No matter it is a capital winter or an industry bubble, for entrepreneurs , since they have chosen to brave the wind and rain, they must believe that the more dangerous the moment, the more opportunities there are. The environment does not scare entrepreneurs, but the difficulty of user growth has become a roadblock, blocking entrepreneurs from moving forward towards the next round of financing. As of 2016, the cost of acquiring users on the Internet was prohibitively high. In many segments, the effective cost of acquiring users is as high as over 2,000. More importantly, users' distracted attention and diversified choices lead to extremely high user churn. Regarding user retention, Zhu Xiaohu, director of GSR Ventures, said: "If you still have 20% of users after 6 months, you can achieve 1 billion US dollars." There are two points here. One is relatively considerable user retention, and the second is reaching a certain scale of effective users. When more and more entrepreneurs lament that the cost of acquiring users is too high, it is obvious that this is not caused by a single factor. There are factors such as the disappearance of traffic dividends and the decline in user retention. Today, I would like to talk about the logic of acquiring users on the Internet by comparing before and after the disappearance of the traffic dividend, as well as how to acquire users at low cost when starting an Internet business after 2016.The logic of acquiring users on the Internet Early Internet customer acquisition was mainly based on search engines, portals, navigation, and webmaster networks. At that time, Internet startup projects were mainly in the fields of medical care, education, tourism, automobiles , real estate, and games . The profit margins of these industries were very high, and the AR PU value was easily tens of thousands. Typical examples include Autohome, Soufun.com, Ctrip , and Danai Education Group, which quickly acquired a group of high-quality users at a relatively low cost through SEM and SEO , and also opened up the entire Chinese Internet marketing market which had been wild and disorderly for many years. For products with high ARPU values, especially those with very clear and simple business models, the operational requirements are not high, or in other words, the retention requirements are not too high. For example, in education and healthcare, basically a user has to pay thousands of dollars at one time, and the profit from a single payment can offset the advertising cost.Therefore, a core keyword for acquiring customers on the early Internet was traffic . As long as there is traffic coming in, there will be users coming in, and the quality is generally not too bad. One advantage of promoting on the Internet is that it allows for flexibility in expression. Many companies advertise themselves as leading domestic brands on their promotional pages, but this leadership has not been proven. Other companies say they are listed on CCTV, but in fact they just spent tens of thousands of yuan to get on a 4 a.m. slot on a less popular CCTV channel, which may not be watched by anyone because those who stay up late at night listen to the radio. But it doesn’t matter. The purpose of this column is to endorse the brand. As long as netizens believe in it, that’s enough. This looseness in expression, to some extent, solves a key problem in marketing, that is, brand endorsement. We say that the first priority in marketing must be brand building. Branding can not only bring brand preference and solve the problem of low conversion rate , but also bring natural traffic and solve the problem of insufficient traffic. When early Internet projects were building brands, most of them did public relations and communication based on search engines, thus providing a basis for search engine traffic conversion. When there is information asymmetry, users' online information decisions mainly rely on search engines such as Baidu. That is, just search on Baidu and you will know. When a user learns about your brand through Baidu, sees mainstream media reports , sees your advertising on CCTV, and sees a variety of success stories, the user may be converted. In fact, when the Internet was first used to acquire customers, the benefits of brands were not obvious . On the one hand, there were not many well-known Internet brands, and traditional well-known brands invested very little in the Internet. On the other hand, due to information asymmetry, netizens had limited ability to recognize information, and no one could figure out who was the leading brand in the country. This leads to a very interesting phenomenon: some entrepreneurs who are good at online marketing, when they discover a money-making logic, immediately invest in it and purchase traffic on a large scale, and their search rankings are often higher than well-known brands. When the conversion rates are similar, they rely on refined traffic delivery to reduce traffic costs, such as locking in a large number of long-tail keywords, relying on SEO to obtain free traffic, and enhancing the efficiency of back-end sales leads and telemarketing. Ultimately, their performance is better than that of well-known companies. It can be found that online marketing still follows some basic principles of marketing, with brand first and sales efficiency second. In other words, we can regard the purchase and delivery of traffic as sales. Improving the efficiency of purchasing and delivering traffic means improving the sales efficiency of the product. In classic marketing theory, in addition to brand and advertising, another very important point in the 4P theory of promotion is activities, especially price-based promotions. So we can see that in Internet advertising , the core are three: brand, traffic, and promotion. If you grasp these three points, you can stay righteous. In general, it was very easy to acquire customers on the early days of the Internet. Even if you didn’t build a brand or do any promotions, as long as you could generate traffic, you could be successful. What is the reason? When there is a huge gap between CAC and ARPU values, your output is guaranteed as long as the traffic you purchased is not completely ineffective. For example, if you are in the tourism business, when I search for pens, your ad appears. Theoretically, this kind of traffic is invalid. But in the early days, there were people who really did this. As long as it was traffic, they would buy it regardless of how accurate it was, because the interest rate spread was so large that they would make money no matter what they did. This is just like buying a house in the early days. There is no need to ask the price, nor do you need to wait for the developer to have a promotion. As long as it is for sale, you just buy it. The same goes for traffic. As long as you can buy traffic, you can buy as much as you can. But unfortunately, there are not many companies that can really make full use of the money to buy traffic, and those that have risked their entire fortunes to buy traffic have become huge companies today. This is the same principle as buying a house. Few people can understand it. So, why does the cost of acquiring customers become unaffordable after the traffic dividend disappears ? From the perspective of marketing logic, I built a brand, did promotions, hired a senior optimizer who adjusted bids and changed materials every day, and made five or six versions of the landing page. Why is the cost still so high? First of all, in terms of brand, after years of brutal expansion, a number of Internet companies have become brands in the minds of users, and some of the companies they invested in, such as those invested by BAT, are also taking advantage of this wave of brand dividends. More importantly, traditional brands are accelerating their move online. In terms of brand endorsement, traditional brands have more advantages than Internet brands, especially in the local market. However, many traditional brands perform poorly on the Internet and have poor user experience, so they cannot compete with Internet brands. A while ago, a friend who was in e-commerce asked me that he wanted to invest in online advertising. Their advantage was that there were a large number of supermarkets locally. I told him directly not to invest because you could not compete with Internet e-commerce and you had no advantage. You had to find another way. When real brands come in, users will choose them without a doubt. In addition, users are becoming smarter, from passively receiving information in the early days to actively searching for information and then to producing information. Information flows too fast and asymmetry is gradually being eliminated, which means that unreasonable profiteering models are dying. Of course, both the relevant regulatory authorities and advertising platforms such as Baidu are strengthening restrictions on false brands and false propaganda, and user recognition is also increasing. Soft articles are no longer effective. Search engine public relations communications are still useful, but no longer as efficient as before. Brand building is becoming increasingly difficult. And what about traffic? When the traffic dividend disappears, the growth rate of competitors exceeds the growth rate of mobile Internet users, which means that they have to fight for traffic among the limited existing users. For big brands, I have high conversion rates and strong monetization capabilities, so of course I have to grab the top traffic. For small brands, even for the remaining traffic, they have to fight hard, but the conversion rate is not good. Big brands are determining the price of traffic. CAC is gradually approaching ARPU value. The fragmentation of user attention, fierce competition, and the entry of big brands have resulted in an extremely low conversion rate for Internet traffic. According to incomplete statistics, the conversion rate of Internet advertising has dropped from 0.5% in the early days to 0.1% at present. Take finance as an example. If you advertise on Toutiao , 1,000 clicks can bring in one paying user. The cost per click has not decreased, which is like the company's profits have decreased, but the workers' wages have not decreased. There have only been rising wages and rising advertising prices. For example, in the app market , the price of a single download has increased from a few cents in the early days to more than ten yuan or even higher now. Some e-commerce and travel apps are priced at more than ten yuan, but there is still no sales volume. Even if there is volume, the final activation and payment costs are extremely high. Promotions are also becoming ineffective, and the numerous tricks have overdrawn users' trust. Just like every time I received taxi coupons worth hundreds of yuan from Didi, I had to spend a certain amount to get the discount; just like every time I participated in Taobao and JD’s Double 11, the discounted products I bought were more expensive than those after the event. So we see that many companies find it difficult to give out trial coupons. If you place an advertisement on Toutiao or Tencent, from click to free receipt, you need to go through the failure rate of opening the page when clicking, then the closing rate after opening, and then the closing rate after filling in information. Basically, you can't send the coupon without more than a dozen clicks. In other words, you will have to pay dozens of dollars in advertising fees to give out a trial coupon. The threshold for brands is rising, real brands are accelerating their online presence, competition is extremely fierce, the conversion rate of traffic is declining, the unit price of traffic is rising, and user trust is being overdrawn. As a result, the cost of acquiring users has increased, while user retention has decreased. All the good and bad are always interconnected. Just like the early days of Internet customer acquisition, brands are easy to build, traffic conversion rates are high, competition is not fierce, and promotions are effective. These are all good factors. In a word, it is a blue ocean, a completely blue ocean. In 2016, when it comes to Internet customer acquisition, big brands monopolized traffic, competition was fierce, traffic conversion rates were low, and promotions were ineffective, all of which were bad factors. In one sentence, it was a red ocean, a completely red ocean. Okay, now that I have explained the logic of acquiring users on the Internet, I will try to explore through some practices how to acquire users at low cost for Internet startups after 2016.How to acquire users at low cost after 2016? I can summarize it in four words: stick to the right path and be innovative. It looks quite normal, but it is quite difficult to execute. Generally speaking, the key to acquiring customers on the early days of the Internet was traffic, that is, promotion first. Whether you are building a brand, organizing events, creating content, engaging in emotional marketing, or entertainment marketing, it’s all nonsense. When it comes to per capita output value, it must be the company's promotion department and telemarketing department. Therefore, we see that most of the people who made money in the early days came from promotion backgrounds and were good at obtaining traffic at low cost, or operating traffic for a large group. At this time, retention and activity are not so important, and the operation position is not taken seriously. In the blue ocean, either complex things are simplified. In the Red Ocean, you have to complicate simple things. So we see that operations are becoming popular. Refined operations can improve user experience, reduce user churn, and increase user payments. Therefore, the first major change in acquiring users is that operations become very important, and entrepreneurs must build a lean operations team. In terms of promotion, keeping to the right path is reflected in regular search engine public relations, brand stories, word-of-mouth building, including some regular promotions. Combined with operations, it lays the foundation for acquiring users at low cost. In addition, promotion genes should be implanted in the product to allow users to spread the word spontaneously, such as adding relationship chains, red envelopes, invitations, etc. This can help save costs for promotion. Specifically on the operational side, it is mainly driven by data. Taking Internet finance as an example, it is reflected in the efficiency of traffic utilization, user retention efficiency, and product sales efficiency; that is, from the three dimensions of traffic, users, and products, data is used to improve these three dimensions. Since it is not the focus of this article, we will discuss it next time. I want to focus on the surprising. The so-called surprising does not mean creating a hot topic or making a lot of money. Because after the hotspot passes, it cannot bring many effective users.In a sea of red, the key to being surprising is to avoid the sharp edge and find gaps. The general guiding direction is not to focus on top traffic or regular traffic. We should not just buy them all at once. We should focus on long-tail traffic and pay attention to content and interaction. Traffic thinking is dead, interaction and content marketing are immortal First of all, the value of new media is very important, especially WeChat public accounts . Although the cost of launching a WeChatpublic account today is not low, I believe it is still in a value trough, especially for some truly valuable KOL accounts. If you can match user attributes with content and promotional methods, you can acquire users at a lower cost. Moreover, this method comes with its own brand preference and has better user retention. In addition to some high-quality KOLs, there are many long-tail public accounts that are in a value trough and no one is placing advertisements. If you place advertisements at this time, you can obviously avoid competitors. For example, if my product matches a third- or fourth-tier city, I can place advertisements on the local WeChat public account and achieve good results. Some entrepreneurial projects are suitable for operating WeChat public accounts, and the customer acquisition cost of WeChat public accounts is very low. Conventional advertising needs to go through the process from exposure to clicks and then to registration, but WeChat official accounts are different. Clicks mean follows, that is to say, the cost of acquiring a WeChat official account user is one click. When some of them find that they don’t like the content of your official account, they will unfollow. We assume that four out of five people cancel, and the actual cost is only 5 clicks. At a unit price of 1.5, it means 7.5 yuan to acquire a official account fan. So I think that for some products with a very low payment threshold and projects that are suitable for content operations, this method can achieve amazing results. In other words, I don’t use conventional advertising to acquire users, I take a different approach. I will first post these fish on the WeChat public account, and then I will harvest them slowly. This is surprising. In addition to WeChat public accounts, there are also many long-tail traffic, including offline resources, third- and fourth-tier cities, and rural markets, all of which have some unique ways to mine traffic. What we have to do is to avoid the giants, because the giants can’t do these things, or it’s too troublesome. It’s easy to directly monopolize the head traffic, purchase or strategic cooperation, so if they don’t do it, then we will do it. These things are quite tiring, but as mentioned before, the strategy of the Red Ocean is to make simple things complicated, because the era of simple and crude profit-making has passed, the environment has changed, and we can’t always think about making big money by being lazy.In addition to finding long-tail traffic, the second thing to pay attention to is the scenario. Why is advertising becoming less effective? Because the scene is not good, you could just use a scene like the WeChat public account. Why are many Internet finance institutions now engaged in consumer finance? Not only is the market large, but the scenario is also good. If you want to spend money, I can lend you money, that's just right. So we have to look for scenes. For entrepreneurial projects, it is crucial to find the usage scenarios of your products. By embedding these scenarios into traffic introduction, you can greatly improve the conversion rate and the user quality will not be bad either.Finally, I think it is still important to pay attention to building your own traffic. How to build your own traffic? If the founder has the genes of an internet celebrity , then strive to become an internet celebrity. If the team can create content, then they should do a good job in WeChat public accounts and various headline accounts. Some people say that SEO is ineffective, but ASO is taken seriously. In fact, SEO has not become obsolete. Search engines are still the most effective advertising platform. Keyword advertising is still number one in the world, the United States, and China. Based on keywords, through some public opinion monitoring and tools , we can find news, hot topics, forum posts, Zhihu posts, Weibo, blogs, and WeChat public accounts related to the keywords. We can follow posts, top posts, create topics, or talk to them about cooperation. This kind of traffic is very accurate and effective, and it is actually just freeloading traffic. Building your own traffic is a long process. As mentioned earlier, we have to do complex things, and complexity can demonstrate our professionalism. If you do this well, I think it will work surprisingly well. At the same time, we must still follow the original marketing logic, with brand first and sales efficiency second, that is, traffic introduction and conversion efficiency, and attach importance to the important role of sales promotion in attracting new customers. Because traditional marketing makes it difficult to distinguish who is a new user and who is an old user, and there is no way to connect users. The Internet can do this. We first lower the entry threshold, let the users come in first, and then find ways to serve them well. In addition, we must attach great importance to operations. Based on our own products, we must figure out what our user growth logic is and what our operating models are, and then let data drive them. The above are some of my suggestions for Internet entrepreneurs after 2016. I hope they can help everyone. At the same time, I would like to dedicate this article to all Internet entrepreneurs. The colder the winter and the worse the environment, the more you need to persist and stay calm. Don't follow the crowd. Be yourself and look forward.
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