Image source @ Visual China
Text | Operations Research Society, author | Wei Yuzhuo, editor| Yang Peiwen, design | Wang Haonan
Recently, there have been some media discussions, Internet advertising has begun to "weaken", and revenue has slowed down.
According to the "2021 China Internet Data Report", the overall revenue of Internet advertising in China is still increasing in 2021, an increase of 9.32% year-on-year, but the growth rate is 4.53% slower than the previous year.
Source: 2021 China Internet Advertising Data Report
These signals and data show that the Internet advertising industry is no longer "growing wantonly", but has entered a "mature period", and the overall environment is becoming increasingly stable.
What is the current state of Internet app advertising?
What causes this?
In this environment, how should apps respond and find new opportunities for breakthroughs?
Today, the operating agency will talk about these issues.
01 Internet application advertising "ice and fire" double day
Today's Internet advertising application environment can be summed up in one word, that is, the two heavens of "ice and fire".
In the Internet advertising industry, there are two main roles - advertisers and traffic platforms. These two roles form a supply-demand relationship with each other:
Advertisers are on the demand side, promoting their own products by initiating purchase demand to the traffic platform;
The traffic platform is the supply side, providing advertisers with traffic that meets the characteristics of the target customer group.
The reason why mobile Internet advertising "cools down" and appears "cold" is related to the change in supply and demand.
First of all, from the supply side, in recent years, due to the impact of the epidemic and industry-related policies, the number of advertisers has become smaller. The decline in the number of advertisers has directly led to a slowdown in revenue growth for mobile Internet apps.
For example, the implementation of the "double reduction" policy in 2021 has greatly affected online education enterprises: K12 education business has plummeted and a large number of layoffs have begun.
For example, with the repeated epidemic situation and the emergence of the "three red lines" indicators, the franchise investment and real estate industry have also undergone violent turmoil.
When these companies are overwhelmed, they need to focus more on their core business and less on advertising.
From the "2021 China Internet Advertising Data Report", it can be confirmed that the above enterprises have changed in "advertising delivery":
From 2020 to 2021, the proportion of education and training advertising fell by 3.5%, and the scale of revenue fell back to the level of five years ago; the real estate category showed negative growth for the first time in five years, and the decline was as high as 47.3% compared with last year.
Source: AppGrowing
Secondly, from the supply side, the value of user traffic on each platform has decreased.
According to the @Aurora push report, more than half of the top 20 app user traffic value is declining.
The reason for the decline in the traffic value of mobile Internet apps is mainly due to the fierce competition for user time and the decline in traffic value.
According to the "Operation of the Internet and Related Service Industries in January-November 2021" published by the Ministry of Industry and Information Technology on December 31, the number of domestic app applications reached 272w.
But the amount of time people spend on the Internet hasn't grown significantly: just 0.7 h in three years, and a large number of apps are competing for limited Internet users' attention.
Source: QuestMobile
Coupled with the siphon phenomenon of "super apps", most netizens will put time on the head app, which further compresses the length of time that most app users stay.
However, the operating agency also noticed that Internet App advertising is not simply "cold" side, some platforms and Apps showed a growth trend, showing "hot".
On the one hand, on the demand side, although the advertiser budget has decreased overall, the growth rate of delivery in some subdivisions has been fast. On the other hand, from the supply side, the platform in the segmentation track field can provide more accurate traffic and help advertisers find the target group.
Taking byte as an example, at the demand-side level, according to the "2021 New Media Content Ecology Report" released by the new list, the average annual increase of Douyin merchants is 1.6 times.
In the subdivision of "e-commerce", Douyin has also performed well in the past 1 year. According to CITIC Securities Media:
In 2021, the level of 250 million daily consumption has been achieved, the turnover of 1,000 billion GMV will be integrated in 2021, and the current growth rate of bytes in 2022 will be close to 100%, and the daily consumption will increase to 400 million, and the transaction volume will exceed 2,000 billion.
Secondly, at the supply-side level, in the segment of "live e-commerce", Douyin can match more traffic for advertisers.
In addition, the operating company also found that the advertising business of some apps with small user sizes also showed a growing trend. For example, a time-managed app that has a 69.16% increase in monthly revenue compared to January 2021
Source: Seven-wheat data
For example, the kitchen app under "National Recipes" has a monthly revenue increase of 13.2% compared with January 2021.
Open these apps and find that their product and service experiences are more "online" and capture a new wave of advertiser demand:
In 2021, the proportion of life service promotion increased by 5%, and the proportion of comprehensive e-commerce promotion increased by 3%.
@Yang Lei, founder of Shark Bookkeeping (a bookkeeping mobile app), made it clear to the Operation Research Agency on the current market environment of "Ice and Fire": "We are not anxious. Focusing on the product is what matters right now. ”
02 In the new environment, how to do a good job of commercialization of apps?
In the face of such a market environment, the advertising of mobile Internet Apps needs to start from the essence and find a new way out.
The operating agency observed that on January 25, @Zhao Qi, the head of the platform of Pangolin (a global developer growth service platform under Huge Engine), sent a Spring Festival family letter "In 2022, how do we break through".
Reading this letter carefully, the operating agency found that it mentioned a core point of view: open up more commercial resources with "advertising resources, content resources, and technical resources" as the core, and promote the ecological prosperity of the entire Internet advertising.
More specifically, app developers want to get out of the "monetization dilemma", there are two solutions: on the supply side, mobile Internet applications should continue to improve efficiency; at the same time, through product innovation, grab the advertiser's budget "dividend".
1) Refined operation, improve efficiency
The business model of mobile Internet application advertising mainly earns the price difference between the amount of buying and selling, that is, the App increases the volume of users (buying volume) at low cost, and then sells the higher price to advertisers (selling volume), thereby obtaining profits.
If the app wants to improve its earning power, it can mainly improve efficiency in the three links of "drainage-retention-monetization".
Drainage link: use data to do channel stratification, buy the right amount.
In the era of rapid growth of mobile Internet traffic, many apps have adopted a "wide cast network" delivery strategy in order to achieve large-scale customer acquisition, and obtain traffic through multiple platforms.
However, the cost of customer acquisition on the Internet is now gradually rising, and if apps still adopt the old method of "rough" delivery, it is obviously not cost-effective.
Therefore, enterprises need to develop a refined delivery strategy to make the money "burned" more valuable.
For example, companies can monitor each channel data, grasp data such as customer acquisition costs and benefits, and calculate the ROI of each channel to optimize the delivery channel. This way, businesses can spend the same amount of money and buy the amount that is really useful.
Retention link: use data to do demand stratification and retention.
If you want to improve retention, you can start in three steps:
The first step is to conduct a refined analysis based on the channel data to distinguish which channel has the highest user value - after the launch, the data of each channel is analyzed:
Is the low user retention due to channel quality issues?
The current product does not match the channel user profile?
What are the characteristics of a high retention channel?
In the second step, after the users who have been drained over match the product, the needs of the users are layered and the content that meets the user's preferences is pushed.
For example, users who drain from the lower kitchen App push life content to them; users who drain from bilibili push secondary or younger content to them.
The third step is to do A/B test for retained users, and constantly iterate, constantly making refined and efficient decisions, and then improving user retention.
Monetization link: use data to do consumption stratification and promote revenue.
In the process of monetization, it is necessary to analyze the content and user portraits of the advertisement, distribute different advertisements to different groups of people, and achieve "thousands of faces".
In addition, it can also estimate the user's ability to pay, layer the consumption of users, and adopt different revenue solutions for different types of users to maximize user value.
For example, for users with high willingness to pay, App can develop an "in-app purchase" mechanism to guide users to spend in the App; for users with low willingness to pay, they can post "ads" in the App for users to watch, thereby increasing revenue.
2) Product innovation to match the needs of advertisers
In recent years, big apps such as Zhihu, Xiaohongshu, and Baidu have begun to add video sections.
The reason behind this is that short video content can not only improve user retention and activity, but also better match the current advertiser's budget and needs.
"Video advertising accounts for more than 50% of the online advertising form, followed by picture advertising. In the second half of 2021, video advertising will be strong, and the proportion will increase significantly, and video advertising will become a key form of advertising for advertisers. ”
The operation agency found that in the pangolin's home letter, it was mentioned that it could provide content resources for developers.
This means that every Internet company that wants to retain users through content and short videos, as well as generate monetization, can more easily build a "small vibrato" in its own app.
For example, a video module is added to the tool software to become a "tool + short video" type App.
At the level of product innovation, many Internet companies have built a product matrix for the needs of subdivided people. For example, as early as 2018, 360 built a rich app matrix.
The benefits of the product matrix are self-evident, and the apps within the matrix can be pushed between each other to expand the total number of users of their own products without spending additional money to buy traffic.
03 Conclusion
In the view of the operating agency, the "decadence" of the industry today is only that the Internet advertising business has finally passed the "explosive growth period" and entered the "stability period" that has really begun to compete in product strength.
On the one hand, users will always have the need to use high-quality products, on the other hand, the demand of advertisers to achieve customer acquisition and growth with delivery will never disappear.
Truly valuable products, efficiency-conscious businesses, no matter what era, can survive.