About seven or eight years ago, a friend who ran an advertising company in Changchun often tried to come to Beijing to cooperate with some large advertising companies, trying to cut some business from these large advertising companies.

He often chatted with me and hoped that I would introduce clients to him. He often said: "We have low prices and good service. We can do it at half the cost of Beijing companies."

Later, as his business gradually grew, he set up a branch in Beijing. Since things are going great in Changchun, why did you come to Beijing to start a company?

People working in the advertising industry should all know the reason. As a first-tier city, Beijing's clients, resources, media, professional talents, etc. are incomparable to third-tier cities like Changchun.

For the advertising industry, most companies choose to take root in first-tier cities and radiate to the surrounding areas. Most 4A agencies are located in Beijing, Shanghai and Guangzhou. If a slightly larger advertising company uses one of Beijing, Shanghai or Guangzhou as its headquarters, it will usually also set up branches in the other two cities.

However, the ecosystem of advertising creativity is changing.

Starting around 2018, many of my friends who were engaged in self-media and content creativity began to "escape from Beijing, Shanghai and Guangzhou" and return to second- and third-tier cities to work. Some opened their own studios locally, while others joined local MCNs to do creative work.

On the one hand, it may be that it is not easy to work hard in first-tier cities. The more important reason is that the rise of a new media creative ecosystem centered on public accounts and short videos has eliminated the huge gap in resources, media, and other aspects between content creative work in second- and third-tier cities and first-tier cities, and it is also close to home and low-cost.

These two examples reflect the changes in the content creative ecology in recent years. In the past, small advertising companies in second- and third-tier cities wanted to squeeze into first-tier cities, but now, the entire creative market has begun to gradually sink from first-tier cities to second- and third-tier cities.

01. How did the creative industry sink?

If you know something about advertising, you must have heard of large advertising companies such as Ogilvy & Mather and Hua Yang United in Beijing, Leo Burnett and Shengjia in Shanghai, and Guangdong Advertising Group. These large advertising companies have maintained their presence in first-tier cities for decades.

If you have been engaged in advertising creative work in recent years, you may be more familiar with these companies: Ruhan, Qianxun, and Ergeng in Hangzhou, Onion Video and Aries Culture in Chengdu, Dayu Network in Suzhou, and Gumai Jiahe in Qingdao. Nowadays, these content creative agencies are generally referred to as MCNs.

Data shows that in terms of the distribution of MCNs, although Beijing, Shanghai and Guangzhou still have an advantage in terms of quantity, a large number of powerful MCN agencies have also emerged in second- and third-tier cities.

For example, the scale of Chengdu's MCN industry is almost as large as that of Beijing, Shanghai and Guangzhou. Institutions such as Yinshi Culture, Onion Video, and Aries Culture have incubated hundreds of Douyin celebrities and Kuaishou stars with millions of fans.

For example, GUMAI JIAHE in Qingdao, Shandong, has so many influencers under its umbrella that it ranks among the top five on Douyin and Kuaishou, and its institutional valuation has exceeded 1.3 billion.

The characteristics of MCNs are that they use new media channels - Weibo, WeChat, Douyin, Kuaishou, Bilibili, Taobao Live, etc., to incubate and acquire content creators, establish their own influence - especially influence on brands, take root and thrive directly in the local area, and they have a strong regional nature.

These new MCNs are no longer focused on squeezing into first-tier cities. The lightweight, low-cost creative approach of MCN is very suitable for operations in non-first-tier cities, and as long as they have the killer weapon of high-quality talents, customers will come to them no matter where they are.

MCN has blossomed all over the country, thanks to the explosion of new media creative forms, which has caused the previously "high-end" creative industry to gradually sink.

Recently, ByteDance DC planned to hold a salon event in Hangzhou with the theme of "New Possibilities for Content Marketing". This was a salon event that included various creative organizations such as MCN, advertising creative companies, and talents. 11 creative agencies and 36 brands participated in the sharing.

Dongdong Gun of ByteDance pointed out that the purpose of holding salons is to unite outstanding creative agencies and creative people to build a commercial creative support matrix. By holding offline salons, summits and other activities, two-way exchanges can be carried out to explore industry trends and promote the evolution and development of marketing.

Some sharing and data on the same day also showed a trend of creativity sinking. Most of the creative agencies participating in the salon came from new first-tier, second-tier and third-tier cities. The organizer also revealed a piece of data that 80% of the creativity on Bytedance Engine came from new first-tier, second-tier and third-tier cities.

Creativity has indeed sunk.

02. Behind the sinking of creativity is the competition between traditional creative models and emerging creative models

As mentioned above, the birth of MCN was entirely due to the development of new media. From Jiuhongbinglan and Loushi in the earliest Weibo era to Wuyou Media and Gumai Jiahe in the short video era, they all took advantage of the latecomer advantage of new media.

Although advertising companies in first-tier cities and MCNs in lower-tier cities are both engaged in content creativity, their creative models and logic are different. For brands, these differences may keep them in a state of game for a long time.

Creativity around traditional media vs. creativity around new media

Advertising companies were born in the era of traditional media, and initially they centered around traditional media such as newspapers, outdoor advertising, and TV. Advertising companies, as professional production agencies, create creative ideas and place them on these media.

The entire process of creative output is relatively routine. Advertising companies come up with an idea through research, insight, strategy and analysis. Basically, a brand determines its strategy at the beginning of the year, publishes a set of graphics and texts on print media, and releases a TVC on television, and that's it. A year's work is done.

Creativity based on traditional media is basically static, which is to ensure that advertisements occupy consumers' minds repeatedly for a long time. But in today's fragmented world, consumers' attention can be diverted at any time, and it is difficult for static, long-term content to have a lasting impact on consumers.

MCNs were born in the new media era. Their creative ideas are created by experts around new media. They can quickly produce creative content that suits the platform based on current popular culture.

And this creative content is dynamic. It will adjust as the platform and consumer preferences change, creating new content to influence consumers. This is also the characteristic of new media creative content.

So you will find that in the traditional advertising era, one TVC and one set of prints a year are enough, but for new media, you have to send several Weibo posts a day, push a public account article, and release a short video every few days...

Although they are both creative, the ideas of advertising companies are based on the ecology of traditional media, while the ideas of MCN are completely fragmented creative solutions under new media.

Owned media, IP VS agency media, IP

Advertising companies initially represented traditional media, including print media, television, outdoor advertising, etc. When television appeared, it was also regarded as a new media, but was eventually "represented" by advertising companies. However, the emergence of new media has changed the situation.

When Weibo was at its most popular, Bai Er, Mr. Sales and Uncle Tongque claimed to account for 90% of the joke tellers on Weibo. For example, "Genius Little Panda", "Jiaoshou Yi Xiaoxing" and "Gu Dabaihua" are all big accounts under Bai Er. These big accounts do not need advertising agencies to represent them. Bai Er and others are not agents for these accounts, but only have a broker-like relationship.

There was no concept of MCN in that era, but now it seems that Bai Er, the salesman and the Tongque uncles are MCN. At that time, advertising companies were not in an absolutely dominant position compared to Bai'er and others. Why? Because they have big names with creative capabilities, clients will come to them on their own, and there is no need for advertising agencies to act as middlemen to make a profit from the difference.

Compared with MCN, advertising companies have strategies, insights, systems, and routines, but they lack media and IP, which are exactly what MCN has at this stage. Which one has more advantages?

MCN can make up for strategies and insights if it works hard and absorbs some talent, but advertising companies cannot make up for media and IP. The fundamental reason is not that advertising companies are incapable, but that they are not willing to do risky things like incubating accounts.

Imagine a scenario where an advertising company gives a proposal to the client. After a series of insights and strategies, it plans to conduct a wave of Buddhist marketing targeting young Buddhist people, and finally says that the creative idea will be through a young Zen monk.

The customer asked the little monk Yichan what the price was.

The advertising company quoted a price of 500,000.

The customer said, "I know Dayu Network, and they quoted me 250,000 yuan."

High cost and institutionalization vs low cost, lightweight and flexible

As mentioned above, the advertising company’s research, insight, strategy, creativity, and delivery are a set of work processes, and this process has been running as a system for decades. Under this system, after a proposal, the basic monthly fee is hundreds of thousands, and several million a year becomes the company's stable revenue.

But in today's media ecology, a print production costing several million per year or a TVC can no longer meet the demand.

More and more clients no longer accept the monthly fee system, but instead settle based on individual projects. This approach allows them to have more room for adjustment when facing market competition.

The creative approach of MCN influencers meets the needs of Party A. The characteristics of their content creativity are low cost, lightweight and flexible.

At the salon event of the ByteDance DC Project, most short video creative workers said that the cost of shooting a video ranges from several hundred to several thousand yuan. According to on-site estimates, the median is around 1,000 yuan. In this case, you can achieve the best marketing effect by creating multiple pieces, testing to find the most effective content, and then increasing the delivery.

This is completely different from the situation where advertising companies spend hundreds of thousands or millions of dollars to shoot a video but are unable to judge the effect.

At the salon, Tik Tok selected the top 10 content on the platform, most of which were not big-budget films, and some were shot at very low costs. For example, the Huawei Honor video below had a very low cost, but because of its creative and interesting ideas, and because it fits the style of the short video platform of Tik Tok, it achieved good results. In this selection, this video ranked second.

Therefore, on new media platforms such as Tik Tok, what is important is not how beautiful or sophisticated the video is, but how creative the content is.

In addition, advertising companies are often unable to bring direct, visible, and measurable effects to the sales of their clients' products.

Although MCN influencers do not necessarily promise results when doing marketing, on platforms like Douyin, there is a whole chain from content marketing to planting grass to pulling grass, so the long-term operation and delivery of content can observe the real effects of product and sales.

03. New video media creates a new creative ecology

The birth of Tik Tok, Kuaishou, and Bilibili has spawned a large number of video MCNs, which has caused the creative industry to experience a downward trend. Small and medium-sized creative agencies are springing up in second- and third-tier cities, and some have grown to a size large enough to compete with large advertising companies.

As a creative entity, the creative capabilities of these low-lying creative agencies have surpassed those of large advertising companies as a whole.

According to R3 data, there were more than 40,000 advertising companies in 2018.

According to Crawley's "2020 China MCN Industry Development Research White Paper", the number of MCNs in China exceeded 20,000 in 2019. There are already millions of influencers with media value on TikTok. According to WeChat data in 2017, there were more than 10 million public accounts and more than 3.5 million monthly active users.

Every public account owner and every influencer is a creative subject.

If advertising companies are a small ecosystem, then self-media and influencers are a large ecosystem.

Data shows that if a city is 9 times larger than another city, then the creative energy of this city is not 9 times higher, but 16 times higher; and if the size of an international metropolis is 50 times that of a small town, its creative energy is about 130 times that of the small town.

The creative energy of a large ecosystem is far greater than that of a small ecosystem. If one day you suddenly find that the number of excellent creative ideas from MCNs, KOLs, and influencers exceeds that from advertising companies, don’t be surprised.

Author: Xunkong's Marketing Revelation

Source: Xunkong’s Marketing Revelation (xunkong2005)