In 2020, China's two dividends came to an end: the demographic dividend ended, pushing many industries into stock competition; the traffic dividend ended, with traffic costs rising and traffic ceilings emerging. It is foreseeable that a new era of brand resurgence is beginning, where dividends peak and brands battle it out. With overcapacity and stock competition, we are entering the era of consumer sovereignty. Production and distribution are infrastructure; companies with quality production and extensive distribution are undoubtedly the first to enter the finals. Who wins the consumer's final choice depends on who can first establish in the consumer's mind a reason to choose you over others, building brand cognitive advantage and premium pricing power. Without consumer-directed purchases, the market will fall into price wars and promotional battles, and companies will only earn factory profits, not brand excess profits. The easy days are over; the finals have begun. Those who win hearts and minds win the market. Brands will polarize, and the Matthew effect will be evident. In the era of traffic dividends, seizing every traffic opportunity, whether for individuals or companies, leads to success. GMV = Traffic × Conversion Rate × Average Order Value × Repurchase Rate is the basic formula. But in e-commerce, traffic operations (precise distribution, traffic pools, private domain fission, etc.) are important; whether a company truly profits depends on the proportion of traffic brought by the brand itself. The brand is the only sustainable free traffic. Image source: Unsplash After the 2020 pandemic and the peak of traffic dividends, in today's stock competition, how can companies navigate crises, break out of operational difficulties, and achieve growth? How can market leaders strengthen brand awareness? How can new brands enter the market? How to handle niche markets? In his new book "The Dividend of Hearts and Minds" at the start of 2021, Jiang Nanchun, founder of Focus Media, explains the logic of the current Chinese market from his perspective and experience, offering readers his 17 years of marketing experience and the theories and practical insights earned from 100 billion yuan in advertising spend. If you have similar questions and confusions, this book will provide clarity. Image source: Sohu -01- Traffic is only the result of a brand winning hearts and minds Many believe conversion rates depend on price, but they also rely on brand awareness and recognition. The core of average order value lies in the brand's premium pricing power. In today's rising traffic costs, brand trust, reputation, and the emotional resonance or identity it brings to consumers are the sources of brand premium. Only with brand premium can companies outpace the operational difficulties caused by rising traffic costs. On the surface, these are traffic and technical issues, but behind them are brand and heart-and-mind issues. Why does Taobao have traffic? Because in consumers' minds, it is the "omnipotent Taobao"—whatever you want to buy, you can find it there. Why does Tmall have traffic? Because its products are "100% genuine" in consumers' minds, and brand flagship stores can be found on Tmall. Why does JD.com have traffic? Because in consumers' minds, it delivers fast—order in the morning, receive in the afternoon. In the dividend era, many Taobao brands and internet-famous brands emerged, seizing traffic dividends and growing rapidly. But for internet-famous brands to become trustworthy public brands and star brands, and to enter the mainstream and occupy the minds of core consumers, they need a "thrilling" leap: On one hand, they must break out of their niche, entering the mainstream users' view and gaining broad awareness and recognition, rather than being just a brand loved by fans for a time. This is the necessary path for brand growth. On the other hand, they must continuously enhance brand trust and brand momentum. Traffic platforms often have a fatal attraction, leading brands to increase conversion rates through discounts and promotions. Over time, the brand's premium pricing power is eroded, and the profits the brand should have are swallowed by the rising costs of price wars, promotional wars, and traffic wars. Without brand power and premium pricing capability, a company cannot have good profit margins. No matter how strong your precision marketing or traffic operations, you cannot escape the fate of working for the platform. Because your traffic algorithms will never match those of the traffic platforms. -02- Companies need a brand algorithm The key is to "calculate accurately the hearts and minds" How to calculate accurately? I have summarized three methods. The first method is to "push the boss to the wall." Ask the boss to state in one sentence why consumers choose you over competitors. This sentence must be the fundamental reason for your brand's market advantage. The second method is to find the sales champion. The sales champion became a champion because, intentionally or not, they said something right to consumers, mastering the skill to quickly strike a chord. The third method is to interview loyal users. Listen to how they recommend your brand to others. They must have a reason to choose you over others (whether functional or emotional). A brand positioning that wins hearts and minds must be three-in-one: it is your product advantage, your differentiation from competitors, and the consumer's pain point. A correct positioning that wins hearts and minds must be recognized by customers (aligning with their existing cognition), usable by sales (with on-site persuasiveness), and hated by competitors (striking at their weaknesses). With a positioning as sharp as a nail, you need a communication tool as powerful as a hammer to drive the positioning nail into consumers' minds. Over the past decade, especially the past five years, the time urban mainstream consumers spend on traditional media has dropped significantly. They get information from Weibo, WeChat, and news apps, but on their phones, they mainly consume content and rarely notice ads. For entertainment, they watch online videos; urban mainstream consumers buy memberships to skip ads on long videos, and on short videos, they can swipe past ads in a second. So to ignite a brand and reach urban mainstream consumers, only two methods work together: One is massive seeding, doing content marketing on WeChat, Weibo, and Douyin (the "Double Micro One Douyin"), creating content and topics that can be spread and noticed, generating brand social content. The other is scenario marketing, seizing the real, inevitable life scenarios of urban mainstream consumers (such as apartment buildings, office buildings, high-end cinemas) and enclosed spaces (like elevators, cinemas) for high-frequency, forced exposure. From users forming awareness and recognition of the brand in life scenarios, to searching for related information on social platforms, seeing fan notes and reviews, and achieving further recognition, to e-commerce platforms' precise distribution, and finally users making purchases, the content marketing of "Double Micro One Douyin" and scenario marketing represented by Focus Media (hereinafter referred to as Focus) have become the core rules for brand ignition in this era. "Double Micro One Douyin" is one-to-one precise private communication, while Focus is one-to-many public, centralized brand momentum ignition. The two complement each other. Strategic resources should be allocated to leading enterprises that can truly win the market, and to innovative enterprises with ambition and courage. In the future, in mature industries, leading enterprises will continue to widen the gap with peers through sustained and substantial brand investment, forming an oligopoly effect. But if leading brands ignore changes in the times and consumer side, ignore the wave of consumption upgrading, and fail to provide new reasons for consumers to buy, they may be eliminated. -03- Focus on the two basic functions of a company After a brand enters maturity, due to high industry homogeneity, it is easy to fall into price wars, leading to reduced brand investment and a vicious cycle. Or the brand continues to invest, but high awareness does not bring high growth, and brand concentration does not increase. This requires brand repositioning to regain youthful vitality. For example, Bosideng, after in-depth research in 2018, strategically chose to abandon brand extension and menswear/womenswear, concentrating core resources on repositioning as the globally popular down jacket expert—"Focusing on down jackets for 42 years, selling well in 72 countries"—and regained the mainstream market. Similarly, Joeone, as China's number one men's pants brand, extended to menswear after its A-share listing but failed to achieve breakthrough growth in recent years. In 2020, it refocused on positioning as the globally leading men's pants expert, leveraging its 12 million body data points to make pants more comfortable and better fitting, reshaping the brand's reason for purchase. During the National Day holiday alone, it achieved over 40% year-on-year growth nationwide, beginning its path to becoming the global pants king. Brands ranked second to tenth in an industry should dare to change, take the opposite path from the industry leader, and turn the leader's strengths into weaknesses. For example, Feihe, facing many leading international brands, proposed "more suitable for Chinese babies' constitution," winning Chinese users' favor, with annual revenue rising from over 3 billion yuan to 13.7 billion yuan in 2019. The rise of new domestic consumer brands has become another feast in the era of consumption upgrading. The core of their rise is creating and leading new categories, such as Xiaoxiandun creating the new category of fresh stewed bird's nest, and Genki Forest creating the new category of "0 calorie, 0 fat, 0 sugar" fruit-flavored sparkling water. Milkground was not the creator of children's cheese sticks; France's Breguet was, but the category leader did not fully educate and develop the market, taking ten years to reach 1 billion yuan in China. Milkground seized the opportunity of category unawareness, saturated advertising, and ultimately led the market expansion of children's cheese sticks, surpassing Breguet in just two years to become the industry leader, and creating a market worth tens of billions of yuan. Similarly, the melon seed brand ChaCha entered the daily nuts industry with its "Little Yellow Bag" single product, using the window period of lacking brand awareness in the daily nuts industry, saturated advertising, and quickly surpassed peers to become the leader, occupying consumer mind share in this category. "The father of modern management" Peter Drucker believed that a company has only two basic functions: first, to create differentiated products and services; second, to become the first choice in a certain field in the customer's mind through brand marketing. -04- Focusing on the "unchanging" allows us to understand the essence of business and human hearts In recent years, the most popular saying in the industry is "integration of brand and effect," which is actually a false proposition. Brand advertising is a long-term, cumulative effect, while traffic performance advertising pursues short-term effects. These two are hard to integrate. So, I have always advocated "synergy of brand and effect." The biggest weakness of traditional advertising is not knowing who saw the ad, making it difficult to quantify the effect (this does not mean it is ineffective, just hard to measure). Now, Focus elevator advertising has changed this. Focus can feed information back to Tmall's data bank, using big data to analyze who saw the ads, whether they paid attention, collected, showed interest, or purchased. At the same time, online performance ads can be used for secondary reach, generating better conversions. "Brand" and "effect" cannot be integrated, but through data integration, they can be synergistic, and even shorten the time cycle between them. At the same time, which communities and office buildings have more purchase interest and intention for which categories and brands? Tmall's purchase data can in turn guide the precise placement of brand ads. The feedback after placement can help update creative, precisely plan the placement cycle and intensity, and multiply brand efficiency. This market is turbulent, but even more turbulent is the human heart. Countless new terms appear and disappear every day, and people get lost in countless temptations and attempts. Change is important, but what remains unchanged is more important. Most people emphasize the importance of change, while a few grasp the unchanging, as Amazon founder Jeff Bezos said: "I don't know how the world will change in ten years, but I know what will not change in ten years." Focusing on the unchanging allows us to understand the essence of business and human hearts. Embracing change allows us to continuously use new technologies, data, and algorithms to optimize traffic efficiency and connection capabilities. Hearts and minds and traffic are two sides of the same coin; synergy creates greater value. The environment is always uncertain, but your heart is certain. Use certain logic to win in an uncertain market. Drucker said: In a turbulent era, the biggest risk is to move forward according to the original model. "The Dividend of Hearts and Minds" is a collection of Jiang Nanchun's thoughts on brand and marketing in recent years, compiled to share with readers. To help readers better understand market conditions and trends, the author has added valuable content at the end of each chapter as extended reading. Additionally, the "2020 Consumer Brand Growth Insight Report" from Wu Xiaobo Channel provided much help for the book, so the full report is included as an appendix for readers. I hope these viewpoints can inspire readers, help them find a path to break through in the opportunity-filled Chinese market, and win the next decade. Image: Jiang Nanchun's signature on the endpaper of "The Dividend of Hearts and Minds" This article is compiled from "The Dividend of Hearts and Minds: Enterprise Growth Methodology under Stock Competition," written by Jiang Nanchun, published by CITIC Press Group in January 2021. Copyright belongs to the author and the book. Please indicate the author and source when reprinting. "The Dividend of Hearts and Minds: Enterprise Growth Methodology under Stock Competition" Jiang Nanchun's new work at the start of 2021 With traffic dividends peaking and the era of consumer sovereignty, how can brands "calculate" hearts and minds? Written by Jiang Nanchun, chairman of Focus Media 17 years of marketing experience, theories and practical insights earned with 100 billion yuan in advertising spend A masterpiece for entrepreneurs, managers, and marketers Tips will be paid 400-2000 yuan upon adoption