Click to read the original for details All business value is based on user value; traffic has no value to users and can only be monetized when attached to products. -01- Changing the Game Alters Supply and Demand A group of tourists encountered robbers. The robbers said: Congratulations, you've caught the robbery dividend. We've introduced new robbery rules: the first to pay pays only 100, the second 200, the third 300, and so on. Don't miss out; pay early and save more. So people rushed to pay, pushing and arguing. The robbers began to maintain order: "Hey big guy, don't cut in line. You in the green, don't push forward. Elderly and children, come over here. Watch your step, be careful." Suddenly, order was restored. The robbers then launched a "Robbery Pass" service. Tourists who purchased it enjoyed VIP treatment, not only getting a discount on this robbery but also a "half-price second time" on the next. With so many people queuing, those at the back grew anxious, and the impatient shouted: "Hurry up! Are we going to be robbed or not?" To save tourists' time, the robbers introduced "Queue Express": for 200, you could pay directly. The robbers used big data algorithms to calculate your queue number and payment based on your location. Such convenient and thoughtful services won praise from tourists. The first tourist to pay was thrilled: "Great, I only paid 100 and got so much exposure." The 40th tourist was also delighted: "Originally I needed to pay 4000, but since I got the Robbery Pass last time, I got half price, plus VIP discounts, so I only paid 1500. They even gave me this Queue Express for free." Later we learned that the 40th tourist actually spent 1800, with 300 taken by "Robber Six," who served him exclusively. This is called: changing the game changes mindset, and mindset changes supply and demand. In 1998, Qinchi's "CCTV Bid Champion" incident scared all Chinese companies. In the following years, Chinese companies avoided CCTV: investing in CCTV was burning money, courting death, and a precursor to bankruptcy. Of course, we now know that CCTV's value was severely underestimated then; its price was actually lower than property prices at the time. If you calculate customer acquisition cost, CCTV ads then cost only about one or two yuan (roughly). But under severe negative public opinion, "mindset changed supply and demand," and CCTV's advertising business was at its worst in years. The person who fundamentally reversed this was a controversial leader surnamed Guo. Guo also started with changing the game. To change the game, you must first change concepts, or "brainwash first." The first core concept Guo proposed was "Media is a strategic resource for enterprises." Originally, they begged companies to advertise; advertisers were the clients, the money bosses. Now it changed: this is a unique strategic resource, only here, no other. From now on, I am the boss. Isn't that magical? Isn't that brainwashing? The next move was a combination: selling resources (ads) while holding promotional meetings, one hand for Annual Economic Person of the Year, the other for the 315 Gala, left for hard ads, right for PR. This combination quickly made companies comply, and CCTV's performance soared, with ad revenue climbing from billions to 20 billion. After Guo fell, "Annual Economic Person + 315 Gala" was called "Guo's Red and Black List," a carrot-and-stick package. -02- Internet Platforms Are All Advertising Companies Let's first familiarize ourselves with a basic business concept. Business is about buying and selling: for every seller, there must be a buyer. Consumers buy specific products, such as food and beverages, clothing, houses, building materials, equipment, raw materials, or services like healthcare, education, consulting, tourism, etc. We collectively call these "goods," and those who produce or provide them are "goods owners." For goods owners to get consumers to buy their goods, they need to solve two basic problems: one is to make consumers able to buy, which is the sales channel—such as supermarkets, specialty stores, trade shows, e-commerce, personal selling, etc.; the other is to make consumers aware, which is the information channel—such as TV, newspapers, the internet, communities, word of mouth, etc. This is the so-called logistics, information flow, and capital flow, which constitute the basic elements of business. Around them are government, finance, and service institutions for the "three flows." Among these, some institutions have contact points with consumers, such as media, terminals, e-commerce platforms, and social platforms. Their volume of contact with consumers is called traffic. Traffic is divided into commercial traffic and information traffic. These institutions are traffic owners. Consumers don't need traffic; they need goods. Consumers certainly won't pay for traffic; they only pay for goods. So traffic owners can only monetize by going to goods owners and earning money by selling traffic. The traditional way to sell traffic is simple: advertising. Media earns money through advertising. Since media must maintain an image, selling ads is left to advertising agencies. Supermarkets charge entry fees, then DM fees, end-cap fees, display fees, anniversary fees, etc., which are essentially advertising fees. This game clearly didn't satisfy traffic owners. Either they kneel to earn money, calling goods owners "daddy," like advertising agencies, or they stand but don't earn money, like traditional supermarkets, which have been declining in recent years. So new traffic owners began to change the game. Like the former CCTV ad director, they started with brainwashing concepts, such as: "The essence of business is traffic." Think about it, isn't that similar to "Media is a strategic resource for enterprises"? With "disruptive concepts," internet platforms began selling you various dazzling "traffic packages" centered on traffic as the core resource. Juhuasuan, Zhitongche, Double 11 and 618, Chengyintong—these are routine. More provocative are "New Retail," "Platform Empowerment," "Integration of Brand and Effect," "Social E-commerce," "Livestream Selling," etc., which are ways to sell ads while brainwashing. Saying "selling traffic" is polite; more accurately, internet platforms wave the banner of traffic, and wherever they point, goods owners follow. Whatever position they demand, you comply. They dig a pit, and you fall in, even paying a "pit fee." These large internet companies are actually "advertising companies" under the guise of "platforms." To judge a company's essence, don't look at what it promotes; just see where its money comes from. Don't overcomplicate it. The relationship between our physical enterprises (including distributors) and platforms is essentially "goods owners" and "traffic owners." But unlike before, they used to coax us to advertise, calling us "daddy." Now they've changed the game, wanting us to call them "daddy." -03- Traffic Matters Only to Traffic Owners If you're a fruit farmer and ask an agricultural expert how to pick more peaches, If the expert tells you that your harvest depends on how many peach trees you plant, how many fruits each tree bears, and how many of those are qualified, so your harvest = number of trees * fruits per tree * qualification rate, You'd think he's treating you like an idiot and want to hit him with a hoe. Because you know the key to harvesting peaches is planting trees, pruning, fertilizing, watering, and spraying pesticides, not staring at the peaches. Staring at the thermometer won't cool the room. Staring at the speedometer won't make you drive faster; you need to steer, brake, and accelerate. But when the same problem is applied to enterprises, many bosses and marketers make the same mistake. The traffic logic of "sales = traffic * conversion rate * average order value" and the business brainwash that "traffic is the essence of business" are rampant here. If you're an internet platform, a traffic owner, of course you should tout the importance and greatness of traffic. But if you're a physical enterprise, a distributor, a goods owner, joining the hype is just making noise, like leeks praising the sickle, ducks praising Quanjude, or Niu Er praising Yang Zhi's family heirloom sword for being "lethal without blood." The more traffic is hyped, the more expensive it becomes, and the worse for you. Steve Jobs never emphasized "traffic"; he emphasized innovation, design, and compelling products. Lao Gan Ma claims to never advertise, yet still beats "Tencent"; Huawei and BBK, which are strong in marketing, emphasize customers; Sister Dong, the top livestream seller, always says "product quality comes first." Truly successful top e-commerce players don't pay much attention to platform traffic games. Sell what you tout; goods owners should emphasize the importance of "goods" and consumers, not look outward. Physical enterprises must know: all business value is based on user value; traffic has no value to users and can only be monetized when attached to goods. Traffic helps monetize your goods, not that you buy traffic and use your goods to monetize traffic. Traffic is not the essence of business, just as media is not a strategic resource for enterprises. Traffic belongs to traffic owners; all the games around traffic are extremely important to them. Goods are yours; all the technology, demand, quality, design, and communication around goods are your foundation. If all physical enterprise bosses and marketers could understand this, traffic would return to its true value, and buying traffic would become cheaper. Perhaps we could even become true clients again when facing internet platforms. Source: Laomiao Tears Marketing (ID: yiheyingxiao), Author: Miao Qingxian