Source: 当下Tech (ID: dengling40)
After the intensive release of Q3 internet company earnings reports, the halt in growth of traffic advertising has become a hot topic.
In fact, discussing why traffic advertising has stopped growing is no longer important. What matters is that we should discuss what brands should rely on for growth and sustainable development in this situation.
The answer may be: Through valuable differentiation, selecting the right main media channels + coordinating media touchpoints, and adhering to long-termism, are the core elements of building long-term brand equity.
This is the original intention of the author in writing this article: through three brand cases that excel at differentiation and combination strategies, to provide professional readers with insights into the combined approach of "Two Microblogs, One Douyin, One Focus Media" (Weibo, WeChat, Douyin, and Focus Media).
However, we must first confront a problem: do not use the diligence of traffic advertising to mask the lack of brand building.
Internet advertising growth halt? It's just a surface phenomenon!
Recently, leading internet advertising platforms have released their earnings reports. Apart from traditional giants, even ByteDance's advertising growth, which had been astonishing, has stalled.
This indicates that this growth stagnation is not a problem of a single platform or certain ad types, but rather a change in the overall environment facing the industry.
This shows that the era of barbaric growth for brands relying on traffic is over; the market has entered a stage of high-quality development with stock competition, and brand development needs to rely on more refined cultivation and management.
A reference data point: According to App Growing data, in Q3 2021, the total number of ads placed across the internet was 36 million, showing a significant decline from 17 million in July to less than 10 million in September. Moreover, some media have assessed that currently, for those using information flow ads in China, very few can recover costs through ROI.
Additionally, many marketers believe that whatever marketing method is popular should be followed indefinitely. However, Kantar China's latest "Media Reactions 2021" points out that marketers and consumers have different acceptance levels for ads on different channels. For example, influencer content marketing, which has a preference rate as high as 87% among marketers, often leaves consumers indifferent, with a preference rate of only around 10% or even lower.
△ "Media Reactions 2021" from Kantar China
Wang Xing, CEO of Kantar China, also stated: In the era of media fragmentation, the combination of Two Microblogs, One Douyin, and One Focus Media is the core paradigm for brand communication. The interaction and resonance between social media brand seeding (represented by Weibo, WeChat, Douyin, and Xiaohongshu) and brand ignition in daily life scenarios (represented by Focus Media) are the core battlegrounds for driving brand growth.
Valuable Differentiation and Skillful Combination Strategies
On December 1, the People's Daily published an article titled "Striving to Create a Favorable Public Opinion Environment for Brand Building," reflecting the top-level design's foresight on "brand power" and emphasizing the importance of brand building.
Brand building requires a long cycle. Kantar China points out that successful advertising does not necessarily mean immediate results; people should view brand assets with a long-term perspective and adhere to "valuable differentiation."
△ "Media Reactions 2021" from Kantar China
Clearly, heavy investment in traffic advertising does not help form "valuable differentiation." Although short-term data may be impressive, product strength, brand strength, and pricing power have not been positively accumulated.
As a result, more and more brands are abandoning investment in traffic advertising and instead investing in brand advertising, which has a longer payoff cycle.
Mankiw's "Principles of Economics" begins with an important principle: when people face trade-offs, the cost of something is what you give up to get it.
In other words, giving up the short-term sales surge from traffic advertising is the cost, and what you want to gain by paying this cost is the longer-term value return from brand advertising.
So, I stated at the beginning: do not use the diligence of traffic advertising to mask the lack of brand building.
For the similarities and differences between short-term and long-term effects, we can look at research from authoritative industry institutions.
Kantar China's research results show that the mid-to-long-term sales effects driven by brand assets are severely underestimated: Of all sales, 70% occur in the mid-to-long term and are contributed by brand assets; while short-term direct conversion sales account for only 30%.
△ "Media Reactions 2021" from Kantar China
You might ask: I understand the value of differentiation, but there are only a few mainstream core media platforms; how can differentiation be achieved?
The author believes that differentiation can be achieved through various combinations of marketing strategies; selecting the right main media channels + coordinating media touchpoints is important.
This is the original intention of the author in writing this article: through three brand cases that excel at differentiation and combination strategies, to help everyone learn "long-term brand building based on valuable differentiation."
For example, in the cheese industry around 2018, the top four market share positions were all occupied by foreign brands. At that time, the domestic brand Milkground (妙可蓝多) had a market share of less than 3%, ranking fifth. Three years later, in the first half of this year, Milkground's market share exceeded 33.8%, making it the undisputed industry leader.
As cheese is an imported product, domestic brands have inherent disadvantages. How did Milkground turn the tables?
On one hand, it certainly improved product strength. Milkground's chairman Chai Xiu (柴琇) said about the company's philosophy: "Consumer-oriented, with craftsmanship spirit, to make ultimate products. The pursuit of quality is deeply ingrained in the bones of cheese expert Milkground."
On the other hand, it bound with top media for brand ignition to seize user mindshare.
So, in early 2019, the advertisement "Milkground, Milkground, Cheese Stick, Cheese Stick" was launched, lasting 30 seconds, adapted from the well-known children's song "Two Tigers" that several generations are familiar with. It was not only catchy and loved by children but also evoked childhood memories for parents.
This ad was placed on several core media channels, including CCTV-1 Comprehensive Channel, CCTV Children's Channel, and Focus Media elevator TVs. The ad scenes all depicted important moments of parents accompanying their children's growth.
Chai Xiu recalled: "In 2018, our products were ready, and channels were laid out, but we had no way to let consumers know. Later, when consulting Trout & Partners, their experts unanimously believed that the way to ignite a brand and win the category is to concentrate resources and heavily invest in one mainstream channel. Currently, the platform that can ignite 30 million mainstream people is Focus Media, so we focused on Focus Media and invested for three years."
"Facts have proven that through our category education and continuous ignition on Focus Media, consumers have firmly remembered Milkground. In the era of fragmented communication, focusing on centralized media is the way to ignite."
Although foreign brands have launched counterattacks, Milkground has continued to consolidate its terminal influence through Focus Media, not only maintaining its market share lead but also keeping its gross margin in the 40%-50% range.
This effectively proves that long-term effective brand building not only increases sales but also brings higher premiums. In comparison, a certain nut brand that has consistently pursued traffic-based tactics has had relatively low gross margins compared to peers, hitting a record low of 24% in 2020 since its listing, with a net margin of only about 3%.
Is brand advertising really "slow" to take effect? Perhaps in today's information-overloaded era, penetrating users' "blood-brain barrier" through high-frequency repeated exposure requires a certain continuity of investment, but this can leave an indelible mark on user minds and thus have longer-lasting effects.
Moreover, in this way, every penny of your investment is not wasted because it is deposited in the user's mind. Continuous repetition will form high brand momentum and mindshare monopoly, thus forming "brand assets" and giving you that 70% sales return.
The Secret to Enjoying Longer-Lasting Dividends
What is the dividend of long-termism? In romantic terms, when your growth comes from the layout you made two or three years ago, you can fully enjoy the natural and relaxed growth of flowers blooming and fruits appearing.
Brand is the continuous traffic; the longer the time, the lower the cost, and the richer the compound interest of time.
Genki Forest (元气森林) is an unavoidable research subject.
Looking back at Genki Forest's explosive growth today, we can clearly see its two main threads: first, breaking through the market with products and channels, and then relying on brand strength to achieve exponential growth and surge. The two are sequential, mutually supportive, and indispensable.
More importantly, Genki Forest follows a brand growth model rather than a traffic growth model.
Tang Binsen (唐彬森) has repeatedly mentioned that in 2020, Genki Forest mainly invested in Focus Media elevator media and cooperated with Bilibili's New Year's Eve Gala. These major channels are basically brand advertising logic.
Why do this? Because Tang Binsen deeply understands the importance of single-point breakthrough and focus strategy: a 1% penetration in 10 markets is not as good as a 10% penetration in 1 market. Because 10% of consumers in one market will ignite the remaining 90%, and even ignite other related markets.
Bilibili, which carries the spiritual home of young people, is a virtual space that Genki Forest must operate, while Focus Media, which carries consumers' physical trajectories, is the hub for transforming from virtual to real. Therefore, Genki Forest's brand head Zong Hao (宗昊) believes that if you only do pure internet marketing, it is equivalent to being in a long-distance online relationship with users without ever meeting in person.
But in reality, brands need to establish offline cognitive channels in physical space to form real connections and communication with users.
He emphasized: "In the early days, Genki Forest did seeding on internet channels. Since 2020, we began to seek a fast and effective integrated offline communication method, and currently only Focus Media has such characteristics."
It was in this year that Genki Forest's valuation tripled. In 2021, Genki Forest finally officially announced that a new round of financing had been completed, with a post-investment valuation of $6 billion.
The tripling of valuation is, of course, due to multiple factors. But in brand investment, the combination of "virtual and real, from virtual to real" is the key.
Of course, the so-called combination strategy is not necessarily a combination of two advertising channels; it can also be a combination of multiple marketing methods.
For example, Bosideng, which has become very popular in recent years, went from brand aging to returning to the throne of "down jacket expert" representing fashion trends in the minds of the people through continuous brand building over three years.
In 2018, Bosideng, which had diversified but with little effect, began to clearly "focus on the main track and shrink diversification," returning to its main business as the "down jacket expert," shifting from pedestrian streets to shopping malls, communicating the brand positioning of "down jacket expert selling to 72 countries worldwide," and comprehensively strengthening brand building among mainstream consumers in first- and second-tier cities.
Brand building must be based on product strength. Bosideng cooperated with international design forces to launch designer collaboration styles and high-end functional styles, increasing product premiums. On the other hand, it strengthened quality perception, such as using the same raw material supplier as Moncler, pushing product strength beyond Canada Goose. To showcase its quality and tone, it frequently participated in multiple international high-end exhibitions. In terms of channels, it entered core commercial complexes like Wanda and Intime, returning to mainstream channels, while also upgrading terminal visuals, opening large stores and flagship stores to elevate the brand tone.
In channel selection, Bosideng also used a combination strategy.
On one hand, Bosideng's president Gao Degang (高德康) summarized the reasons for brand growth at this year's "National Brand Development Summit Forum": "I firmly believe that the power of brand is the key to breaking through involution. Over the past three years, at every cold and windy moment, on the Focus Media screens at elevator entrances, you could see the heartwarming ad 'For you in the cold wind, Bosideng has worked hard for 45 years.' And with the rise of national brands, 'China's Bosideng' will become 'the world's Bosideng'."
On the other hand, Bosideng also likes media such as airport billboards, believing they can cover high-end business travelers, and according to "signal theory," airport billboards can signal brand strength and have the effect of raising brand momentum.
With a series of combined offensives across product, channel, and marketing, Bosideng truly turned the tables. In fiscal year 2019/2020, Bosideng's revenue exceeded 12.19 billion yuan, with net profit of about 1.2 billion yuan, a year-on-year increase of 22.6%.
Even during the special period of the pandemic, Bosideng maintained growth. Data shows that in fiscal year 2020/2021, Bosideng's revenue reached 13.5165 billion yuan, with net profit of 1.7096 billion yuan, a year-on-year increase of 42.1%.
It is worth noting that in August this year, Euromonitor International, a world-renowned authoritative research institution, certified Bosideng as the world's largest down jacket brand by scale. Since the beginning of this year, Bosideng's stock price has risen by more than 45%, and its market value has surpassed that of "Canada Goose," which it had been benchmarking against, completing a comeback against international brands in three years.
In studying the above brands that achieved good results through combination strategies, it is not difficult to find that they are all confident in the path of long-termism. Therefore, whether their tactics are virtual, real, or a combination of both, the continuity of their actions is long-term.
Moreover, their years of continuous advertising investment have long been deposited as a solid brand asset moat, which is the winning strategy.
This also shows that advertising investment and brand asset accumulation should adhere to long-termism and avoid short-sightedness.
What should be seen more is that brands should not only see the sales rise from short-term marketing but also see the promotion of brand assets for mid-to-long-term sales. The role of advertising is not only to drive short-term sales but also to curb the possibility of homogeneous competitors entering, forming a strong competitive barrier through the "siphon effect."
Are you "watching" me?