Will new media face more difficulties in 2019?

Recently, many friends have asked me: "What will be the prospects of the new media industry in 2019?" Many organizations have already made predictions or forecasts, and many people want to hear what I think. I guess it may be related to the recent adjustments and ups and downs in the Internet sector.

Nowadays, it is becoming increasingly difficult to attract traffic, increase followers, and monetize self-media or APPs, and more and more "black swan" events are occurring. Leading companies such as Zhihu, Smartisan Technology, and even Meituan, JD.com, etc., have begun to adjust their staffing. The industry is filled with worries, and many people are beginning to feel anxious...

If this trend continues, will 2019 be a "difficult" or "anxious" year? I have two points to make here.

Specifically, I would like to elaborate on my views on several aspects.

1. Capital moves faster with traffic, and the trend will target vertical KOLs

Judging from the big trends, it is indisputable that the "traffic dividend" is close to exhaustion. Combining data from all parties, we can see two trends.

1. The number of new users has dropped sharply

In recent years, the total shipments of domestic smartphones have shown a significant decline, and PC shipments have not increased in the past few years. However, smartphones and PCs are the main carriers of the Internet.

2. User time is approaching its peak

At present, the average time that adults in China spend on digital media is close to 6 hours, which is close to the limit and it is difficult to see any significant increase.

As long as you swipe the interface of your mobile phone, the world will whiz past your eyes. The flood of information brought by various apps and self-media has caused your and my time and attention to become increasingly insufficient.

In today's era of "scarce attention", Weibo, WeChat, Toutiao and various new social apps are all trying to meet users' needs for obtaining information and consuming content. Then, users stay here longer and stay in other places less.

It is difficult to have a significant increase in new users. What are everyone competing for at this point? In fact, it is a competition for user time. Traffic is user time.

The competition for traffic among domestic Internet companies has mainly gone through the following three waves.

Before 2012 was the first wave , when traffic was concentrated in the hands of giant companies like Baidu, Sina, Tencent, and NetEase. If you wanted to do online marketing, you had to place advertisements on these websites and then get traffic.

At that time, the expansion model of many giant companies was: the first step was to spend money to buy traffic; the second step was to provide subsidies and raise funds to see who could subsidize more, raise funds faster, and have a larger layout; the last step was to merge and monopolize to achieve profitability. This model is difficult to replicate today because the value of traffic has increased 10 to 20 times compared to a few years ago, and the first step of buying traffic is stuck. And even if you buy traffic, it’s not easy to maintain it.

The second wave was from 2012 to 2015 , when some new leading Internet companies emerged, including WeChat, Weibo, Kuaishou, and Douyin, which began to disperse a considerable amount of traffic to individuals, such as personal Moments, WeChat groups, Weibo accounts, or Douyin accounts. That Weibo era was also the time window for Xiaomi's rise. Xiaomi really made good use of Weibo traffic in a commercial sense, not only building its brand, but also doing publicity and customer service, while also accumulating fans.

The third wave began in 2016. Traffic gradually concentrated in the hands of individuals (Internet celebrities, opinion leaders, and self-media people). Capital began to actively enter some leading self-media people (such as Papi Jiang), and angel investors began to target individuals as investment targets. This was unprecedented.

I believe that 2019 is still in the third wave of traffic competition. The core position of KOL (Key Opinion Leader) in traffic aggregation and commercial monetization will be further consolidated. For example, KOL marketing has become a mainstream method in the beauty and cosmetics industries and has become an indispensable brand channel.

In 2019, the "traffic dividend" will undoubtedly continue to dry up, but there is no need to be pessimistic. The continued spread of the "boiling water effect" will enable the top KOLs to continue to enjoy the "traffic dividend."

What does it mean?

In the past, WeChat had a slogan: "No matter how small an individual is, he or she can have his or her own brand." This is actually not a good thing for new media business. Because a large number of "small individuals" disperse the traffic, and only when the traffic is concentrated can it have commercial value. It's like boiling water. If the water is not boiled to 100 degrees, it is a waste if it is boiled to 95 degrees. If it is only heated to 95 degrees, the heat will be gone as long as you stop heating it; if it is heated to above 100 degrees and the water boils, as long as you maintain a low heat, the water can continue to boil - this is like the cohesive effect that KOLs have on their fans.

Because this "boiling water effect" is at work, social marketing will continue to "transition from pursuing traffic to pursuing vertical KOLs." In 2019, brands will increase their investment in professional KOLs (experts in specific fields). They have a high degree of trust from fans, and have a clear positioning and a fixed tone, which can help brands better position their users.

In 2019, there will still be many opportunities for vertical self-media, and the best era for leading self-media has passed. There are already enough leading self-media, that is, those self-media with great influence. It is very difficult to create another one like this. In comparison, self-media in vertical fields has gradually opened up development space, such as tourism, parenting, study abroad consulting and other vertical fields. If done well, the potential is immeasurable.

2. In 2019, the “fast variables” of new media business decreased, while the “slow variables” increased

The development direction of new media business in 2019 is jointly determined by "fast variables" and "slow variables". In my opinion, we should pay more attention to "slow variables" in 2019.

Just like the waves on the sea, when the wind blows the waves are high. The wind is the "fast variable" and the waves are the result. From variable to result, it is a very quick process. But where does the wind come from? Is there necessarily wind for the waves to rise and fall? no. The slow celestial movement between the moon, the earth and the sun is a "slow variable" that causes climate changes and tidal fluctuations, but few people notice this slow process.

1. What are the “fast variables” of new media business?

For example, in 2018, only a few giants such as Weibo and Toutiao were able to seize the new trend of short videos. The rapid rise of TikTok was a surprise in 2018. When TikTok was first launched, the outside world questioned whether it was a copy of the North American music short video social platform Musical.ly. Unexpectedly, Toutiao directly acquired Musica.ly for US$1 billion and merged it with TikTok. Soon, TikTok exploded in popularity, with the international version of TikTok ranking first in the world in terms of downloads on the Apple App Store.

The rise of Tik Tok has seized the “fast variable” of short videos + vertical screen. Shorter videos mean more frequent stimulation and more intense moments of pleasure. The change from horizontal to vertical video display provides a new user experience. This trend comes very quickly, and to keep up with the pace requires a lot of vision, speed and strength. Therefore, only giants can grasp this kind of "fast variable".

2. What are the “slow variables” of new media business?

For example, in the new media field, "user sinking and the rise of earthy content" is not a trend, but a "slow variable" that can last for a long time. The process of influence is not fast, but once the breakthrough point is grasped, the explosive power will be very strong. At present, the "traffic dividend" is still continuing in third-, fourth- and fifth-tier cities. Consumers in China's third-tier and below cities account for more than 70% of the country and contribute 60% of China's economic growth. Social e-commerce companies such as Pinduoduo and Qutoutiao are typical examples. Instead of taking the high-end route, they have extended their tentacles to third- and fourth-tier cities. Among them, Qutoutiao was successfully listed in less than a year, and the platform’s daily active users exceeded 30 million per year.

At the Sina V Influence Summit in 2018, many of the most active V influencers were in the seafood and earthy business, and their “earthy” and “marginal” content attracted fans very quickly. I feel that the new internet celebrities in 2019 may become more grassroots and earthy. There are two reasons -

(1) At present, the "traffic dividend" can still be continued in third-tier and lower-tier cities, but content production (and e-commerce products) must adapt to the needs of the local area, that is, grassroots and local;

(2) Audiences have become aesthetically fatigued with traditional stars. The refined, idol-like temperament of stars is all the same. On the contrary, the earthy and grassroots styles that have been ignored for a long time bring more novelty.

In the coming year, self-media and social e-commerce will lead to further downward flow of traffic. This process will not be quick, and there are many opportunities that ordinary people can seize.

When facing "fast variables", you have to get to the top of the momentum as quickly as possible . Many times, performance is achieved through resources. If you are a step slower, you will lose at every step. Facing "slow variables" puts greater pressure on layout and strategy , and sometimes it is necessary to redefine new media traffic by "surrounding the cities from the countryside". In addition, these new changes that affect the new media industry ecology in 2019, whether fast variables or slow variables, will be dominated by the platform, and KOLs will be "passive beneficiaries."

All self-media rely on platforms. In the future, the number of platforms will definitely decrease, and only a few will be left. For example, there are three or five live streaming companies, and currently there are only two content platforms: Weibo and WeChat. There must be differences between them. The platforms providing content should not be too fragmented, otherwise it will not only increase costs but also lead to unconcentrated traffic. The platform gets the greatest benefits here, just like a city developer. Self-media people come in to rent shops to run their businesses, and the platform connects the self-media. The business territory cannot be divided into smaller and smaller pieces, it will definitely be integrated.

Therefore, there will be a reshuffle of platforms in the coming year.

3. Commercial realization, who will be the final winner?

In recent years, the new media industry has attracted a lot of capital and practitioners. Many people want to know whether this industry is profitable or not, and who will be the final winner in the coming year?

My answer is very clear: those who survive in the end are the winners.

You enter this industry as a content producer (KOL and internet celebrity), as an MCN (bringing more operational experience and advertising orders), or as an e-commerce person, etc., and the ultimate goal is to gather traffic and realize commercial profits. But I am sure that 90% of those who enter will not survive for long. Here, I would like to briefly talk about the entry logic and clearance logic of this industry.

1. Entry logic

Between 2016 and 2018, due to the overheated economy, many MCNs received a lot of investment, but when they settled the accounts at the end of the year, they did not make a penny.

The logic of VC and PE institutions is “don’t miss out”. For example, if they invest in 100 companies and two of them become Uber or Airbnb, then they win, even if they get 98 wreckages in return. But the premise is that they don’t know who will be the ultimate winner among these 100 companies, so no one will be missed. You don't know when lightning will strike, but be there when it strikes.

As a result, countless VCs and PEs have invested in countless startups. Even if 98% of the money is destined to be wasted, they would rather make a thousand wrong investments than miss out on one, fearing that the one missed out will determine the success or failure of the entire investment.

However, for new media startups, no matter how much money you get, if you don’t have your own loyal fans on social media and your own traffic conversion, the money will be of no use to you and may even be a burden.

2. Clearing logic

In the next one or two years, there will definitely be an industry reshuffle, and 90% of the players will be eliminated. Those MCNs that fail to make a profit, and individuals who do not make a profit, will be eliminated in this arena.

From the perspective of capital, when there is a lot of money in the market, the operating efficiency of many companies may not be that high, but the huge amount of capital can make up for many operational gaps. But in the long run, operational efficiency is the key to entrepreneurial success. Capital is smart money and will not wait foolishly for improvements. It will definitely make adjustments and shifts in a timely manner.

From the customer's perspective, in the coming year, under normal economic conditions, companies will be very concerned about every penny they spend. When companies care about the effectiveness of their spending, truly valuable MCNs and self-media people will be able to achieve smoother commercial realization.

Now, many people are discussing the downward trend of the macro-economy and the reshuffle and adjustment period of the Internet industry, and they can't help but express pessimism. I think adjustment is a good thing. It washes away the bubbles and helps you clear out your competitors.

Every MCN entrepreneur and every self-media creator should think more before creating every day: how can I earn an extra dollar a day to keep myself alive, how can I create content that satisfies my fans, and how can I do my career well with peace of mind on a good platform.

Source: Li Meng (ID: imslimeng)