development is 2-3 times higher than that of similar information apps, and it can basically be said to be everywhere. The same advertisement can be displayed on Qutoutiao for 12-15 times. What does this mean?

That is, every time you swipe the screen, there is an advertisement accompanying every 3-5 pieces of content, which simply and repeatedly brainwashes users. It can basically be said to be to the point of being outrageous, but because of the subsidies, users will still continue to read.

Qutoutiao is attracting new users to obtain low-cost traffic on the one hand, and monetizing the traffic through advertising on the other. Its most powerful feature is that it "balances the advertising revenue and incentive costs of a single user" , and the connector in the middle is content.

5. Advertiser Account Backstage: Precision Delivery Cockpit

When it comes to advertising , Qutoutiao's features are algorithm recommendations and native experience. It can be targeted through tags, and you can choose to promote exposure, landing pages , or app downloads according to your needs. The final effect depends on three key factors: creativity + targeting + bidding.

According to the needs of advertisers in various industries, we have built a very complete targeted population portrait, including the need to target student users, e-commerce , games , finance, and automobiles . At the same time, under each category of people, we have also built more granular interest tags. This is actually the specialty of several founders of Qutoutiao! (Background: Shanda Games, originally a traffic advertising platform)

• User gender, age, time period, city, operating system, network status, and placement location.
• Crowd filtering package (can block this user group): student users, active users.
• The advertising billing model is based on CPC (single click) and the unit bid is set in the background, with the price ranging from 0.15 to 0.45 (the bid is adjusted according to the actual delivery effect).
• We continuously improve the delivery effect through multi-dimensional algorithm optimization including time period optimization, region optimization, similar population mapping, behavior prediction model, and comprehensive algorithm.

6. Data-based traceability mechanism: clarifying advertising effects

Qutoutiao’s advertising system platform is not only about delivery, but also about improving advertising efficiency, helping advertisers analyze deviations in current advertising strategies and continuously optimize them.

Take the above example and explain a few terms:

• Impressions : The number of times content is displayed within the user's visual range over a period of time.
• Clicks : The number of times users click on the content.
• CTR (Click-Through-Rate): Click-through rate , which is the number of times the ad is clicked divided by the number of times the ad is displayed.
• Consumption amount: This is the cost of the current advertising.
• Number of registrations: The number of target users who complete registration through advertising.
• CPC (Cost Per Click): The cost per click on an ad.
• CPA (Cost Per Action): The cost of guiding users to complete a specified behavior each time (can be registration, information, ordering, etc.).
• C VR ( Conversion Rate): Conversion rate is an indicator to measure the effectiveness of CPA advertising. In short, it is the conversion rate from users clicking on ads to becoming effectively activated, registered or even paying users .

It is not difficult to see that the cost of attracting a single new user for the first advertisement was 16 yuan, which means that the investment of 4,000 yuan brought about the conversion of 250 people, but the CVR was relatively low at 3.36%, which is the number of registrations of 250 people divided by the number of clicks of 7,446.

Basically, we can roughly determine the following possibilities:

1. There may be problems with the conversion effect of the landing page after the click, and further optimization is needed.
2. The people who click are not the target group, so the target group should be more precise when delivering the ad.
3. There are certain gaps in the process experience, or technical bugs, response efficiency issues, etc.

7. Advantages of Qutoutiao’s advertising model

Qutoutiao's user base is mainly composed of users in third- and fourth-tier cities. This group of users is currently in the stage of consumption upgrading (Baidu, Alibaba , JD.com , and Tencent are currently planning to develop this type of user base). Qutoutiao uses its unique operating strategy to tap into more dormant users and cultivate user reading habits.

Based on the founders' understanding of advertising and technical insights, they have built high technical barriers, including a complete user portrait system, an advertiser's precision delivery cockpit, an account performance optimization platform, an exclusive marketing precision algorithm, etc., which are relatively advanced in the current industry.

Conclusion:

Information apps and social media are the best carriers for the rapidly developing information flow advertising. They are performance-oriented and can maximize the value of traffic.

Qutoutiao's essential positioning is also an advertising profit-sharing platform driven by social fission and profit. Although the company's reputation in the current market is not very good, and some people think it is low and its values ​​are distorted, we need to see the more exciting strategies and models behind them, and why they can attract the favor of so many giants. I personally think that when Qutoutiao makes up for its shortcomings in content quality, the future will be promising! (Everyone, hit me with bricks!!!(;´༎ຶД༎ຶ`))

Source: Jiong Jiong You Shen (rorycrazy)