Weibo layoffs, sinking or new life?

Wen | Pai Finance, written by Wang Feishu |, edited by | Pai Gongzi

Weibo, which is good at hot search, also tasted the taste of being on the hot search this time.

Recently, the topic of "Weibo layoffs" has landed first in the pulse heat list. On the pulse, some users who are certified as "Sina Weibo employees" said that Weibo is "dissuading" employees on a large scale, and last year's year-end bonus was used for layoffs. According to the news, the number of layoffs on Weibo may be as many as hundreds of people, and soon, this news rushed to the Weibo hot search list.

In fact, since the end of the year, the layoffs in the Internet industry have been continuing, Xiaomi, Zhihu and other companies have been rumored to lay off employees, but unlike other enterprises, Weibo's layoffs are more concerning, one of the important reasons is Weibo's operating conditions and living environment.

01 "Cryptic" layoffs

For this layoff, programmer Li Kun (pseudonym) actually had a premonition.

In the optimized employee group, Li Kun said that the performance appraisal at the end of last year was "inexplicably" hit the lowest grade, did not get the year-end award, and was dismissed for it. Similar to Li Kun's situation, many Weibo employees on the pulse said that their performance was also D, which means that layoffs have been nailed down.

On the day the news broke, the WeChat group formed by the "optimized" employees had reached more than 200 people. In the group, some employees said that in this round of optimization, the staff will be laid off in batches according to the length of service, and the working age of one year and two years is within the scope of optimization, not only that, the core department known as the "lifeline" has also been optimized. According to internal employees, the layoffs on Weibo will be as high as 7%-15%.

However, Weibo officials did not recognize the layoffs.

The relevant person in charge of Weibo said: "The company took stock of the business at the beginning of the year, in order to strengthen the advantages of the field and business focus, the adjustment of some organizations, in this adjustment, the company gave priority to the transfer and placement of the employees involved, and negotiated the termination of labor relations without suitable positions, and there was no layoff. ”

Obviously, this statement cannot be recognized by the outside world, especially in combination with the current survival status of Weibo, the above statement is obviously suspected of concealment, and behind this is actually Weibo's unoptimistic performance and capital market performance.

On December 8, 2021, Weibo picked an auspicious day to officially land on Hong Kong stocks, but unexpectedly, the first day of listing broke, and the stock price closed at HK$253.4 on the same day, a decrease of 7.1% from the issue price of HK$272.8, and by February 23, it fell to HK$232, a drop of nearly 15%.

Looking at the U.S. stock market, by the end of 2021, the U.S. stock price of Weibo is only $28.83, with a decline of nearly 30% for the whole year, and if the timeline is extended to 2018, the decline in Weibo U.S. stocks in 2018-2020 is 43.52%, 20.67%, and 11.56%, respectively. From the highest share price of $142.12 in February 2018, Weibo's U.S. stock price has fallen by 77.5% in four years.

Of course, the biggest reason for such stock price performance is due to the weakening profitability of Weibo.

According to the third quarter of 2021 financial report, Weibo's revenue in the third quarter of fiscal 2021 was US$607 million, an increase of 30% year-on-year; net profit and attributable net profit were US$210 million and US$182 million, respectively, which were also significantly improved from the same period last year. But this is not the norm of Weibo, if the observation timeline is lengthened, performance instability is the biggest label of Weibo performance.

The data shows that for the whole of fiscal 2020, except for the fourth quarter of the year-on-year increase of 9.7%, the remaining three quarters all showed negative year-on-year growth. Even in fiscal 2021, the year-on-year growth rates of 41.9% and 48.3% in the first and second quarters, respectively, the year-on-year growth rate of Weibo's revenue in the third quarter has slowed down again.

Not only revenue, but also Weibo has a similar dilemma in terms of profit margins. At present, Weibo's excellent performance in the third quarter of 2021 is more like an accident. The quarterly growth rate of net profit by 442% year-on-year and 124% sequentially was a surprise. But before that, Weibo's net profit has been negative year-on-year growth for 4 consecutive quarters, and the overall growth curve is very sluggish.

Looking at the performance of user data, according to Weibo's 2021 third quarter report data, as of September 30, 2021, Weibo's monthly active users reached 573 million, an increase of 62 million year-on-year, of which mobile users accounted for 94%, and the number of daily active users reached 248 million, compared with 225 million in the same period last year, a net increase of 23 million, an increase of 10.5%, which is a new high in the past six quarters.

However, even if the increase in the number of users in the third quarter is very considerable, and hit a new high in the total amount, this growth rate has not significantly boosted the performance of revenue and profit. At the same time, Weibo's user data performance is not stable, from 2018 to 2020, Weibo's monthly active users were 462 million, 516 million and 521 million, the growth rate plummeted from 12% to 1%, and the daily active users were 200 million, 222 million and 225 million, and the growth rate also fell from 11% to 1.3%.

It is worth mentioning that Weibo's excellent performance in the third quarter of 2021 is largely attributable to the Tokyo Olympic Games. According to official data, during the Tokyo Olympic Games, weibo had 383 million discussions and 1.533 billion interactions on the whole network, contributing nearly 3,500 hot searches, which was far more popular than expected.

This sports event has greatly improved the number of users of Weibo, but from an objective point of view, how much of this data can be precipitated into long-term users of Weibo, and how much commercial conversion can be brought to Weibo, it is still difficult to make a conclusion.

Therefore, from a long-term point of view, Weibo's performance and the number of users have entered a rather unoptimistic stage, although in the short term has achieved a fairly good performance, but in the long run, Weibo is still in a downward range. I believe that Weibo feels more strongly about this, so the recent layoffs have to be quietly carried out under the cover of Internet peers.

02 Self-regurgitation

So, as the only platform in the Chinese Internet world to benchmark Twitter, after the blood battle against Tencent and NetEase, why did Weibo, which has no difference in scenery, fall into the quagmire of profitability?

The root cause stems from the problem of Weibo's own positioning on the one hand, and on the other hand, it is due to changes in the external environment.

In July 2009, seeing the success of overseas Twitter, Sina management decided to make Weibo as a product, and this burden eventually fell on the shoulders of Peng Shaobin, then head of the desktop product business department. Just two months later, Sina Weibo began internal testing, and on September 25, the @, private message, comment, and forward functions were officially added, which have also become the most basic functions of Weibo so far.

Subsequently, with micro-blogs, product forms that support comment forwarding, and a large number of celebrities and celebrities, Sina Weibo gave ordinary users and celebrities the opportunity to interact directly, accumulating a large number of popularity in a short period of time. In April 2011, the number of registered users of Sina Weibo exceeded the 100 million mark, and before that, NetEase Weibo, Tencent Weibo, Sohu Weibo and other old enemies also followed up with the launch of Weibo products.

However, with its first-mover advantage, strong star strategy and stepping on the mobile Internet outlet, Sina Weibo quickly broke through the siege and in fact became the first platform of Weibo in 2013, with the number of registered users exceeding the 500 million mark. Also in this year, Sina Weibo signed a strategic cooperation agreement with Alibaba, and the two sides carried out in-depth cooperation in the fields of user account interoperability, data exchange, online payment, and network marketing, which has a far-reaching impact on Weibo, of course, there are pros and cons. The following year, Sina Weibo deleted the word "Sina" and officially monopolized the industry as a platform.

However, weibo after reaching the peak quickly entered a downward channel, and the "Statistical Report on the Development of China's Internet Network" released in early 2014 showed that in 2013, 22.8% of netizens reduced the use of Weibo, while the use time of Weibo products increased by only 12.7%.

In order to cope with this unfavorable situation, Weibo began to consciously move closer to entertainment, with the purpose of increasing the traffic of the platform through the high attention of celebrities, and then obtaining more commercial benefits. In 2017, there were relevant statistics showing that in the Weibo hot search list, minsheng news, international and domestic political news were ignored on Weibo, focusing on the 50 hot topics on the Weibo list on May 14, it was found that the proportion of minsheng news was zero, domestic political news accounted for 4%, of which "focus on the Belt and Road" ranked third in the list, and the rest of the topics tended to be entertaining.

It is in this atmosphere that in 2016, Lu Han's super talk reading volume exceeded 100 billion, the number of super talk fans exceeded 1 million, and Weibo's super talk and star list became a must for the star rice circle, which brought huge traffic to Weibo and also led to the rapid growth of advertising business.

In the revenue composition of Weibo, the main business income is divided into two parts: advertising and marketing revenue and value-added service income. In 2020, advertising and marketing services achieved revenue of 1.486 billion US dollars, accounting for 87.9% of revenue, in fact, advertising revenue has been accompanied by Weibo for many years, since 2018, advertising and marketing revenue has remained at about 87%, in the first three quarters of 2021, the proportion of revenue of this business further increased to 88.5%.

Over-reliance on advertising revenue has allowed Weibo to go farther and farther on the road of entertainment traffic, and it has become an indisputable fact that traffic kidnapping Weibo has become an indisputable fact. It is also for this reason that there will be an uproar caused by the iQiyi Youth with You 3 "Milk Pouring Incident last year. In fact, long before this incident, central media such as Xinhua News Agency and People's Daily had repeatedly spoken out against the tendency of Weibo to be overly entertaining.

At the third quarter of 2021 earnings report, Weibo CEO Wang Gaofei admitted that in the past year, Weibo's entertainment traffic relied too much on a small number of variety shows and a small number of stars, and the content heading affected the content diversity of Weibo as a social media. He also said that the entertainment industry has long been marketing in the form of content cooperation on Weibo, and is not an advertiser, "the impact on our revenue is not as high as that of other peers." ”

Having said that, it is still necessary to rectify it, especially behaviors such as excessive fan support.

According to the announcement of the State Internet Information Office, the Cyberspace Administration of Beijing imposed an administrative penalty of a total of 3 million yuan in fines in accordance with the law for repeated violations of laws and regulations on Weibo and its accounts in mid-December last year; at the same time, it was revealed that from January to November 2021, the Cyberspace Administration of China imposed 44 disposal penalties on new microblogs, and repeatedly imposed a fine of 500,000 yuan, with a total fine of 14.3 million yuan.

In terms of Weibo, in the third quarter of 2021, the Weibo rice circle special cleaned up nearly 50,000 illegal Microblogs, the Qinglang Action Special Project permanently banned 1175 illegal accounts, and the juvenile protection special disposal of more than 180,000 illegal accounts; at the same time, the hot search rules were adjusted to reduce the proportion of entertainment content, which has now dropped from 30%-40% last year to about 25%, and enhanced the diversification of hot search content.

At the same time, Ali's previous suspicion of controlling public opinion in zhang dayi and other incidents has also received attention from regulatory authorities and the outside world, and at the end of 2021, under the influence of the big environment, the major shareholder Ali withdrew from Weibo. It should be known that Weibo's advertising revenue from related parties has always been an important source of income. From 2018 to 2020, Alibaba, Sina and other related parties accounted for 21.81%, 21.42% and 19.07% of the advertising revenue, respectively.

There is no doubt that Ali's withdrawal will have a very significant impact on Weibo's subsequent advertising revenue. But at present, Weibo, which relies too much on advertising, seems to have no better way to attract more advertising revenue, especially in the current popularity of short videos, Weibo is undoubtedly a passive defensive party. If Weibo has no more effective measures, I am afraid that the future days will be even more difficult.

03 Sit back and wait?

Entering 2022, Yuemou in Weihai, Shandong Province, became the first hit worker to become popular because of the epidemic.

Yue's part-time work to find a child has received a lot of attention as soon as it was reported, although this incident was known to the public after the WeChat Weibo screen was reported by the media, but in fact, he has been using Kuaishou to release relevant information since August 2020, and after being diagnosed on January 20, 2022, he continued to use Kuaishou to find a son in the isolation ward.

In fact, this incident has exposed that weibo's influence has begun to be eroded by platforms such as short videos, and the influence of the platform has long been far less than before, and Weibo has certainly long been aware of this.

Trustdata data shows that in March 2021, the distribution of Weibo users in cities was more than 85% in second-tier cities and cities with third-tier cities and below, of which users in third-tier cities accounted for 51%. On the data alone, Weibo seems to have become a social product that mainly attacks the sinking market.

This is actually an established strategy for the second rise of Weibo after 2017 - sinking and the Internet celebrity economy.

But now, Weibo's sinking strategy is being squeezed by new media forms such as short videos, and the stagnation of advertising revenue is the best proof. According to QuestMobile statistics, as of the first half of last year, short video, integrated information and instant messaging media accounted for the highest share of the Internet advertising market, with Douyin, Today's Headlines and WeChat accounting for 30.2%, 16.4% and 9.7% respectively, ranking in the top three. In contrast, Weibo accounted for only 1.2%, which is a huge gap with the previous competitors.

Data show that since the short video fire, the number of Weibo advertisers has shown a downward trend year after year, from 290 in 2018 to 1.6 million in 2020, a total of 80 in the first three quarters of last year, a sharp decrease of 40% year-on-year.

As the earliest hegemon of the Internet industry, sitting on 570 million monthly active users, why did Weibo fall here?

An important reason lies in the quality of Weibo's traffic. On January 13, 2022, Li Lianglei released the transfer records of her ex-husband Wang Lihong's purchase of water army, marketing number and hot search. The picture shows that Wang Lihongfang spent 6,000 yuan to buy 11,000 comments, 8,000 retweets and 16,000 likes for weibo posts published on September 9, September 10 and September 20, 2021 on three occasions. Wang Lihong, who has more than 68 million fans on Weibo, is still like this, and it is conceivable how the popularity of other large and small V on Weibo is.

In fact, such traffic fraud questions have indeed affected the development of other businesses on Weibo. Generally speaking, relying on hundreds of millions of user traffic, if Weibo can effectively divert traffic when developing new products or businesses, the success difficulty is much smaller than that of other Internet manufacturers, but this is not the case.

Taking the popular e-commerce in recent years as an example, as early as 2014, Weibo set up an e-commerce business department, and also considered combining with Ali's e-commerce business to monetize, but Weibo played a mess.

In 2019, an entrepreneur and partner in Shenzhen spent three years developing several technology products. In the second half of 2019, he decided to start promoting the product to the market, through the introduction of him found the bee colony media known as the head of Weibo, and together with the bee swarm designed a Weibo topic promotion that is expected to be millions of budgets.

In the end, he chose YuHan, who has 3.8 million followers. Subsequently, Zhang Yuhan released a VLOG video advertisement on Weibo on time according to the agreement, and from the data volume, the video had 120,000 views, thousands of likes, hundreds of comments, and more than 100 forwards in less than an hour.

But when he opened the background sales data, he found that the transaction amount was 0, which means that all the traffic is fake. Since then, according to Weibo's own screening of traffic, the Internet celebrity with 3.8 million fans has only 10,200 active fans, and zombie fans account for 99.7%.

The above cases are by no means unique, and false data is everywhere on Weibo. Pai Finance once secretly visited a weibo data merchant on an e-commerce platform, which clearly stated that it only needed 500 yuan to brush the top 10 hot searches in the city with a keyword. Therefore, it can be said that the traffic data of Weibo has become a window paper that can be punctured at any time, and the credibility of e-commerce has long been lost, and it is even more impossible to talk about drainage.

This is also the core reason why Weibo has long realized that it is difficult to rely solely on advertising revenue, but it is unable to make a breakthrough.

In recent years, Weibo has tried to enter the field of live broadcasting, games and other fields; before the rise of short videos such as Douyin, Weibo also launched the built-in application of second beat in 2013, and has also launched products such as small coffee shows, small videos of love to move, puffer fish small videos, etc. In the second half of 2020, Weibo launched a video number plan to motivate Weibo's head content creators to turn to video creation through traffic support and promote the development of video creation ecology; in the development of vertical content, Weibo has also benchmarked the small red book model. The Oasis APP was launched in September 2019.

But without exception, the above moves are ultimately fruitless, and the huge traffic that Weibo is proud of has not poured out any product that can be taken, and the low quality of its traffic is evident.

Returning to the hotly discussed layoffs, this layoff is undoubtedly a throttling measure under the pressure of Weibo's operation, and it also highlights Weibo's helplessness under the uncertain prospects of Internet advertising business. In order to break through this bottleneck, in addition to Weibo continuing to look for new growth points, the improvement of platform traffic quality is undoubtedly the absolute core.

Fortunately, Weibo has already taken action in this regard. According to Wang Gaofei, since last year, Weibo has deliberately reduced the proportion of hot searches for entertainment content, with entertainment content stabilizing at about 25% and intentionally enriching the content ecology. Among them, the fields of games, sports, and life that are closely related to Gen Z users are all key development targets.

However, it is difficult to heal, and Weibo still needs more time and determination to move forward.