From online to offline, advertising budgets continue to decline!

Well-known self-media complained in the circle of friends that since they can't afford large traffic, they use social networks and call it private domain traffic; since they can't afford KOL, they turn around and create KOC.

CTR Media Intelligence also released a set of data showing that the advertising market fell 8.8% year-on-year in the first half of 2019. Compared with the continued shrinking of traditional offline media, online media also experienced its first decline, with a year-on-year decline of 4.3% in the first half of 2019.

Image from CTR Media Intelligence

In fact, the Chinese advertising market experienced its first decline in 2015. Although declines have become the norm, the market coldness this year has reached a new high.

Three brand clients told us that they were considering discontinuing their Baidu brand zone. A kitchen and bathroom client even put forward a more direct hypothesis: if the search engine budget is cut to zero, what can be done to not affect the current user experience?

The financial reports of media giants are even more obvious. Tencent's Q2 revenue did not meet expectations, despite cutting promotion expenses and increasing investment returns; although Tencent further opened up high-quality media resources and could embed four ad slots in one WeChat article; but it still could not cover up the sluggish growth of its advertising business. This Q2, Tencent's advertising business grew less than 20% for the first time in history.

Focus Media, which claims to cover 200 million mainstream people, has maintained a double-digit decline in operating income for several consecutive quarters. Its net profit fell by more than 70% in the first half of 2019, and it feels the chill of the advertising market every minute.

Even public relations companies are complaining that brands don’t need to hold events anymore. The budget of several million dollars that used to be available is gone this year.

It is already clear that brand advertising budgets are decreasing, both online and offline.

There are fewer ads, perhaps due to structural adjustments in marketing budgets

An advertising budget of 150 million per year is considered a good amount, even though this figure is after 50 million has been cut. For a brand, the 50 million cut may be for a few campaigns, a few sets of OTV and splash screen bombardment. It is difficult to say what impact this will have on the brand’s audience reach and business.

Perhaps, it is because many brands hold similar ideas to a greater or lesser extent, so many 50 million have appeared, and these 50 million added together eventually became a cold winter for the advertising market.

Some people repeatedly describe the coldness of winter, as if if they talk too much, it won’t be cold anymore and they don’t have to worry about the KPIs to be completed; some people quote Zhao Benshan’s words, why is the environment so bad wherever you go, are you the one who destroys the environment? Others begin to pay attention to the other side of the cuts in advertising budgets: where there are cuts, there may be places that are supported.

For example, NIKE's revenue in Greater China has maintained strong double-digit growth for twenty consecutive quarters. However, the impressive performance is not reflected in profits. Its financial report specifically points out that it is mainly due to a large amount of non-advertising marketing investment, such as investment in online direct sales channels such as Tmall and mini programs, investment in enhancing APP member service experience, and R&D investment such as developing China-specific APPs.

For example, a fast-moving consumer goods client told us that the Chinese market has sufficient budget, and they have begun to make some new marketing attempts, such as offline data collection and online and offline data integration projects; for example, user insights and research projects based on data from all parties.

The 50 million advertising budget seems to have been cut, but in fact it has been moved elsewhere.

In a fragmented and even powdered traffic environment, the impact of advertising on users is becoming increasingly difficult to measure; as mobile Internet users grow at a saturated rate and traffic costs continue to rise, the cost-effectiveness of advertising reach and customer acquisition is rapidly declining; on the other hand, the digitalization process has the opportunity to truly connect the consumer journey for the first time, so brands will inevitably stop to consider the value of advertising, and after getting a bunch of CPM, CTR, TA concentration, and N+reach reports, they will start to think about what else they can do after the ad is over.

The overall cooling of the advertising market is certainly related to the economic cycle, but the changes in this cycle are not simple budget cuts, but may indicate a structural adjustment of future marketing budgets.

Where did the money go?

There are at least three notable changes.

1. Digital transformation of brand marketing and brand data management

Ten million dollars of advertising is unlikely to create any splash in an extremely fragmented channel and user environment, but a DMP/CDP (enterprise data management platform) worth several million is at least a feasible test.

A pharmaceutical company in South China that doesn't invest much in digital advertising is determined to collect consumer data and has already selected its suppliers; in the automotive industry, which is experiencing negative growth for the first time, data-based marketing projects are being launched one after another, from Guangben, Volkswagen to BMW.

Although there are many pitfalls in data projects, the general trend is that the number of tenders related to this remains in double digits every month.

The brand's first-party data management platform can collect marketing data from various consumer touchpoints and channels, and to a certain extent help brands to more efficiently deliver advertisements, gain user insights and conduct subsequent consumer operations. The above are the application focuses that everyone is paying attention to, but they are not the only driving force for the project to be implemented.

Image from "White Paper on Chinese Enterprise Private Domain Data and DMP/CDP in 2019"

The marketing departments of large brands often have multiple departments that check and balance each other, or even operate independently. In addition to the corporate marketing department, important business departments may also be equipped with a marketing department that directly controls the budget. In addition, many brands also involve complex supplier and dealer channel management, so data projects without clear boundaries have also become "centralized" on the road to helping brands transform digitally.

In addition to first-party data management platforms, increasingly open third-party data products provide a more lightweight approach: analyzing delivery data by user attributes, determining consumer journeys for re-delivery optimization, and injecting first-party data to improve the overall user portrait. Large brands are already proficient in using the first two methods.

The third-party data products here mostly refer to those produced by media giants represented by Alibaba's Databank (Ali Brand Bank) and Tencent's TDC (Tencent Data Think Tank). In addition to product structure and function planning, the core is the scale and depth of consumer data behind the product.

2. Construction and investment of WeChat marketing ecosystem

A few months ago, an article about a brand stopping updates on Weibo, WeChat and Douyin swept the marketing circle. Brand promotion on WeChat is a bit outdated, but the way brands play on WeChat is no longer just simply updating public accounts.

If we connect the advertising traffic generation systems inside and outside WeChat with brand public accounts, mini-program e-commerce, and CRM, a marketing/business ecosystem that is also closed-loop but more open than Alibaba has been formed.

Image from 36kr

In the WeChat ecosystem, the complete consumer journey is connected from reach, interaction, conversion, and repurchase, or converted to 5A (Aware, Appeal, Ask, Act, Advocate) and AIPL (Awareness, Interests, Purchase, Loyalty).

This year, we have seen wave after wave of luxury goods and beauty brands establishing mini-programs, providing both membership services and selling products. For example, Lancome currently has three official mini-programs that can be retrieved. The main one is the Lancome official website boutique mall, which provides a full range of services including shopping, membership services, beauty consultants, and makeup trials. The other two are the Lancome Honey Enjoyment Box specially designed for the Double Eleven promotion and the Lancome Makeup Room with separate foundation sticks and lipstick trial colors. For atypical consumer brands such as Mobil, consumers also prefer to click on the mini-program to select lubricants based on brand, model, and engine displacement and find the nearest authentic retailer. I have personally tested it and the experience is good.

At the same time, MarTech and marketing automation, also known as Social-CRM products, from the other side of the ocean began to enter the brand's field of vision. Its main application scenario is also on WeChat, automatically capturing the best marketing opportunities in the customer journey and automatically triggering personalized WeChat and website marketing.

Compared with advertisements that cost hundreds of millions, the construction of a mini program ranges from tens of thousands to hundreds of thousands; the price of WeChat S-CRM products is concentrated in the hundreds of thousands, and the renewal product usage fees are also at the same price. Compared with the super high cost-effectiveness of advertising, it has become another reason why brands can "boldly" try it.

Today, the booming private domain traffic is about to come to the end of its life as a concept, but the issues behind it are how to operate, how to interactively convert, and how to retain repeat purchases after spending money on the traffic. These will be the focus of brand marketing for a long time to come. WeChat has a powerful enough closed-loop ecosystem, coupled with increasingly mature lightweight applications, we will further see brands' continued investment in the WeChat ecosystem.

3. Increase in-house marketing team and overall combat effectiveness

The term "client revolution" is a bit harsh, but it makes sense. However, it is unlikely to revolutionize the client's life, but rather the career of some client's marketing personnel. The good days of following the traditional style of looking at creativity, looking at delivery data, and being the main reviewer of the agency are over.

More brand marketers are beginning to take the initiative to seek change.

This year, there were obvious changes in several digital marketing classes taught by Teacher Song Xing in Beijing, Shanghai and Guangzhou: in three years, the proportion of brand parties among the participants increased from 20% to 80%. From brand managers, marketing directors to CMOs, everyone studied together for two days on the weekend.

Fenxi's in-house training business also reached a peak. The most popular courses were "Data-Driven Marketing and Operations" and courses on DMP/CDP enterprise data management and user operations. Not only the entire brand and marketing team came to listen, but the bosses and CEOs sometimes sat down for the whole day.

Some brands take a more direct approach. They first lay off a group of marketing staff, and then send the remaining people to business schools in batches. After one or two years, they become upgraded heroes again.

At the same time, more and more brands have begun to build their own big data analysis and insight teams, and even digital transformation teams. For example, a certain automobile company already has a big data team of hundreds of people; for example, a certain East China manufacturing company has begun to establish an in-house marketing technology team.

Cultivate your inner strength, accumulate your knowledge, spend the least marketing budget, cultivate marketers who stand from the consumer's perspective and have data awareness, and then you will have the opportunity to do the most lasting marketing.

New ways of spending money, new problems

No one denies that user-centric, data-driven systematic marketing is the general direction. Data, WeChat, and talent seem fancy enough and in line with national conditions and trends. However, compared with consumer research, creative production, and advertising, a mature model and methodology have been formed over the past few decades. These new marketing methods, especially those related to data, are new, vague, and lack direct reference objects for any brand. This is a new chapter that troubles everyone.

The original marketing model is no longer suitable for the new digital world. With diversified media and touchpoints, how can we build a unified, continuous and attractive consumer experience? How to make good use of new technologies without falling into the trap of "deception"? In the deep waters of change and with increasing uncertainty, where can we find replicable experience?

Whether there are successful DMP/CDP cases is one of the frequently asked questions, and it is also the easiest issue for brands to understand the value of data projects. Unfortunately, there are none, at least in our opinion.

A data project is not a campaign that can be launched in ten days and completed in another ten days. It takes time to build a data system; it takes time to clean, input and connect the data of various consumer touchpoints; and it takes even more time to sort out the business scenarios and needs in the early stages of the project, but it is often ignored. As a result, the system is built, but everyone in the room has the same question: what is it for?

The launch of the data management platform project is just the beginning; its subsequent operation and use are the key to the project.

How to measure new ways of spending money? What are short-term indicators? How is long-term business growth reflected?

New attempts and new problems require some calm discussions. In late September, Teacher Song Xing will also chat with 20 brand friends about brand data marketing. What are the actual application scenarios? How to measure “effectiveness”? Three places are available. You can read the original text and fill out the form; you can also contact me directly (WeChat: garyoldman, please note the brand + name + position when adding me). Thanks.

There is an old Chinese saying, "If the East is dark, the West will be bright; if the South is dark, the North will be bright." It means that when the enemy is strong and we are weak, the best option is to conserve our strength and prepare for the best opportunity.

As market growth slows down further, there is room for adjustment from marketing budgets to marketing skills that is worth imagining and exploring.

Author: Huang Erdan

Source: Huang Erdan