A war about retention rate!

Since I started my public account, people have been asking me, "Why don't you become an investor and switch to content creation?"

In fact, my original intention of writing articles was very simple, I just wanted to share. Investing itself uses money as leverage, while content uses words and ideas as leverage. If done well, the impact and change that content can have on the world may be more fundamental, thorough and extensive than money.

After making this decision, I looked at content entrepreneurship from the perspective of both an investor and an entrepreneur . Just like thinking about other industries, I wonder why content entrepreneurship can take off? What stage of development is it at now? What will happen next? What are the elements of success? etc.

During this process, I was thinking and practicing at the same time, so I had the following questions and the answers I figured out myself. I am invited to share this with you. It is just my personal opinion and for reference only.

Origin: What is the essence of this wave of content entrepreneurship?

For the earliest media industry, the most scarce resources were brands, channels and advertisers. In other words, for a magazine to succeed, it must have a good brand, enough offline channels, and advertisers who recognize it. In the new media era, although brands and advertisers have undergone corresponding migrations and changes, it is the role of offline channels that has actually been radically transformed. WeChat allows everyone to have a voice and have the potential to be spread to a huge group of people.

When new channels emerge, few people can see the trend clearly at the beginning, and advertisers don’t know how to participate in the construction of the new ecosystem. Therefore, the giants of the old era have no motivation to continue exploring new platforms, which brings opportunities to new content entrepreneurs.

In addition, when a new platform emerges, users have a strong demand to consume content (just like people's demand for oxygen in a suddenly created vacuum world), so content entrepreneurs can increase users at a rare exponential rate along with the growth of the platform.

In the past one or two years, this wave of entrepreneurs on the WeChat public account platform has seized this opportunity.

Current situation: What stage is content entrepreneurship in now and what problems are there? 

But now, the growth rate of the entire WeChat platform has slowed down significantly (in terms of opening rate, it is even declining). So for a large wave of entrepreneurs that have emerged due to channel changes, the biggest problem is homogeneity.

Since everyone's rise is due to channel changes, everyone is actually a leverager rather than a momentum maker, so few people can truly form their own barriers or master the so-called scarce resources. What's more, for content entrepreneurs, difficulty in replicating and difficulty in monopolizing have always been problems. Ultimately, from the essence of the business, this problem is reflected in the increasingly low " retention rate ".

During the channel dividend period, the rapid increase in new users masked the problem of loss of old users. But now that the channel dividend has passed, everyone will encounter the problem of low retention rate. One day, the retention rate may be so low that the entire public account will experience negative growth.

The so-called negative growth here does not necessarily mean a decrease in the absolute number of followers, but rather that the more articles are posted, the lower the open rate and the lower the reading volume.

To put it bluntly, what a good content entrepreneur is best at is getting traffic. However, retaining users and tapping into the commercial value ( conversion rate ) of these users is the biggest bottleneck that content entrepreneurs (especially many traditional media professionals in transition) will encounter.

The future: Going deep rather than small

There is no essential difference between content entrepreneurship and any other entrepreneurship. Many people’s core pursuit before was the number of readers or attention. This is wrong. The ultimate pursuit of any business should be the real money that can be obtained in the end.

Therefore, the two most important indicators are the number of users and the revenue that each user can bring. Ultimately, what we want to look at is the product of these two indicators . Large traffic and low income and small traffic and high income in vertical fields are not necessarily better.

Therefore, some people think they are great because they have a large number of users, while others think they are small and beautiful and cannot grow big because there are too few people in their vertical group. This is both wrong. It doesn’t matter whether it’s small or beautiful, what matters in the end is the product.

Due to the characteristics of content and the audience itself, in order to reach a wide audience, the content must be shallow. The shallower the content, the weaker the relationship with each user. The weaker the relationship, the less trust (and thus revenue) you can earn from each person. Not to mention the fact that the weaker the relationship, the lower the retention rate.

Therefore, in the future, serving vertical groups of people will be a more reasonable choice, which is what I call vertical and deep. For example, even if what I write is only for Jack Ma to read (the extreme verticality), but it can influence Jack Ma’s personal investment or business decisions and is needed and recognized by Jack Ma (the extreme deepness), then the value I create will be much greater than those who have millions of subscribers but can only rely on traffic for advertising.

At present, there are still many public account operators who manage traffic monetization like cutting leeks, so sooner or later these companies will become a half-dead small advertising account.

They all fail to realize that superficiality is more temporary and worthless, while depth and breadth are more lasting and valuable.

So, based on these analyses and understandings, what should we do specifically?

Specific Strategy (I): Continuously Produce High-Quality Content and Opinions

The value of everything is determined by supply; the scarcer something is, the more valuable it is. Therefore, in an age of information explosion and rampant bad content, high-quality content and opinions are scarce and valuable.

I once wrote an article saying that the reason why a CD is a CD is largely influenced by the physical optical disc as a carrier. Otherwise, who stipulates that an album must have 10 songs? Who says that an album can’t be updated after it’s released?

The same goes for magazines. For magazines, the number of pages is fixed to a large extent. So in order to reach a certain number of pages in each issue, you must work on the content, and deletions, reductions, additions and additions are inevitable. For example, cover articles and some long reports are intended to be high-quality explosive content, while other short essays are inevitably for the purpose of adjusting the reading rhythm.

But the problem is that people have too many independent choices in the new media age. As a reader, I don’t need a media outlet to update a large amount of information every day to satisfy me, nor do I need the media to publish simple essays in order to stay in the readers’ sight, because all the articles I open in my circle of friends are such articles.

So, why do we have to update every day? Why is it necessary to provide a lot of information and content? If I publish an online magazine now, and only publish a cover article every week without any small articles at the back, then who can say that this is not a qualified "weekly"?

What's more, since it is no longer a paper magazine, various rich media forms such as audio and video should also be added to the article. As long as they can express better, all forms are means.

So, rather than saying that everyone is a reporter now, it is better to say that everyone is an editor-in-chief.

Of course, I have also looked at the comments under Toutiao articles countless times and asked myself, do users really have the ability to judge the content? Is “spraying” the only feedback users give to other people’s opinions?

But later I discovered that, first of all, there is a threshold for users to judge whether content is good or bad. I once saw a saying, "The so-called critical acclaim but poor box office success is simply because it's not good enough." I think there is some truth to this saying.

For most articles, even though you feel you have put a lot of effort into them, in reality the results are not much better than normal "circle of friends articles", so they are easily drowned out. For example, many of 36Kr's recent feature articles are clearly superior to other articles. Whether in terms of topic selection or operational level, they will arouse widespread discussion and forwarding.

Secondly, thinking from the opposite logic, when a person starts out creating good content but eventually it gets worse and worse, there will always be many people who jump out to express their disappointment. Well, if a person has the ability to judge "bad", it naturally means that he has the ability to judge "good". So, as I wrote in a previous article, many times people are just not used to speaking out for good things, but this does not mean that people cannot see your sincere efforts.

So, when you do well enough, there will still be enough people recognizing you.

Having written this far, we might as well ask ourselves one more question: what does high-quality content and opinions ultimately bring? Traffic? That is too superficial. No matter how good an article is, it may not get as much traffic as a video of cats and dogs. I think that continuously producing good content creates a trusting relationship with users.

Zaozuo's CEO Shu Wei once said "brand is the standard", and I deeply agree with him. When users make a purchase, they have an expectation of a standard. No matter where in the world you go to Starbucks, you know that the taste is guaranteed and will meet your expectations. Building a trusting relationship is the only way to establish a brand.

Therefore, at present, the scarce resource that content entrepreneurs should strive for is a brand that can establish a trusting relationship with users. Brand is one of the most important barriers to improving user loyalty, retention rate and willingness to pay. 

Specific Strategy (II): The Value of Community

Why are companies from Luoji Siwei to Xin Shixiang all building communities and emphasizing the importance of communities? 

There is a famous theory in the United States, which is often mentioned together with Moore's Law, called Metcalfe's Law. This law states that the value of a network increases exponentially as the number of users increases. But his definition of this network has a premise, that is, every two users can be connected.

As shown in the figure above, this network that connects two to another brings about stable network effects, more usage scenarios and data accumulation, higher retention rate and platform value.

In the era of traditional paper media, media relationships are one-way. There is always a point in the center that scatters output, and a circle of points outside that do one-way reception. No interactive relationship is formed. The media cannot know the user's information in real time, nor can it activate a specific user in a targeted manner. But in the new media era, connections make two-way interactive relationships and even networked communities possible. Therefore, Luoji Siwei and Xinshixiang all emphasize community. The fundamental principle behind this is to transform the one-way relationship between content producers and readers into a two-way or even networked one.

Fundamentally speaking, Facebook first created a network of communities, then allowed this community to spontaneously generate content, and ultimately became a content platform. Many media outlets now start with content. If they can eventually build a good community, it will in turn become a social network.

Different entry points, but ultimately the same destination.

I hope that one day in the future, my peers in the content field can carve out such a path.