14 “open secrets” of China’s advertising industry!

"The times define advertising, advertising adapts to the times - building a new development pattern for China's advertising" is the theme of this year. Industry experts and participants will contribute in-depth insights that can be followed and referenced for the development of the advertising industry in the new era, and find feasible ways to solve problems.

In 2020, the COVID-19 pandemic brought China's advertising market to an end with a decline of -11.6%; however, at the beginning of 2021, the advertising market as a whole showed restorative growth, and the market was full of upward momentum.

The market will undergo cyclical changes. We can only make the best judgment of the market, seize the opportunities when it rises, and shield ourselves from the risks when it falls. Whether it is a gray rhino or a black swan, only with better judgment can we truly adapt to the market and possess upward power.

Party A Finance will summarize 14 observations on the policies, business, and phenomena of the advertising industry from the speeches of 15 speakers, including Alimama, Tencent Advertising , Baidu Marketing , Focus Media, Kuaishou, iQiyi, NetEase Marketing, Zhihu Marketing, CCTV, etc.

Don’t judge status by celebrity status, just collide with interesting souls.

01 Advertising policy observation: four important measures

1. Chai Baoguo, Director of the Management and Supervision Department of the State Administration for Market Regulation: Four major measures

The digitalization process of my country's advertising industry is accelerating, the omni-media and integrated media operation modes have been basically established, and the scale of the Internet advertising industry is expanding rapidly. Last year, Internet advertising revenue reached more than 370 billion yuan, accounting for 66.7% of the total revenue of the publishing link, becoming the dominant force in the development of my country's advertising market. But at the same time, the market has also seen false advertising, counterfeiting and shoddy products, etc., which infringe on the rights of consumers.

The Cyberspace Administration of China and eight other departments launched a special rectification and standardized management campaign for the live streaming industry, and organized and investigated a number of cases involving live streaming by internet celebrities and online live streaming marketing. And through four measures to regulate the compliance development of the industry:

Measure 1: Strictly curb all kinds of illegal and irregular activities such as engaging in commercial hype for profit in the name of celebration.

Measure 2: Strengthen advertising supervision and law enforcement, adhere to full-chain investigation and crackdown on illegal online live streaming marketing activities.

Measure 3: Rationally allocate industrial resources to provide planning guidance and policy support to promote high-quality development of the advertising industry. At the same time, we will continue to promote the reduction of tax and fee burdens on market entities in the advertising industry.

Measure 4: Promote the "reform of delegating power, deregulating and improving services" in the advertising field, and promote the online review of the "three products and one device" advertisements throughout the process, so as to release vitality, regulate fairness, and provide efficiency.

Party A Finance Note: There is also a crucial point, which is prohibiting commercial hype and commercial marketing in the name of celebrating the 100th anniversary of the founding of the Party.

02 Advertising Business Observation: Alibaba + Tencent + Baidu + Focus Media + Kuaishou + iQiyi…

2. Wang Jun, General Manager of Alimama Marketing Center: Return + Focus + Digitalization = New Marketing

“Return to young users + focus on innovative consumption + digital management connection = new marketing value.”

First, return to young consumers. Tmall platform already has nearly 200 million Generation Z people, and in 2020, Generation Z already accounted for 30% of fashion consumption share. Driven by this new consumption wave, the total sales of new brands on Tmall in 2020 reached 17.6 times that of 2016. During last year's Tmall Double Eleven, 360 new brands became sales champions in their respective industries. What is gratifying is that more than 90% of them are domestic brands.

Secondly, focus on new supply to create new consumption. The blue ocean of differentiated new product categories is increasingly favored by consumers. There are 7,600 brands in the fast-moving consumer goods industry on Tmall that have opened Tmall stores, and 64 new brands have annual sales of over 100 million yuan. Industries such as automobiles, agriculture, health, domestic beauty and domestic clothing are experiencing new life.

Finally, "new marketing" in digital scenarios is needed to build a bridge between new consumer groups and new consumer brands.

Tmall will launch a digital new product management platform, allowing brands to achieve full-chain digital management and operation on Tmall, from consumer research to product launch simulation testing, and from sample trials to new product launches. Tmall plans to create 2,000 trending new products and launch 200 super new products in 2021. At the same time, Tmall's New Product Innovation Center will comprehensively upgrade the entire new product knowledge base, and through public domain linkage and commercialization, promote one-stop digital marketing management of the entire chain, helping brands achieve the shortest conversion path from explosive products to brands.

Party A Finance Note: Although Alibaba faces challenges from Pinduoduo, JD.com, etc., Alimama is still the absolute leader in the advertising industry. Even Bytedance and Tencent Advertising cannot match it.

3. Yang Weijia, Senior Brand Public Relations Director of Tencent Advertising: Seeing the value of public service advertisements

Every 2-3 weeks you will see a public service advertisement on the Tencent platform, in addition to Moments and all information streams. These advertisements are created by advertising competitions hosted by Tencent.

So far, this project has been held for four sessions, with a total investment of 387 million advertising resources, 59.78 million in cash, incubation of 194 public service advertisements, and a total of more than 100 international and domestic advertisements, helping Chinese public service advertisements go global.

The most phenomenal case is "One Man's Team", which evolved from a public service advertisement to the basketball association playing with the players in the finals, including being **, Jackie Chan's attention and interaction in the Basketball World Cup, influencing more than 400 media to reprint, winning numerous awards around the world, and ultimately achieving 680,000 online organ donation agreements, which is the total number of online organ donation agreements in the ten years since the establishment of the China Organ Donation Center.

Party A Finance Note: While the value of commercial advertising is highlighted, the social value of public service advertising cannot be ignored. As long as it is done well, it will definitely achieve a power that is unimaginable to us. Tencent's technology for good is also driving advertising for good, which is both beautiful and safe.

4. Zhu Lei, General Manager of Baidu Marketing Center and Dean of Marketing Research Institute: 3 signals, 3 directions

We can see from the data the fundamental needs of various users. Among the changes in these needs, there is the "sinking" trend that everyone has been talking about.

This year's data gives us three signals:

Signal 1: Consumer attention has shifted to consumer goods, such as medical beauty, books, and even more investment and financial management needs.

Signal 2: The demand for online services is particularly prominent this year.

Signal 3: The trend of consumer goods becoming domestically produced, also known as the national trend.

The consumption driven by young people of Generation Z also gives us three directions:

Direction 1: Compared with the past, young consumers’ requirements for quality have increased by more than 3 times, and their individual aesthetic needs have increased by 5 times. These demands are reflected in various consumption scenarios.

Direction 2: Users have developed towards more professional and in-depth consumption.

Direction 3: Shorten the user decision cycle. Young consumer groups not only consume more and more content, but also greatly shorten their decision-making cycles. How to quickly capture the hearts of young consumers is a marketing inspiration for the industry.

Party A Finance Note: Judging from the on-site speeches, Baidu Advertising is still taking a pragmatic approach. In terms of concepts and innovation, it is indeed lagging behind the previous three giants.

5. Chen Peng, partner of Focus Media: 4 “>” of the consumer market

“Mid- to high-end > low-end”: Mid- to high-end consumer goods will be the main source of growth in the advertising market.

The population curve is falling, but total consumption is rising. The consumption trend has entered the era of "quality consumption" from the past era of "demand consumption". More and more people are willing to pay for high-quality products and service experiences. Self-pleasing consumption and upgraded consumption have become the mainstream, and people's pursuit of a better life is endless.

“Domestic products > foreign products”: Domestic products will become the consumer leader surpassing foreign brands.

Mass consumption no longer respects foreign products, which is closely related to the fact that Generation Z has gradually grown into the main consumer group. As a generation that has benefited from the fruits of reform and opening up, they “don’t care” whether the brand is an international big name. Soft demands such as individuality, fun, and good looks have become new requirements that the new consumer group has put forward to brands.

“Service > Product”: Strong brands in the future will all be service-oriented brands.

Commodities give way to services, which in essence means that "product functions" give way to "consumption scenarios." At a time when product levels are gradually flattening, providing consumers with solutions to their pain points, itches, and difficulties in specific scenarios will be a lever to leverage consumer growth, and the marketing chips that corporate brands are willing to pay for the reputation of their solutions will be the base volume on the other side of the lever.

“Online > offline”: The advertising market share will further concentrate in online cities

The new type of urbanization is the migration of residents from small towns and cities to large cities and metropolitan areas. In the current domestic advertising market, the urban share is larger than the rural share. When consumers flow to first-tier cities in the process of new urbanization, the consumption share of first-tier cities will certainly increase. Changes in the consumer market will only amplify this trend when it radiates to the advertising market, further converging and concentrating on higher-tier cities.

Party A Finance Note: The reason why Focus Media can become the absolute leader in the ladder media is really because of its insight into the essence of advertising and business. Focus Media is a true barometer, weather vane and crystal ball.

6. Mao Haifeng, Vice President of Kuaishou Magnetic Engine and Content Commercialization: Short dramas are a new choice for future marketing

Customized high-quality short drama marketing has frequently gone viral, and Kuaishou's short theater has become a dual engine of "content production + brand marketing".

It only takes 2 minutes to watch one episode, and each episode has a thrilling plot with either twists or sweet moments. After "This Male Lead is a Little Cold" was launched on Kuaishou, the number of views on the platform exceeded 650 million in just one month.

Compared with the traditional one-way implantation marketing model, interesting skit content first stimulates users' interest in watching at the source of the content, and then combines it with reasonable product concept implantation to change users' stereotypes about advertisements, allowing users to transition from "passive" to "active" imperceptibly, thereby helping brands achieve better product awareness and concept communication effects.

For brands, by paving the way with high-quality short drama content, combined with innovative customized short drama marketing strategies, and the digital, interactive, high-participation consumption scenarios created by Kuaishou, with the dual support of public domain traffic and private domain traffic, ideal marketing effects will naturally be produced, helping brands trigger greater commercial value.

Looking at the entire marketing field, the wave of customized short drama marketing is becoming popular. Kuaishou Small Theater, as an important link in this ecosystem, is exuding huge marketing potential.

Party A Finance Note: Among so many marketing giants, Kuaishou is the one that knows how to market itself the best. Through its strong operational capabilities, it has achieved equal success with Douyin. Kuaishou has just announced that its global monthly active users have exceeded 1 billion, and its actions in advertising commercial monetization are also the boldest and most radical (a detailed article will be provided later).

7. Zhang Yan, Group Director of Marketing Innovation Department of NetEase Media: 2 New Marketing Methods: “Easter Eggs & Co-creation”

To communicate with the confident generation of young people, we need to constantly update our tactics and provide them with surprises when they use our products.

Tip 1: Easter egg marketing.

The Easter eggs are based on some creative ideas of the product itself, using technology to better give the songs some storytelling elements. Influenced by the times and culture they live in, Generation Z pursues more entertainment and interactivity in marketing experiences.

For example, the "music easter egg" of the song "No Thirst, No Satisfaction" simulates the whole process of users drinking Sprite. As the melody of the chorus "I make my own decisions and release my thirst freely" sounds, "Sprite" is suddenly poured into the upper right corner of the song playback page. In an instant, half of the phone's screen is filled with soda, and the playback components of the page are also washed away; then, a lemon falls and "explodes" the bottle opener, and Sprite scatters all over the screen.

Step 2: Co-create marketing.

What is co-creation? In terms of marketing, in addition to creating content together with products and brands, is it possible for users to participate in the marketing of the product itself?

Vicky Xuanxuan, a talented girl from Yuncun born in 2005, created a song with 32 music reviews. This song is not only her personal musical inspiration and creation, but also a song created jointly by 32 talented music critics from netizens. Such content that is suitable for users of Generation Z can help brands with marketing interactions. Only by truly expressing young people’s emotions and their thoughts can young people themselves help brands produce content.

Party A Finance Note: The most underestimated marketing company is NetEase. Anything produced by NetEase is high-quality, especially in terms of creativity. NetEase is unique.

8. Wang Huilin, Marketing Director of iQiyi Film and Television: 3 Values ​​of Branding

Why do you want to do a theater? Why do you want to do such a famous and labeled theater? It is not about meeting the needs of a niche group, but about meeting the segmented needs of the mainstream audience: reaching the mainstream population by capturing the segmented interests of everyone.

The era of theater brands, characterized by genre focus, brand-based operations and high quality, has arrived, and "Misty Theater" is the best representative.

Value 1: Providing momentum from the production supply side and accumulating users to create a fertile ground for popular products.

Theatricalization will undoubtedly motivate and stimulate major content producers and suppliers from the content production supply side, form the cohesive force of vertical content, and promote the continuous maturity of a type of product through the production and broadcasting of high-quality content.

Value 2: Circle traffic can be precisely delivered, and the branding model brings multi-dimensional business possibilities.

The emergence of the theater label model has accurately locked in the circle of users before marketing, laying a solid foundation for the brand to achieve accurate exposure and real and effective targeted delivery. Brand advertisers can target their advertising efforts accordingly and can choose to place their advertising ads in either a single drama or in a theater, thereby increasing the value cycle of theater marketing. Partnering brands can also reach high-value circle traffic and users behind suspense dramas in a one-time or permanent manner.

Value 3: Promote the collection of high-quality IPs and the superposition effect to give birth to more monetization models.

Multiple high-quality suspense IPs are aggregated under the same brand at the same time. Whether it is the vertical extension of the industrial chain of a single IP or the horizontal connection between IPs, there are certain operational possibilities and operating space. The commercial possibilities brought by such a brand operation model are far more than advertising monetization.

Party A Finance Note: The theater model has helped iQiyi regain its confidence and is also a baptism and upgrade for China's long-form video industry.

9. Ge Yanhan, Planning Director of Zhihu Marketing Center in East China: 2 Marketing Upgrades

What every brand will have to do in the future and will continue to increase their budget for it, "content" must be one of the answers. Good content can instantly trigger curiosity, resonance and decision-making. How long is that moment?

According to the records in the Buddhist Sangha Vinaya, the length of time for an instant or a snap of the fingers is only about 0.36 seconds.

How to continuously trigger and prolong this effect?

Upgrade 1: From “traffic pool” to “traffic + private domain + content pool” . Among them, traffic is mainly responsible for boosting the popularity of content and forming hot topics; private domain helps companies communicate with users at a deeper level, but the private domain is relatively more like a "container", and the key lies in what is put in it. Private domains should be equipped with high-value "content pools" to provide high-frequency incentives for private domain traffic to remain active and continuously convert.

Upgrade 2: From "content marketing" to "content strategy". The "content pool" belongs to both the platform and the customer. It can grow bigger and bigger, and it can also become the company's own position. This method is the way for the company to operate user assets, reap long-tail content dividends and achieve exponential growth.

Party A Finance Note: Zhihu’s new slogan is, “Where there is a problem, there is an answer.” However, Zhihu’s own marketing growth does not seem to have found a clear answer.

03 Advertising sentiment observation: Confidence is more important than gold

10. Ding Junjie, Deputy Director of the Academic Committee of Communication University of China and President of the National Advertising Research Institute: Return to the Essence of Advertising

The further you can see into the history of advertising, the further you can see into its future.

The 40-year development of China's advertising industry is a process driven by multiple factors, with each stage having its own prominent elements.

The era of relying on policies has passed, and reviving a business with an advertisement is a thing of the past.

The era of relying on the market has passed. At this stage, as long as you invest enough funds, you are sure to succeed in advertising.

The era of relying on capital is over. In the era of capital, the effect of connection and communication is decreasing. Only high-quality resources can achieve the effect you can achieve.

Today, it is an era of technology, and "policy + market + capital + technology" have become the four driving forces of advertising development: If you want to perform well in the advertising market, you must study the policies and markets, understand the power of capital, and grasp the elements of technology.

Today is also an era of oversupply of concepts. Returning to the essence of advertising is the original intention that all advertisers must regain while looking for business growth points.

Party A Finance Note: I strongly recommend you to go online and read President Ding’s speeches at advertising forums over the years. It is simply a history book of Chinese advertising.

11. Zhao Mei, Assistant General Manager of CCTV Market Research and General Manager of Media Wisdom: Confidence is more important than gold

Whether it is a gray rhino or a black swan, only with better judgment can we truly adapt to the market. Confidence is the long-term engine of advertising development.

Consumer confidence: Renewing life with more confidence, the rise of domestic products and the new digital life have become new forces in the advertising market.

Media confidence: Media survives in scenarios, multiple scenarios resonate and integrate, and outdoor and community advertising have great potential.

Marketing confidence: Video is the right time, live streaming and short video marketing open up new channels for brand growth.

Operational confidence: Seek efficiency through careful budgeting, refined operations, and rapid growth in the brand’s private domain.

Advertiser confidence: This year, advertisers' confidence is different from the past. They are more rational and pragmatic in thinking about risks.

Party A Finance Note: To paraphrase a popular saying on Bilibili, from a macro perspective, we are very confident about the future of this nation, but from a micro perspective, we have lost confidence in ourselves.

12. She Xianjun, Director of Advertising Resource Management Department, General Manager's Office of China Central Radio and Television: Advertising at the Crossroads

Advertising is at a "crossroads".

One direction at the intersection is: digitalization. Advertising is becoming an algorithm that can be tracked with precise numbers from ad dissemination to product sales. Advertising is very similar to the "stimulus-response model" proposed by behaviorism back then.

The huge platform of the Internet's new media provides space for vivid stories and complex plots, which has contributed to the trend of storytelling in advertising. But if there are too many stories, emotions will be overdrawn, and consumers will become more indifferent.

The other direction at the intersection is: storytelling. Advertisers began to tell stories like the literary world, with ups and downs, in a leisurely manner, hoping to influence consumers and make them make strong purchasing decisions driven by emotions.

Digitalization makes people more rational. On the one hand, merchants carry out precise and thorough advertising and marketing, while on the other hand, consumers make careful purchases. Transactions are more efficient and demands are met more promptly. But as the numbers increase, all efforts will not be able to outrun the algorithms, and people will lose the joy of living independently without necessarily making any progress.

The most difficult thing is to be just right. Standing at this confusing crossroads. Good advertising masters know how to combine the two: using digitalization for measurement and storytelling for rendering, so as to forge the sharp brand brilliance of Longquan sword.

Party A Finance Note: CCTV is still indispensable, but it also faces new challenges on the market side.

04 Observation on live advertising: live streaming is a double-edged sword

13. Wang Junhua, Chairman of Mosquito Club: Live streaming is a conversion rate accelerator

Live streaming e-commerce is currently the method with the highest conversion rate, no doubt about it.

Do you want to do live streaming to mow the grass, or do you want to dig deeper and multiply the brand instead of adding it?

With the emergence of 5G and VR/AR in the future, the efficiency of live streaming will be further amplified. For example, the live streaming room will have “one thousand faces for one person”. The page you see is the same for 1,000 people, but 1,000 people can keep clicking on the screen to browse the products you want to see and learn about what you want to do.

14. Chen Jiawen, Senior Director of Nielsen Marketing Mix Analysis Consulting: Live streaming is good, but don’t drink too much

How to engage in live streaming scientifically? Do 4 steps first.

Judge first. Not all products or brands are suitable for live streaming.

Find resonance. Consumers would be more inclined to see certain effects or characteristics of a product directly demonstrated in live broadcasts, thus generating consumption ideas.

Thinking about private domain: Before a brand chooses to broadcast itself instead of hosting a live stream, it should consider the current status of private domain traffic. If that doesn’t work, use the anchor to attract traffic and create enough traffic before broadcasting yourself.

Media: Live streaming is good, but don’t be too greedy. Live streaming has a very short time limit and is highly promotional, so the effect is direct but also very short-term. If you want to superimpose or extend the advertising effect of live streaming, you must also coordinate the layout of other media channels to allow consumers to reach it multiple times in different scenarios. This can establish long-term brand effects and increase brand popularity and value.

05 Thinking: See the future first, then advertising can see the future

According to the Forward-looking Industry Research Institute, judging from the development trend of the entire advertising industry, it will maintain a relatively stable growth rate in the next six years, and the compound growth rate from 2020 to 2025 will remain at around 6%. It is estimated that the advertising industry market size will be close to 920 billion yuan in 2020, and will grow steadily year by year. By 2022, the advertising industry market size is expected to exceed 1 trillion yuan.

With the popularization of the Internet and the development of 5G, the revenue from Internet advertising is also considerable. Data shows that China's total Internet advertising revenue has continued to increase from 2013 to 2020, and is expected to reach US$44.609 billion in 2020.

Advertising supports half of the Internet. At the same time, the boundaries of advertising are greatly expanding, advertising technology is advancing by leaps and bounds, and the effectiveness of advertising is greatly improved.

This is an era where opportunities and crises coexist. The industry is changing too fast. If we remain complacent and apply the original model, we may face greater industry challenges. Only the fittest will survive.

It will be a shuffling of the cards—and every shuffle will produce losers and winners. The survivors of this round of reshuffle may be in a good starting position in the next 5-10 years.

See the future first, then advertising can see the future.

Party A’s Financial Note: Thanks again to the China Advertising Association for the special invitation. It is a rare feast of ideas. This article was not published until a month later because I hope to look at this industry more objectively and calmly.

Let’s work hard together.

Author: Party A Finance

Source: Jiafangcaijing2019