Introduction: New-generation elevator advertising, choose Xinchao Smart Screens! Author | Chen Wenshi Reviewer | He Wen Layout | Zhang Yuwei Preface: Elevator media has become an important form in today's advertising industry. With the acceleration of urbanization and the unique attributes of elevators, elevator media has unique advantages in communication effectiveness, target audience coverage, and frequency of exposure, making it a must-have for advertisers. After more than a decade of development, the landscape of elevator media has changed, with elevator smart screens surpassing LCDs and elevator posters to become the top elevator media. Advertising investment in elevator media is growing rapidly During economic downturns, almost all brand managers face a difficult and significant choice: attack or defend, increase or reduce brand budgets? David Ogilvy believed that a brand still in its launch phase could be permanently killed if it stops advertising during this time. Conversely, he advised competitive corporate brands to increase marketing budgets. The Harvard Business Review also argued in its article "Advertising Spending: Growing Market Share" that cutting advertising to maintain or increase current profits is brand suicide. The article further stated that to defeat larger competitors, brand investment must exceed theirs by more than double. Winter is not suitable for war, but the best victories often come from attacks launched in winter. In fact, many international brands with experience in navigating cycles almost unanimously increased their advertising budgets in 2023. Procter & Gamble's advertising spending increased by $453 million in the second quarter; L'Oréal's half-year advertising spending as a percentage of sales increased by 1%; Unilever's advertising support grew by 10%; Nestlé's quarterly advertising support grew by 7.5%, while Hershey's quarterly advertising support grew by 15%. An important question is: where did these brands' increased brand advertising budgets ultimately go? CTR revealed the answer in a report. In the media advertising spending changes from January to September 2023, the overall market grew by 5.5%, proving that many brands increased their advertising spending. Among them, elevator media grew by 19.9%, ranking second among all media, second only to cinema advertising. Notably, internet advertising, which grew by 14.7% against the trend last year, only grew by 0.8% in the first three quarters of this year, far weaker than the overall market. CTR's data reveals several important changes:
Online traffic is facing bottlenecks and is returning offline;
Performance advertising is losing favor among brands due to issues like cost-effectiveness, while brand advertising focused on consumer mindsets is rebounding strongly;
Among brand advertising carriers, elevator media has become the most important brand promotion platform due to its high growth potential. If we take the trouble to count, we'll find that the top ten advertising slogans that have made a splash in recent years were almost all created through elevator media. "WeChat, Weibo, Douyin, and elevator media" is becoming the standard paradigm for building brands effectively in recent years. As the pioneer of the elevator media industry, Focus Media was synonymous with elevator media for a long time. However, in recent years, it has had to face a strong challenger—Xinchao Media. Xinchao Media is a "latecomer" to elevator media, entering the field in 2014, and by 2017 it began large-scale financing and national expansion. Today, it has become the second-largest player, closely following the industry leader. Data shows that as of 2023, Xinchao Media has deployed 45,000 communities and 700,000 elevator screens nationwide. Why did it dare to enter when the industry leader had absolute monopoly? How did Xinchao Media become one of the industry's two giants? In this economic cycle, what role will elevator media play in brand building? Is there a dividend or opportunity for brands trying to make a mark in this cycle due to the major changes happening in the elevator media industry? With these questions, New Distribution visited Xinchao Media's Shanghai headquarters on December 14th and conducted an exclusive in-depth interview with Mr. Zhang Jixue, founder of Xinchao Media. ****A Super Giant Dominates Alone Why did Xinchao still enter the elevator media market? In 2014, Focus Media's revenue reached 7.5 billion yuan, accounting for over 90% of the industry's revenue and profits. Is an industry where share and profits are highly concentrated in a single giant an opportunity or a risk? Many entrepreneurs might not choose to enter such a "red ocean" market. In 2013, Zhang Jixue, who had been an entrepreneur in the media field for nearly a decade, ultimately chose to "take a risk" and "entered the elevator media industry just as the bell rang," despite the dominance of a single giant. Let's briefly review the timeline of major events for Xinchao Media over the past decade. In 2014, Xinchao pioneered the elevator in-cabin smart screen and entered the elevator media track. In 2016, it expanded into first-tier cities: Beijing, Shanghai, Guangzhou, and Shenzhen. In 2017, Xinchao Media received investments from Opple Lighting, Kuka Home, Yuanjing Capital, and Source Code Capital, occupying 100 cities nationwide and solidifying its position as the second-largest elevator media company. In 2018, Xinchao Media received strategic investments from Baidu and 58.com. In 2019, Xinchao Media received strategic investments from JD.com and government funds, and was ranked 224th in the Hurun Global Unicorn List. In 2021, JD.com led a $400 million strategic investment in Xinchao, becoming its largest shareholder. Xinchao Media's valuation reached nearly 20 billion yuan. In 2023, Xinchao Media entered 110 cities, with 700,000 elevator smart screens, reaching 180 million middle-class people daily, ranking first in China in the number of elevator smart screens. Over ten years, Zhang Jixue led Xinchao Media to firmly establish itself as the second-largest player in the elevator media industry, becoming one of the true twin giants. 1) Why enter an elevator media market dominated by a single giant? "In any competitive field, unless the industry space is too small, a single oligopoly cannot exist long-term. If such a situation exists, there must be an opportunity to create at least one more giant," Zhang Jixue believes this is a historical law that cannot be changed by anyone's will. For example, in the instant noodle field, there are the "four major families" of Kangshifu, Master Kong, Longfeng, and Xiangpiaopiao; in the liquid milk field, there are the twin giants Yili and Mengniu plus some smaller giants. Although Red Bull dominated the energy drink market for decades, a "Dongpeng Special Drink" was bound to emerge eventually. The world pattern is the same; it does not allow a superpower to exist long-term. Originally, it was the US-Soviet rivalry; after the Soviet Union collapsed, China was bound to grow into a superpower. The elevator media industry cannot escape this historical law. Therefore, Zhang Jixue judged that when Focus Media occupied over 90% of the market, there must be an opportunity for another giant worth tens of billions to emerge. Zhang Jixue thought it through thoroughly: "One can only accomplish one major thing in a lifetime; I cannot give up such a strategic opportunity." 2) Why will a single-giant market inevitably undergo major changes? For an industry to undergo major changes, it must be driven by multiple powerful forces, not a single force or organization. Zhang Jixue believes that investors, brands, and even property resource providers—all market stakeholders—are actually expecting another industry giant to emerge. It's just that Xinchao's excellent team was chosen by the market. Investors hope for a sufficiently excellent challenger to emerge, expanding the entire industry through competition and creating more investment opportunities. For example, Alibaba invested in Focus Media, so JD.com and Baidu need to invest in a new giant to maintain their strategic layout. Brands also hope for a strong challenger, which would allow them to regain their rightful position as clients in negotiations. Elevator media has become a very important carrier for brand building, and a monopoly is not conducive to brands negotiating prices and resources. This is indeed the case. During the decade of Xinchao Media's rapid growth, the unit price of elevator media advertising continued to decline due to competition. Xinchao's rise has been instrumental in ending the era of excessive profits in the elevator media industry. Zhang Jixue also stated, "The birth and development of Xinchao Media have brought elevator media advertising prices back to their true value, truly starting to reduce costs, which is a great thing for all brands." Of course, property owners also welcome Xinchao's emergence. When two tenants come to rent, there is potential for sustained rent increases. In addition, Zhang Jixue has another important judgment. In 2013, although the elevator media industry was monopolized by a single giant, the industry's output was less than 10 billion yuan, and the coverage resources were only a few hundred thousand elevators. He believed that with the acceleration of urbanization, the future elevator media industry would be a market of 50 billion yuan. "The bell ringing is not the end, but the beginning of the next class. The next class for elevator media is from 10 billion to 50 billion. Five times the growth space, this is definitely an entrepreneurial opportunity worth fighting for." It was precisely because he saw that "another giant would definitely emerge in elevator media" and understood that "everyone is expecting a challenger to appear" that Zhang Jixue decided to enter the elevator media industry. Xinchao used differentiated competition—rather than being better, it's better to be different. At that time, Focus Media mainly focused on office buildings, so Xinchao focused on communities. Focus Media sold framed manual screens, while Xinchao sold internet-connected smart screens; Focus Media charged by package, while Xinchao charged per point. These differentiations allowed Xinchao to establish itself in the industry. "Many people think my decision back then was like a gamble, but it wasn't at all," Zhang Jixue believes that even today, few people truly understand the reasons behind his decision. 3) The secret to rapid growth: using speed to counter scale Before 2017, Xinchao, which grew in the southwest, was not well-known in the industry. After 2017, entering Beijing, Shanghai, Guangzhou, and Shenzhen, Xinchao naturally faced strong competitive pressure from Focus Media. Zhang Jixue summarized, "Focus Media is a very respectable opponent. In several major confrontations between us, we won some and lost some. We were hit hard, but that forced us to become stronger quickly. The most important weapon for Xinchao's growth is speed—using speed to counter scale." After entering first-tier cities, under Zhang Jixue's leadership, Xinchao launched multiple "flanking battles," "surprise attacks," "blitzkriegs," and "public opinion battles." Surprise attack. When Xinchao entered Beijing, Shanghai, Guangzhou, and Shenzhen, it quietly "entered the village." It registered multiple companies, quietly signed contracts for buildings, but did not install or launch. Only when each first-tier city had over 10,000 points did it install them overnight and quickly push them to the market. "In Go, you need two breaths to survive; in first-tier cities, you need 10,000 points to survive. With this foundation, you can't block me or kill me," Zhang Jixue felt that Xinchao's surprise attack was well-executed, carving out a place to survive in the first-tier cities. Blitzkrieg. Only with sufficient speed can one win against a giant. First, rapidly expand the team. At the beginning of 2017, Xinchao had only 1,200 people nationwide, but by the end of the year, it was close to 7,000. A large organization ensured the rapid accumulation of media resources. In one year, Xinchao Media's media resources soared from over 100,000 to over 400,000. Second, rapid financing. Although this significantly diluted the founding team's shares, Xinchao obtained enough "bullets" for the future decisive battle. Starting in 2018, Xinchao entered a phase of aggressive financing, with 9 rounds in one year. In 2019, after JD.com and Baidu invested in Xinchao, the total investment in the elevator media industry was about 6.3 billion yuan, with Xinchao alone receiving 5.7 billion yuan. After rapid financing, the entire elevator media landscape was sealed. Later, Sequoia Capital and IDG also invested in some elevator media companies, but none managed to grow. The Rise of Smart Screens Is the Biggest Change in the Elevator Media Industry Every brand manager knows elevator media, but not everyone can accurately distinguish between the various forms of elevator media and the differences behind them. Simply put, before 2014, there were only two forms of elevator advertising: one was an electronic screen displayed horizontally at the elevator entrance, called LCD; the other was a poster inside or outside the elevator car, called a frame. But Xinchao Media made a major innovation by moving the electronic screen into the elevator car, changing it from horizontal to vertical, and connecting it to the internet. Later, the vertical screen could also be split into upper and lower parts. The vertical screen advertising invented by Xinchao is the third form of elevator media, called "smart screen." It can be said that Focus Media is the inventor of elevator media, and Xinchao is the pioneer of smart screens. So, what are the differences between posters, LCDs, and smart screens? Elevator posters Elevator posters are the earliest form of elevator media, with images but no sound. Their characteristics are large size, exclusive advertising during the corresponding time, and cannot be changed. Installation costs are low, but they require manual maintenance, and replacement costs are high. As for advertising effectiveness, if your product requires sound and scenes to convey, frames are not suitable. Moreover, static ads are easily ignored by users without scene and sound reinforcement. Elevator LCD LCD advertising is a horizontal screen at the entrance of office or residential buildings. The advertising is less mandatory than smart screens inside the elevator car, but the advertising image is better. Except for Xinchao, LCDs are still sold in packages, not allowing point selection, and LCDs in residential and office buildings are sold together. Elevator smart screens Smart screens are the in-elevator media advertising format pioneered by Xinchao, and they were the latest to emerge. Due to the limited space in the elevator car, they use vertical or split-screen formats. The combination of sound and visuals makes the advertising more mandatory to watch, with rich content, almost covering the entire elevator ride. The most catchy advertising slogans in recent years have basically been created through smart screens. As a new generation of elevator advertising, smart screen sales can set user tags based on brand needs, then filter communities and points that match the tag profile in the system, charge per point, and the delivery data can be queried online. This is very friendly to brands. 2024 Elevator Media Situation In our market research, we can find that today almost all well-known brands prefer smart screen advertising when placing ads. Why is this? Zhang Jixue stated, Smart screens are a differentiated innovation. They have been quickly accepted by brand owners due to their high cost-effectiveness, intelligent delivery, and good advertising effects, thus achieving extremely rapid development. Relatively speaking, smart screen advertising is easier to attribute effects to. After a cycle of smart screen advertising, it is easy to compare and attribute whether awareness and reputation have improved, and whether your e-commerce PV, UV, and repurchase rates have increased. Later, Focus Media joined the construction and competition of smart screens, greatly accelerating the development of smart screen advertising. Today, smart screen advertising has become the largest form of elevator media. As the pioneer of smart screen advertising, Xinchao Media still firmly holds the top position. According to data from Digital 100 monitoring, elevator video advertising (elevator TV and smart screens) is the medium with the longest daily average contact time, close to 5 minutes. Today, the number of customers choosing smart screens is more than 3 times that of LCDs. Why? There may be four reasons: First, the number of smart screen terminals is greater than LCDs. Currently, the number of elevator smart screen terminals in China has reached over 1.2 million, more than 3 times the 370,000 LCD terminals, covering more people. Second, smart screen technology is more advanced. Smart screen advertising has achieved digital delivery, supporting precise delivery needs such as tag-based point selection, online ad replacement, real-time monitoring, and effect attribution. Third, smart screen advertising prices are lower. Since elevator smart screens are still in a period of competitive dividends, the advertising price advantage is obvious. It is said that in actual transactions, the price of elevator smart screens is only one-third of LCDs. Fourth, smart screens have obvious advantages in community scenarios. The advertising value of community scenarios is greater than that of office buildings. China has 470 million office workers, but fewer than 70 million work in office buildings. The rest work in factories, hospitals, schools, government, and offline stores. Office workers go home at night, so the number of people in communities is greater than in office buildings. Where people gather, there is value for advertising. Data shows that China has over 1.2 million smart screens, with over 200,000 in office buildings and over 1 million in communities. There are 370,000 LCD terminals, with 120,000 in office buildings and the remaining 250,000 in communities. Surveys have found that LCDs in communities are installed outside the elevator, and people wait for the elevator for only a few seconds, so the advertising effect of community LCDs outside the elevator is small. In contrast, community smart screens are installed inside the elevator and move up and down with people, resulting in longer advertising contact time and more effective advertising. "It can also be said that the cost-effectiveness advantage of smart screens is actually a dividend brought to brands by competition. The unit prices of frames and LCDs have significantly decreased in the past two years, which is also a benefit brought to brands by competition," Zhang Jixue answered why customers should choose smart screens first. New-generation elevator advertising: invest in elevator smart screens "Elevator advertising is not about investing more for better results; there is a methodology for investing in elevator advertising," Zhang Jixue said. When new traffic emerges, those with capability and dividends have brand opportunities, but traffic alone rarely builds a brand. Use private domain to build membership, create the earliest and smallest base, and then expand beyond that, using broad-spectrum media like elevator media to build a mass brand. Elevator advertising is an important medium for igniting brands, but there is a methodology for investing in elevator advertising. It's not about investing more and succeeding. There are four reasons: 1. The product is simply not suitable for elevator advertising. We generally divide products into e-commerce-friendly, e-commerce-neutral, and e-commerce-unfriendly types. E-commerce-friendly products, such as music and games, don't need offline advertising; they can rely on internet traffic. For the other two types, as long as they are suitable for consumption in family scenarios, they are suitable for elevator advertising, especially FMCG products, with a very high success rate. 2. The advertising content is not well done. 70% of advertising effectiveness is determined by content, and 30% by the media itself. If the product's selling point is not accurately identified and the advertisement is not well shot, it's hard to achieve good advertising results. Let's look at some excellent advertising cases: "When it's cold, wear Yaya," "Xibei grassland lamb"... These are all good ads, catchy and easy to spread. 3. The media is chosen incorrectly! Not choosing elevator smart screens to ignite the brand. The effectiveness of media is determined by the coverage and penetration rate of the effective audience. Today, Xinchao smart screens are the key to igniting a brand because they are the new generation of elevator advertising. They have the largest number and cover the most people. There are over 1.2 million smart screens in office buildings and communities nationwide, while elevator LCDs total only 370,000 in office buildings and communities, a 3-fold difference, and they are 3 times more expensive. Let the results speak: in the past two years, almost all brands that have been ignited have primarily used smart screens, such as Yaya down jackets, Maoren tech underwear, Junlebao milk powder, Xiao Kuihua children's medicine, Qimao free novels, David mops, Ying's children's complementary food, Deyou wet wipes... If the budget is limited, choosing Xinchao plus partner smart screens for ignition is sufficient. If the budget is ample, you can add pure office building LCDs. Elevator posters cannot ignite brands because the brain remembers images and sounds. Ads like "This year, don't accept gifts" and "Looking for a job, talk to the boss" are video ads. The role of elevator posters is to display promotional information and QR codes during promotions. 4. The timing and rhythm of advertising are wrong. Don't go all out from the start. First, choose two cities to complete the 0-1 pilot, find the method, and then replicate it nationwide. Building a brand requires 3 years of mind-share occupation to succeed. You must persist long-term; the medicine cannot be stopped, changed, or reduced. If done well, 30-40 million yuan a year can ignite a brand nationwide. For example, when Huang Tian'e, Yaya, and Xiao Kuihua ignited nationwide, they didn't exceed 50 million yuan a year. Otherwise, spending 100 million is a waste. The major changes in the elevator media industry are underway. The exciting entrepreneurial story of challenger Zhang Jixue and Xinchao Media is worth remembering and learning from, and his disruption of the elevator media industry has brought tangible media dividends to brands.