New user growth strategy: from traffic to retention

Traffic is the most valuable thing on the Internet, and it is of great significance to every enterprise and entrepreneur. Traffic is the "core" of the Internet era. Therefore, everyone in the Internet industry knows the importance of traffic. If you want to get more traffic or make your products attract more attention, the key is to find traffic and convert it well. Next, the author of this article analyzes the new growth strategies of giants in the era of competing for traffic.

Competition among giants has never been as fierce as it is today.

In the past, the giants would be keen to tell investors and the public such a story: "Look, the field I am in is a fertile, uncultivated land, and I have a huge advantage in this land."

Today, it is difficult to continue telling this story with the same logic, because - "Yes, you still have an advantage on this fertile land, but the problem is that you have almost cultivated this fertile land!"

Yes, mobile Internet has entered the stock market from the incremental market!

1. From incremental to stock: Changes in the logic of mobile Internet game

When the company went public, Wang Xing specifically thanked Jobs for inventing the iPhone, which opened up the mobile Internet, the largest incremental market in the past decade.

Since the birth of the iPhone in 2007, human Internet has experienced a period of vigorous growth. Countless new companies have been born, countless great enterprises have emerged, and countless people have written their own glory in this industry.

However, the technology industry has obvious cycles. Obviously, today, mobile Internet has reached the end of its industrial cycle, and a new industrial cycle has not yet begun.

The mobile Internet industry cycle has come to an end. We can get a glimpse of this from the following macro data:

1. Mobile Internet Monthly Activity Data

According to Questmobile data, the monthly active users of the entire mobile Internet only increased by 8.47 million in the first half of 2020, with a pitiful growth rate of 0.75%.

2. Mobile Internet User Time

In the same report, despite the increase in user time due to the epidemic, the growth rate was only 5.2%.

3. The average number of apps opened by all network users per month

This figure was 24.5 in 2019, and it was still 24.5 in 2020, with 0 growth. People are no longer willing to try new apps.

4. Smartphone shipments

According to IDC data, China's total smartphone shipments in Q1 2020 were only 66.6 million units, a year-on-year decrease of 20.3%.

5. Replacement cycle

According to the Q3 2019 report by Aurora Big Data, more than 54.4% of domestic smartphone users replace their phones every 2-3 years or more than 3 years.

All Internet macro data point to one key word - stock game.

Yes, this round of industrial cycle has come to an end, but the new story has not yet begun. Changes in the competitive landscape will inevitably lead to changes in the rules of the game.

That’s right, the era of land grabbing has ended, and the era of intensive farming has begun. The mission of the giants has begun to shift from how to grab more land to how to grow more high-quality crops on the land they have grabbed!

2. From monthly active users to daily active users - what are the face, substance and gold of growth?

For China's Internet giants, monthly active users are an important data.

Why? Because it will be included in the financial report! However, starting from 2019, Twitter announced that it would no longer disclose monthly active data in its financial reports, but would instead use a new indicator called "monetizable monthly active data".

This transformation of Twitter, on the one hand, reflects that it is becoming increasingly difficult to increase monthly active data in the game of existing resources; on the other hand, it also reflects that companies are paying more and more attention to more practical indicators.

Let's look at another data point - penetration rate, which is the percentage of total users of each company's products among all users:

According to data from Questmobile, in June 2020, Tencent's penetration rate was 98.6%, Alibaba was 97.6%, Baidu was 91.2%, Toutiao was 66.7%, and Kuaishou also reached 44.7%.

It can be seen that for the giants, their penetration rate has reached a very high level. For example, in the short video field where Kuaishou is located, unlike instant messaging such as WeChat, its penetration rate actually has a ceiling.

Therefore, for these leading giants, a more realistic strategy is to convert more monthly active users into daily active users.

Taking the short video field as an example, the competition for market share between Kuaishou and Douyin has entered a very stalemate stage after last year's hand-to-hand combat. So we can see that in the short video field, both parties mainly use two major strategies to awaken the dormant population that has already become their own users.

1. Large-scale strategic activities to attract people

For example, Kuaishou invited Jay Chou, and during the marketing cycle of his live broadcast activities, all network resources were deployed, directly increasing the daily active users of the live broadcast to more than 30 million; while Douyin carried out large-scale city theme activities in many cities such as Xi'an and Chengdu, and these city theme activities also needed to expand their voice through external media.

2. Periodic activation

Yes, some users are periodically active on the platform, and they need to be regularly informed that there are new things on the platform.

As for users who are not active in logging in, there is no way to activate them through the short video app itself. Instead, it is necessary to use external advertising and find suitable media to use suitable short video materials to reach dormant users in a personalized and periodic manner.

That’s right, monthly active users are the face, daily active users are the substance, and user time is gold.

So how do we convert monthly active users into daily active users to increase user time? Many people may answer - growth hacking, event operation, cash subsidies...

Yes, these measures may have an immediate effect on a startup. For example, in the early days of Facebook, the company found that as long as it ensured the simple rule of "new users can add 7 friends within 10 days", Facebook's user base could grow exponentially.

Nowadays, such simple rules are rare, especially for giants with extremely large scale. Any simple and single strategy is unlikely to have a very direct impact on the overall daily active users.

So, apart from the tricks just mentioned, what other methods can effectively convert more monthly active users into daily active users?

The answer is advertising!

Advertising may be one of the few most certain strategies among all means of growth, but advertising is actually an extremely professional subject - what kind of media to choose? What type of creativity should I choose? How to grasp the rhythm of delivery? How to get the best price? How to effectively measure ROI?

These problems pose a lot of challenges to advertisers.

Advertising is essentially an investment. Operating an advertisement is like operating an investment fund, and the advertising trader is the fund manager. Every choice of action must yield returns and results. Since it is an investment, it requires a rate of return.

In the past, when the market was rising, you could get good returns by buying any stock, but the magnitude was different. But today we face the difficulty that the market is not rising. This is when the fund manager's ability to select stocks in a refined manner is reflected.

Yes, stable and refined advertising is the watermelon of growth, while various one-wave tricks are the sesame seeds of growth. Extensive and barbaric growth is no longer suitable for the competitive environment of stock game. Refinement is the king.

3. From flood irrigation to drip irrigation: the only way to fine-grained growth

Before analyzing how giants promote growth through refined advertising strategies, please allow Wei Xi to tell a seemingly unrelated story about Israeli agriculture, because this story is interesting enough and very consistent with today's topic.

Israel is not a country suitable for agriculture. This country located on the southeast coast of the Mediterranean Sea has 60% of its land area covered by desert and less than 20% of it is suitable for farming. There are no rivers in the country, only a tiny freshwater lake and some small streams as big as ditches.

At the same time, there is almost no rainfall in Israel from April to November, and the annual precipitation is only 200 mm. What does 200 mm mean? It is equivalent to a heavier rain in Beijing. Yes, this is the annual rainfall in Israel.

In Israeli supermarkets, the price of water is equivalent to RMB 33 per liter, while the price of fresh milk is RMB 10 per liter. This is a country where water is more expensive than milk.

But even in such a harsh environment, Israel has developed the world's most advanced and efficient agricultural system.

Today, Israeli agricultural products account for 40% of the European fruit and vegetable market and have become the second largest supplier of flowers after the Netherlands. The unit output of dairy cows, strawberries, tomatoes, cucumbers, roses and other varieties ranks first in the world. One Israeli farmer can feed more than 400 people.

So how did Israel do it?

The answer is: it has created an agricultural system with extremely high technological content, and the most outstanding of this system is its world-renowned drip irrigation technology.

Different from flood irrigation, drip irrigation technology delivers water in extremely small particles directly to the root system of plants, with an effective water utilization rate of up to 95%, while the utilization rate of ordinary flood irrigation is less than 3%.

This technology, accidentally invented by an Israeli farmer in the 1960s, has now reached its sixth generation and is extremely sophisticated:

For example, in order to prevent the growing roots from blocking the drip irrigation nozzle, a drug that can inhibit the growth of roots in a very small surrounding area will be applied to the nozzle. At the same time, the nozzle will be aerated in time after drip irrigation to prevent blockage, because the precisely proportioned fertilizer is added to the water to reach the roots directly. Therefore, even weeds cannot grow in places without fertilizer and water, which indirectly saves the cost of weeding.

Today, Israelis have already designed this mature drip irrigation technology and equipment into a complete system and exported it to the world. NETAFIM, a drip irrigation company founded in 1964, has captured more than 55% of the global drip irrigation market share.

Well, the reason why I spent a lot of space to talk about this drip irrigation story is that today the mobile Internet has entered the stage of stock game, and the entire industry has become Israel.

The giants cannot rely on the original high-profile flooding growth strategy, but need the intensive drip irrigation growth strategy like Israeli agriculture to make full use of every bit of traffic.

The drip-irrigation growth strategy of mobile Internet requires more detailed dimensionality and stratification from multiple aspects such as technology, products, operations and markets, so as to ensure funnel conversion and ROI at each step.

Specifically in terms of growth, the marginal benefits of the original growth strategy based on massive media purchases such as variety show sponsorship, outdoor advertising, and mobile phone pre-installation are becoming increasingly lower.

Although the giants have sufficient funds, they are also increasingly eager to calculate the effectiveness of every penny they spend on buying traffic. Is there any duplication? Is it possible to achieve personalized recall? Is it possible to accurately calculate subsequent retention?

These issues all require a drip irrigation system at the advertising level to be implemented in detail.

So, does such a sophisticated drip irrigation system exist in the domestic advertising field?

The answer is yes, and there is more than one. Many domestic platforms have now developed the RTA (Real Time API) system for accurately controlling the target audience for advertising.

Why can this system be called the drip irrigation system in the advertising field? The reason is that it allows advertisers to control the target audience of advertisements in a more precise way, thereby achieving refined reach and improving growth efficiency.

Next, we will take Tencent’s RTA as an example to illustrate how this advertising drip irrigation system works in a refined manner.

4. From traffic to retention - How does RTA effectively improve the efficiency of giants in attracting customers?

If you look at Tencent's financial reports in recent quarters, you will find an obvious trend that advertising revenue is growing rapidly and its share in total revenue is increasing.

There are many driving factors behind this, but one important reason is that Tencent has been exploring new ways to improve advertising monetization efficiency. The RTA introduced today is one of such explorations.

You may have heard of RTB (Real Time Bid) advertising, but what is RTA?

Simply put, it is a lightweight API interface that is grafted onto Tencent's original advertising system and is used to accurately filter traffic.

For example, if Kuaishou wants to place an advertisement on Tencent, the traditional way is for Kuaishou to select the target audience; for example, women aged 18-23 in fourth-tier cities who are interested in movies and TV, and then place specific advertisements to them. However, in reality, users who meet this condition can actually be divided into several categories in terms of composition:

50% are already heavy users of Kuaishou, 30% have Kuaishou but only use it once a month, and the remaining 20% ​​have never installed Kuaishou. Kuaishou, as Tencent's advertiser, actually wants to attract these 30% of low-frequency users and reach 20% of non-users at the same time. Moreover, the advertising materials used to reach these two types of users are different.

To achieve this, general advertising platforms need to upload their low-frequency groups as a data package to the advertising platform, and then specifically select this data package for delivery, otherwise there will inevitably be problems with inaccurate reach.

But there is a problem here. Advertisers are usually very concerned about the security of their data, so uploading data packages is not a perfect way. So RTA was born:

Every time Kuaishou places an advertisement, Tencent will send a request to Kuaishou, asking whether it wants this traffic. After receiving the request, Kuaishou will judge the characteristics of the traffic on its own server, such as whether it is a high-frequency user, a low-frequency user or a non-user, and then decide whether to participate in the bidding. This solves both the data security problem and the problem of refined reach.

Tencent's RTA system has a special appeal to giants competing in existing markets. Kuaishou, WeBank and other companies with close investment ties with Tencent are among the first customers of this system.

Taking Kuaishou as an example, the "K3 Campaign" at the end of 2019 made it extremely concerned about growth efficiency. For this reason, Kuaishou also developed the Kuaishou Express Edition; and RTA delivery on the Tencent advertising platform is also an important part of it. Using RTA, Kuaishou can accurately target users and non-Kuaishou users with different frequencies, and then create different advertising materials for different types of users to promote activation at a personalized frequency.

Ultimately, the next-day retention rate in Tencent’s advertising system increased by 50%, and the effective increase accounted for as high as 90%, truly transforming the advertising “traffic” into “retention”.

Yes, Tencent's new advertising system is indeed very attractive to the giants, and the new delivery method of RTA has gradually gained wide recognition in the industry, especially in the field of short videos. More and more players are embracing this drip-irrigation growth path.

After all, retention is far more important than traffic, and growth is the bottom line!

Author: Wei Xi Zhi Bei

Source: Weixizhibei (ID: weixizhibei)