Click to read the original article for details In recent months, the influencer ecosystem on Douyin can only be described as "turbulent"—East Buy had barely risen to fame before being embroiled in controversy over Douyin limiting its traffic; Qudian CEO Luo Min spent over 100 million on live streaming, but was forced to retreat online amid a chorus of criticism; and when people came to their senses, they found that Liu Genghong, who was hugely popular just a few months ago, is hardly mentioned anymore. Opening Xin Dou, the first name that catches the eye as Douyin's top带货 king is an unfamiliar one—Rainbow Couple. This post-90s couple from Sichuan has over 9 million followers on Douyin, but they self-reported selling 200 million yuan worth of goods in a single day. The myth of selling hundreds of millions is just one side of the coin. There are also those who cannot accept the reality of having millions of followers but being unable to monetize them. Knowledge-based creator Lu Kewen publicly questioned Douyin's conversion rate, saying, "300 million followers sold 600 yuan worth of goods, which baffled me." An industry insider told Caijing Tiandi Weekly, "Lu Kewen's product selection was wrong. To achieve good sales results on Douyin, you need to find the right approach." This also confirms a saying: on Douyin, the only constant is "change." Many creators have stated that after June this year, they clearly felt a change in Douyin's traffic distribution. More and more new rules have emerged, and these rules seem to point to the fact that creators need to provide more value to Douyin. Some have gradually realized that to continue playing on Douyin, they must adapt to the new rules. 01 "Getting More and More Involved" "Too involved." When mentioning the current entrepreneurial environment for short videos and live streaming, this is a word most creators will mention. Behind this are environmental changes. Douyin, once seen as a trend, has long reached a traffic bottleneck. Since 2020, its daily active users have hovered around 700 million, with growth hitting a ceiling. While traffic tightens, with an IPO looming, Douyin also has an urgent need to monetize its e-commerce business. "Many people can see that Douyin's incremental space is not large anymore," those interviewed told Caijing Tiandi Weekly. The era of generous dividends has disappeared, and every "sensitive creator" should capture this change. Creator Long Qintian said, "Some players used to only appear on Kuaishou and basically never came to Douyin. But one day, you see them suddenly arrive"—she refers to short video bloggers on the platform as "players" and those from the film and television industry who are good at shooting and editing as "professional players"—"After 2020, those professional players who previously looked down on short video platforms also came to Douyin, and they do it more professionally and better." The "cross-border" entry of film and television companies and MCN institutions has also made Douyin's creators more crowded. On the other hand, as Douyin vigorously developed its e-commerce sector after 2020, the continuous influx of merchants has also become a competitor for traffic to some extent. According to data disclosed by Douyin, the platform has seen 1.8 million new merchants join. Creator Hang Xinghua provided more direct data: in the broad knowledge field he focuses on, the influx of creators has seen an explosive growth of 300%. Douyin's algorithm and recommendation rules are also changing. Earlier this year, the platform tested a "loyal fans" mechanism. "This will also cancel some basic recommended traffic for videos," Hang Xinghua observed. His account data has also undergone significant changes. Previously, his follower count grew in large leaps of tens of thousands, but in the past two months, it has stagnated. The opportunities for videos to "go viral" are also decreasing. "In the past, a video with a 60% completion rate and a 3% like rate would definitely be a super hit with tens of millions of views. But now, (the platform) won't push it to that level all at once; it might just slowly promote it." Image | Visual China As traffic growth slows, revenue is also affected. He cited an example: when traffic was rising, one of his viral videos sold 600,000 yuan worth of goods, and with a 20% commission, he netted 200,000 yuan; but this year, for the same video with 600,000 yuan in sales, he only earned 50,000 yuan. "This year, I clearly feel that organic traffic can't move anymore. We lowered the commission to 5%, and let the advertisers invest in paid traffic for the rest. Although we still sold 600,000 yuan, the profit is actually not high." This made Hang Xinghua sigh: "This year, creators are getting more and more involved, and traffic is getting more and more expensive." A blogger whose main content focuses on business and finance revealed that after more than a year of operation, homogenized content has become increasingly serious. Due to the lack of clear profit models and monetization paths, the account has been paused for over half a year. "Many marketing accounts or accounts that want to harvest traffic are touting that Douyin is the future trend. That's true, but there's a second half to that sentence they don't say: 'Not everyone is suitable for Douyin.'" 02 Big Streamers' Betting Agreements In fact, Douyin is no longer short of good content. Multiple interviewees mentioned this view to Caijing Tiandi Weekly. As content becomes saturated, Douyin has shifted its focus more to traffic monetization. Long Qintian has had an account on Douyin for over three years, with millions of followers. Just in May, a "so-so" video could still get nearly a million views, but only a month later, the situation took a huge turn—80% of the traffic disappeared. "For the same video, it's now hard to even get 200,000 views." Long Qintian speculated that the suddenly "evaporated" traffic was "taken" by super-top streamers. According to information she learned, in June this year, Douyin signed betting agreements with some top streamers. The deal might be that streamers need to achieve a single live stream GMV of 100 million yuan, and the platform would invest 20 million in traffic for them. "These streamers usually invest in traffic themselves. Once they reach the transaction target, they save on traffic fees. At the same time, based on a ratio of 20% or 30%, they can also earn a considerable commission." For brands, they also crave higher transaction volumes, more traffic, and attention. Long Qintian analyzed to Caijing Tiandi Weekly, "(This matter) is difficult," but streamers can join forces with brands to "do it together." On top of the platform's traffic investment, both parties share part of the traffic targets, "so the plan to sell 100 million is achievable." However, she feels that in this internally circulated agreement, the platform's investment of 20 million in traffic is "a bit high." Based on her experience, 10 million is more credible. There are not many streamers who can sign such agreements. "(The platform) can count them on one hand," Long Qintian said after a pause, "including East Buy." There are also reports that this year, the betting agreements for super-top streamers are driven by both the platform and brands, involving both single live stream GMV bets with the platform and single product GMV bets with brands. "In short, traffic is extremely competitive." According to Xin Dou's streamer sales ranking data, in the past July, there were 13 streamers with sales exceeding 100 million yuan. The top three were: East Buy (618 million yuan), Crazy Little Yang (305 million yuan), and Mr. Dong (299 million yuan). East Buy has been at the top for two consecutive months. It sounds like a win-win-win choice. But the cruel part is that "the platform's traffic is limited. The more it is concentrated on super-top streamers, the less it is tilted towards other streamers." Thus, in unseen places, the battle for traffic is even harder. As with the problem Long Qintian encountered, data is dropping across the board. Along with views, the return on investment is also shrinking. She cited an example: before June, the ROI could stay at 1:4, meaning investing 25 yuan in traffic could sell 100 yuan. But in June, investing 100 yuan in traffic could only achieve 100 yuan in sales—resulting in a loss of 50 or 70 yuan. In July, the situation did not improve. She thought, as long as she could invest, even if 100 yuan in traffic fees only generated 100 yuan in sales, it would be fine. But at that point, Long Qintian found that the traffic fees invested in her account were "not being consumed." That is, even when paying for traffic, the platform has higher bidders and better traffic options. "'People' are (the platform's) core. Why should the same traffic be given to you?" Lin Ming described Douyin more directly as a "traffic dealer." She tried to start a business by opening a Douyin account in 2021, but the poor business conditions made her give up and return to being a streamer. Reflecting on this experience, Lin Ming said bluntly, "Every account, from the day it is created, is racing against similar content, and the platform will give traffic to accounts with more value." Long Qintian has not failed to strive to become a "more valuable account." She told Caijing Tiandi Weekly that she was once invited to participate in a single-session challenge activity. In the activity, if a streamer achieved a single-session transaction of 1 million yuan, the platform would give corresponding traffic investment rewards; if not, the streamer would not receive any traffic benefits. It is worth mentioning that just as she accepted the single-session GMV challenge, Douyin also systematically and planned to explore and test potential "sales kings." It is reported that at the end of 2021, Douyin launched a plan to "help 100 super-top streamers achieve a GMV of 10 million." This year, the screening plan continues, with the activity content being "help 1,000 top streamers achieve a GMV of 1 million." Undoubtedly, the traffic intensity has decreased significantly. "Last year, seed players were screened, and this year, they are basically finalized. Many resources, including brand resources, have been concentrated on the top, and such policies will not be given to any streamer casually." "This is an efficient platform," Long Qintian showed great calm and understanding. "If I were the boss of Douyin, I would do the same." The so-called efficiency means clear goals. She analyzed that Douyin creators need to have two abilities: one is to create higher-quality, differentiated content to attract or retain more users' attention, and the other is to help Douyin make money. If they lack these two abilities, creators are not worth Douyin's investment. "(The platform) will always have opportunities, but you only get one chance. If you don't seize it, it's hard to get another." At the end of last year, Long Qintian "couldn't achieve" the single-session transaction of 1 million yuan, and the most direct consequence was, "Eight months have passed, and I haven't been able to wait for such an opportunity again." 03 Efficiency Machine Douyin A person engaged in business operations on Douyin also said, "The traffic pools for Douyin's sales videos and daily videos are different. Douyin now mainly promotes sales videos." According to this year's Douyin 618 Shopping Festival data, from June 1 to 18, the total live streaming duration on Douyin e-commerce reached 40.45 million hours, and short videos with shopping carts were played 115.1 billion times. Another view is that creators feeling the squeeze is essentially Douyin's desire to improve the efficiency of traffic monetization. "Content with better sales performance and better data will definitely get more traffic." This has also led Douyin, while gaining traffic, to continuously try more, such as e-commerce and local life services, with e-commerce always being the top priority. In terms of e-commerce performance, according to Douyin e-commerce, from May 1, 2021 to April 30, 2022, Douyin e-commerce GMV reached 3.2 times that of the same period last year, selling over 10 billion items. In addition, Douyin e-commerce also began internal testing of Douyin Mall this year. The emergence of strategies such as low-priced good products and hundreds of billions of subsidies has also led external comments that it is increasingly like Pinduoduo. In fact, according to its latest data, mall scenarios drove sales up 514% year-on-year, search scenarios drove sales up 293% year-on-year, and the number of participating merchants increased 159% year-on-year. "Traffic is fleeting," in Long Qintian's view, "If a more attractive platform appears, users will leave immediately. From this perspective, traffic does not belong to the platform or creators. But it may be beneficial to merchants, as long as they provide satisfactory products and services." Many merchants use Douyin as one of their operational and traffic-driving channels. A agricultural product merchant also said that monetization and traffic driving are the most important reasons for them to enter Douyin. According to Caijing Tiandi Weekly, currently, high-profit categories such as cosmetics and clothing, or traffic-driving products like small home appliances, are more popular on the Douyin platform. A person engaged in e-commerce coaching and teaching also mentioned the differences between Douyin and Taobao platforms. He believes that opening a store on Douyin will grow faster, but for long-term development, Taobao stores are more "stable." A daily chemical category owner confirmed this view to Caijing Tiandi Weekly. The products she sells on Douyin are mainly "welfare products" and "traffic-driving products," with sales fluctuating dramatically, sometimes only a few thousand orders a day, and sometimes hundreds of thousands of orders. "Douyin is like a roller coaster. High orders today don't guarantee the same tomorrow. Consumer clicks (to purchase) are highly uncertain. If the short video is interesting, sales might suddenly spike." Another women's clothing brand entrepreneur told Caijing Tiandi Weekly that very few of their peers do live streaming. "Forcing yourself to open a store on Douyin and do live streaming is like starting a new company." In other words, you need to consider team and supply chain configuration, and calculate cash flow. "We generally don't try it easily." These women's clothing brands still mainly develop on traditional shelf-based e-commerce platforms like Taobao. A person familiar with Douyin's advertising business said, "How to ensure that brands or merchants can make money on the platform is a more concerning point for internal advertising sales staff. Only with sustained profitability can they better help them stay on Douyin." In the capital market, this is also a story that investors can more easily recognize. Kuang Yuqing, founder of the third-party research and consulting agency Lens Company, pointed out that after years of development, the live streaming e-commerce model has been validated. For Douyin, which is considering an IPO, it needs to let investors and the market see its ability to deliver on its story. In May this year, shortly after the new CFO Gao Zhun took office, ByteDance also carried out intensive renaming actions for its related companies. Among them, ByteDance (Hong Kong) Co., Ltd. was renamed Douyin Group (Hong Kong) Co., Ltd. ByteDance Co., Ltd. was renamed Douyin Co., Ltd.; Beijing ByteDance Network Technology Co., Ltd. was renamed Douyin Vision (Beijing) Co., Ltd.; Beijing ByteDance Technology Co., Ltd. was changed to Beijing Douyin Information Service Co., Ltd., and its business scope also changed. These changes were interpreted by the outside world as preparatory actions before the listing of Douyin Group. Therefore, running an efficient traffic monetization model will be an important weight to push up valuation. Kuang Yuqing told Caijing Tiandi Weekly that from the previous rapid expansion to traffic monetization, Douyin needs to open up all paths of its business story. "The market's acceptance of the 'only making noise' internet model is getting lower and lower. Only when the model is validated and the story is delivered can its commercial value be better accepted." And one after another "sales kings" that aggregate platform traffic are proof that Douyin has completed the journey from content production to commercial monetization. (The interviewees in the article are pseudonyms) Source: AI Finance and Economics (ID aicjnews) Author: Ni Ping -END-