How will Baidu, Toutiao and Weibo fight in the information flow advertising battlefield?

1. The Warring States Period of Information Flow Products

Baidu's latest Q4 financial report shows that online marketing revenue (2.328 billion), which still accounts for 88.7% of total revenue (2.623 billion), has once again fallen by nearly 9% year-on-year. Baidu's net profit in 2016 fell by 62%. From this perspective, we can actually see why Robin brought out content distribution again in his 6,000-word internal letter and placed it at the top of the four major strategies.

In my previous article "Can an internal letter solve Baidu's problems? 》 mentioned: "The most important reason why Baidu brought up content distribution again is definitely not users, nor traffic , nor even illusory concepts such as portals, but because its own money bags have been taken away by others, and the people who have taken away its money bags are also engaged in content distribution, technology-driven, and artificial intelligence . If Baidu does not bring up content distribution again, is it waiting to drink the cold wind of Xibeiwang?"

Baidu's intention to seize the information flow advertising market through information flow products has actually been known to everyone for a long time. Baidu only started to integrate information flow into its products such as the Sohu.com app on a large scale in 2016, but less than half a year later, it had already started to put advertisements in them.

Zhang Yiming of Toutiao claims that the daily active users have reached two-thirds of those of Sohu, and the online time has reached a staggering 76 minutes. While its revenue was only RMB 1.5 billion in 2015, it reached RMB 6 billion in 2016, which is about one-tenth of Baidu's. The number of people in the sales team will double this year, possibly approaching 10,000, and a system similar to Phoenix Nest is also being built.

At the same time, Weibo, which released its financial report one day earlier than Baidu, "coincidentally" also made efforts to develop information flow. Weibo already had an information flow, but it was still based on the relationship flow between people. Now, Weibo wants to focus on the interest flow based on hot topics.

Weibo CEO Wang Gaofei said this in the Q4 conference call: Compared with pure information flow products, Weibo has an advantage in social relationships. On the one hand, Weibo's information flow has shifted from pure time flow to relationship flow and then to interest flow, and the interest flow is based on lowering the usage threshold for new users and increasing the usage time of medium and high-frequency users; on the other hand, the problem with pure information flow products is that there is no social relationship centered on content producers , and users cannot be effectively retained . Chinese mobile phone users generally change their phones about every 12 months, so pure information flow products will most likely need to acquire new users.

I remember that in a conference call in Q2 2016, Wang Gaofei said that the revenue from information flow advertising has accounted for more than 50% of Weibo's overall advertising revenue, while the proportion of display advertising has shrunk to 30%, although the absolute figures of both are increasing.

From this perspective, information flow advertising is really a piece of fat meat. Including Tencent, UC Toutiao and a number of traditional portal apps, this year's information flow products can be said to have entered the Warring States Period. I can even say that as long as a product has a little traffic, it will dare to change its homepage to an information flow mode.

Just as Wang Gaofei finished emphasizing the advantages of Weibo in social networking, Toutiao, which seemed to be temporarily ahead in content distribution efficiency, sent an email to Toutiao authors saying that the social function of Toutiao would be launched soon, and authors would have more opportunities to achieve fan interaction and content monetization.

The battle for information flow is in full swing. Obviously, everyone wants to tap into the gold mine of information flow advertising. So the question is, what is the fundamental reason why information flow advertising is so popular?

2. Information flow ads: The shorter the better, the more unfamiliar the better

If there are three information flow products in front of you: Toutiao, Weibo and WeChat Moments , without considering their current sales strategies, if you were asked to manage them, which one do you think should sell more information flow ads? I will save the answer for last and first talk about the nature of information flow advertising.

Advertising itself is not a business model unique to the emergence of the Internet. There are many people in traditional industries who have become rich by relying on this model. Although Internet companies have made many innovations in advertising models, those are only presentational things. The core essence of advertising has never changed for hundreds of years.

1. Direct sales

Moji Weather , which submitted its prospectus at the end of 2016, chose to sell advertisements directly. This pure tool product company, which had not been favored by everyone, actually had a positive net profit. The latest data shows that advertising revenue accounts for 95% of Moji Weather’s total revenue.

Any product with a certain user base can actually sell advertising, it’s just a matter of how you control the “valve”. Are you as restrained as Douban and Zhihu in their early years, or are you like portal websites and Caoliu, where advertisements are everywhere and cannot be turned off?

But even if we open the advertising valve to the extreme, I believe everyone understands the problem with products like Moji Weather: the online time is too short, only 2 minutes on average. For products with low online time, the value of advertising will be limited because there is less "advertising inventory" to sell.

The problem of low online time may be due to insufficient demand for the product and low average number of openings per person, or it may be due to short stay time each time the app is opened. In any case, the total time cannot be increased, and the commercial value can easily hit the ceiling.

2. Online time

So, do products with longer online time necessarily have higher commercial value than products with shorter online time? Generally speaking, yes.

However, it should be noted here that the online time on video websites is actually a pitfall. For example, when a user watches a drama on Youku or iQiyi, the viewing itself is actually a “complete behavior” . So you see that users spend a long time, but there are actually not many opportunities to expand the value of advertising, because the more ads are inserted, the more the user experience is destroyed, and the "valve" of advertising inventory cannot be adjusted very high.

In fact, which video website users choose is based on a specific popular TV series, which is why major video websites spend sky-high fees to compete for the first and exclusive broadcasts of star dramas. With such high costs, it is impossible to make back the profit by selling advertisements alone. In the end, this business can only be sold to giants, or companies that are incubated by giants can engage in it.

3. Duration subdivision

So what is the best online time? The degree of segmentation is high enough.

For example, feed- based products like Toutiao, Weibo and WeChat Moments have higher commercial value due to their online time. The reason is that the consumption of each feed (reading/watching/commenting/forwarding/liking/collecting) is independent of each other, and the content of the previous feed is not necessarily (or even definitely not) related to the content of the next one. From the user's experience, he is actually constantly "jumping" from one feed to the next, which means the "segmentation" is high enough.

The previous video talked about this problem. The time is long, but each episode is continuous. Users don’t want you to disturb them in the middle. Even in the users’ minds, there should be no division between episodes. They think the whole plot should be watched in one go.

As users continue to "jump" from one feed to the next, opportunities for "interweaving" of commercial value arise. In other words, if you insert commercial advertisements into the feed, users may still find it annoying, but they will not feel that you are interrupting their original user experience. There is actually an opportunity to insert advertisements between any two feeds. The only question is to what extent this "valve" is controlled.

4. Proximity of content

The size of this valve basically depends on the content attributes of the product feed: the more irrelevant the content is to the user and the less private it is, the easier it is for the user to accept advertisements, so it doesn't matter if the frequency of advertisements is higher.

So, for example, in a stream of 100 normal feeds, Toutiao can put more ads than Weibo, and Weibo can put more ads than WeChat Moments.

In WeChat’s Moments, it is actually a bit like a private area for interaction among friends and family, so the tolerance for advertisements is actually the lowest. We can see that the frequency of advertisements in Moments is indeed very low, not only because Zhang Xiaolong is more sentimental, but also because advertisements in social products among acquaintances are a landmine that cannot be touched. Therefore, the commercial value of WeChat based on its advertising model is more due to its user base, online time and brand effect.

For example, the early advertising strategy of WeChat Moments was to target KA customers with high average order values. Such advertisements were more popular, and the click-through rate and conversion rate would increase accordingly. Weibo and Toutiao are more suitable for small and medium-sized advertisers to do some self-service delivery. Although the average order value is low, because their "valves" can be opened wider than Moments, the final competition may be about operational efficiency.

As social products, the threshold for advertising can be opened wider in flow products such as Momo’s Nearby People and Status, where the relationship is not so intimate, than in WeChat Moments. And judging from the financial report, this is indeed the case. Momo's mobile marketing revenue increased by 64% year-on-year in Q3 2016 to US$17.7 million. From my judgment, Momo's valve can be even wider than Weibo's, but still smaller than Toutiao's.

One more thing to mention is, don't really believe what Zhang Xiaolong said about WeChat being a tool that you use and then leave. The essence of WeChat is a communication tool that comes with a network effect. The more people use it, the higher its value becomes. In fact, the more you use it, the less you will want to leave . Pure tool products like Meitu and Moji Weather are designed to be used and discarded. Even if you are the only one using them in the world, your user experience will not change much. This also has a fatal impact on the advertising commercial value of the two types of products.

5. The advertising value of every mobile Internet product is a combination of the above four aspects

Therefore, according to the idea of ​​"segmentation", short dramas, which are also video content, have become more popular in recent years. Except in the mobile Internet era, everyone's usage time is fragmented, which is more suitable for the consumption of short dramas, which may be only one-fourth to one-eighth of the previous length. Moreover, once a certain type of short drama becomes popular, it has more opportunities to insert advertisements than a long drama, because it divides the user's time more "segmented".

Therefore, for products with the same traffic and online time, the commercial value of short video products is theoretically higher than that of long video products. Of course, you also have to consider what kind of content attributes the video product has.

So remember my previous question? I believe that after reading this, you already have your own answer in your heart.

3. Why Baidu fell out of the Big Three

BAT is actually the name for the three giants in the PC Internet era. A and T have found their own product forms in the mobile Internet era, but B has not.

We have discussed a lot about the reasons behind this. From the perspective of business direction, corporate culture, and team genes, it can be said that they can all be explained. Here I will provide another interpretation, from the perspective of the basic product form of mobile Internet.

I wonder if anyone still remembers that when smartphones were first used, everyone felt fresh and unfamiliar with each independent app. This was an experience different from opening a browser and surfing the Internet through the web in the PC era. So at that time, many people believed that native apps were just a transitional form, a compromise solution caused by the immaturity of mobile phone technology, and that the H5 web page form that was more familiar and friendly to everyone would eventually become the mainstream on mobile phones. At the same time, mobile browser apps would naturally become the entry point.

Many years have passed and we know that this did not happen, and I think this may be the main reason why Baidu fell behind.

The reason is actually very simple. In the era of PC Internet, the content of the website can be crawled and indexed. Unless you have achieved the scale of Taobao and Weibo and have to block the search engine index from a strategic perspective, for most websites, being searched is not a bad thing. Even for most grassroots websites, it is the source of life.

In the era of mobile Internet, native mobile phone apps are naturally closed, and the information within them is difficult for others to search. This has caused these apps to form isolated islands one after another. The foundation of Baidu's indexing has been broken, and there is no chance to rebuild it.

Baidu once strongly promoted light applications. Its original intention was to rebuild the web ecosystem of that year, connect the information isolated in many apps, and recreate the glory of the past. Unfortunately, it also failed.

Baidu's product form in the PC era required users to actively search, which was difficult for China's vast grassroots users. Therefore, it acquired hao123 for URL navigation, and then made profits through a bidding ranking model. Its commercial revenue was once staggering.

Unfortunately, all of this is based on the premise that a large number of indexable websites must exist first. Without an information portal and unable to index everything, how can Baidu distribute content?

4. Final

Although the information flow model recommended by algorithms has partially replaced the Baidu model of active search, it has become a traffic entrance in the mobile Internet that cannot be underestimated. However, we will see that under the premise that mobile Internet apps exist in the form of isolated islands and information is scattered in various applications, although Toutiao will indeed snatch a lot of advertising revenue that should have belonged to Baidu, it is unlikely that this company will directly replicate Baidu's former glory, at least not through the product form of information flow alone.

The final outcome of the information flow decisive battle should be the products with large traffic, including Tencent products (Tencent News + Tiantian Kuaibao + WeChat official accounts + Moments), Sina Weibo , UC Headlines, portal apps, and Baidu itself, which can also index PC web pages and a small amount of mobile H5 content. They will divide up the entire information flow advertising pie according to their respective traffic, distribution efficiency and commercialization capabilities.

As the saying goes, “Kill the local tyrants and divide the land”, the fate of mobile Internet entering the AT era is irreversible.

As for which one will become bigger, Weibo, which focuses on hot interest streams, or Toutiao, which focuses on social systems, that depends on your opinion on this question: Baidu's high online marketing revenue back then was due to the contribution of the Phoenix Nest system developed by its product technology experts? Or is it the layers of agency systems set up by commercial salesmen that contribute more?

If it is the former, then the technology-driven Toutiao may have a higher chance of winning. If it is the latter, Weibo, which excels in operations, may win.

Maybe the two companies will merge in the future, who knows.

For information flow advertising , please visit: www.opp2.com/dsp

Mobile application product promotion service: APP promotion service Qinggua Media advertising

This article was compiled and published by @刘胖胖(Qinggua Media). Please indicate the author information and source when reprinting! Site Map