By Guo Danchun and Wang Rui
Source: ID: Excel ers
Data support insight Data Research Institute
2020Q3 earnings season, advertising
For example, the revenue of focus media Q3 increased by 2.4%, which achieved the first growth recovery since 2018q4. Among them, the revenue of the company's building media increased by 19.79% in the third quarter compared with the same period of last year, excluding the cinema media that has not yet been restored.
While Tencent maintained good growth in social advertising, the decline in media advertising narrowed to 1 percent. The trend of advertising revenue has improved.
But a warming industry doesn't mean that advertising platforms can benefit from eating
This paper will analyze the main factors affecting the revenue one by one by disassembling the advertising revenue model: revenue = Mau * feed * load * price, and explore the specific performance of Baidu's advertising business under the expectation of industry recovery.
1. Load: under the background of industry recovery, advertising demand is released
2. Feed: competing for users for a long time
3.PRICE： price increases are premised on effective advertising
4.MAU： the epidemic's dividends run out
Load: under the background of industry recovery, advertising demand is released
For the advertising industry, the loading rate is an important factor, and improving the loading rate is a way for many platforms to achieve growth.
For example, if the user's content reading volume is 100, if the loading rate increases from 10% to 20%, then the number of ads seen by each user will change from 10 to 20.
However, the loading rate can not be improved infinitely. On the one hand, the advertising delivery should maintain the balance of platform reputation, advertising effect of advertisers and user experience; on the other hand, it will be affected by the relationship between supply and demand.
This determines that only when the demand for advertising inventory falls short of demand, the increase of loading rate will have an effect, otherwise, expanding the inventory will only cause excess supply and affect the advertising unit price.
In fact, in recent two years, the problem of information flow advertising industry inventory increasing too fast and competition intensifying has appeared.
However, the impact of revenue is not only the advertising inventory competition, but also the impact of the macro environment: the poor development of advertisers will affect the marketing expenditure, leading to the decline of the overall demand of the advertising industry.
For example, in the first half of 2019, affected by the cold winter of the industry, China's advertising market as a whole fell by 8.8% according to the publication price.
This decline will be narrowed in the second half of 2019 and industry demand will improve.
In this context, the growth rate of advertising revenue including focus and Tencent is also turning upward in the second half of 2019.
Focus Media's revenue growth began to decline in 2018q3, and increased in 2019q2-2019q4 for three consecutive quarters; Tencent's online advertising revenue (the sum of social advertising and media advertising revenue) began to grow rapidly in Q4 of 18 years, and returned to the upward trend from Q3 in 19.
At the beginning of 2020, due to the epidemic situation, the advertising industry will inevitably be affected. It can be seen that after the impact of the epidemic has been basically eliminated, Q3 advertising industry's performance has improved collectively and the industry has been boosted again.
Baidu's growth is also consistent with the industry as a whole. The growth rate of Q3 advertising business in 2019q3 began to hit the bottom and rebounded. After overcoming the impact of the epidemic, Q3 core online advertising revenue growth in 2020 continued the rebound sign of the last quarter, and the improvement speed was also faster than market expectations.
It can be seen that the improvement of industry prosperity is the key to the performance recovery of advertising industry in Q3 financial reporting season. The enterprises with higher sensitivity coefficient such as focus and Baidu timely seize the incremental opportunity of industry demand release and become those enterprises that keep up with the trend when the industry recovers.
But not all companies can benefit from the industry recovery. For example, in the second half of 2019, with the overall growth rate of the industry turning head, the Q4 quarter of microblog will decline.
Some people are happy and others are worried. Maybe it is the deviation of enterprises in other factors affecting income.
Feed: competing for users for a long time
There is no dispute about the rise of information flow advertising. As far as the platform side is concerned, now, whether it is social networking, search, video, information distribution, news information, all fields are competing for the information flow advertising market.
Through the form of information flow advertising, the platform is competing for the user's duration, that is, the feed factor (the number of content users browse).
However, according to QM data, in terms of trends, the growth of total user hours has slowed down significantly. From last year to this year, the average daily use time of users in the whole network has only increased by 3.4%.
When the user's duration changes from incremental market to stock market, the competitive logic prevails. At this time, who can occupy more user hours will have more market share.
Unlike social media, which rely on social properties to attract users and release information flow advertising space, information platforms need to rely on content to attract users to improve the advertising loading rate.
For example, if you open the information app in your mobile phone, you will find that the boundaries of search and news are gradually broken, from page to column.
From left to right are: today's headlines, Baidu, UC browser app page. If the logo is hidden, it is easy to be confused.
Not only in form, but also in content construction. Today's headline number, Baidu's Baijia number and UC's big fish are all trying to grab users' time by creating rich content.
In addition to the creation of text content system, we notice that app columns of all platforms have special video content output. This is another kind of stronghold to seize users' time.
But the same is to create video content, the focus of each platform is not the same.
According to our research experience, the content of Baidu short video is more focused on information and knowledge transfer, and the entertainment information of UC and headlines accounts for more. (the platform recommendation mechanism may be related to personal preferences. This is the first time to open the screen without clicking into a single specific video viewing experience.)
From left to right are today's headlines, UC, Baidu's video page.
The growth of short video on these information platforms can not be quantified because there is no specific disclosure from each major platform.
But according to Baidu's 3q20 financial report, in September, baidu app mobile video advertising revenue increased 83% compared with three months ago.
From this, we can see that the information flow platform has a promising imagination in the creation of short video content.
Moreover, according to the qusemobile report, the total user time of Baidu mobile products (including Baidu app, good-looking video, national small video, baidu online disk, etc.) increased by 29% and 31% respectively from September to October last year, which was ahead of that of Toutiao, Alibaba and Tencent.
Byte beat fierce attack, achieved such results, and Baidu in the feed stream of the last two years
In the long run, the information flow advertising platform, which has made a difference in the market competition of user duration stock, is more likely to become the winner of the recovery of the advertising industry.
But since the market space is limited, there are bound to be losses. The competition in the advertising industry is not the gain and loss of a city, but a long-term process of competition. In this arena, it is very common that the roles of winners and losers are reversed.
PRICE： price increases are premised on effective advertising
Compared with the traditional pay as you show advertising and search advertising bidding model, information flow advertising pays more for effect. In other words, advertisers will pay the platform only after users click on the link or make a transaction.
Therefore, for the information flow platform, in addition to the content to attract customers, but also need to improve the probability of users to click Open advertising. Only when the advertiser's rate of return is high can the unit price of advertisement be improved.
So, how to improve the probability of advertising? The answer is to shorten the chain of transactions.
The small program becomes one of the optimal solutions to shorten the transaction chain.
By September 2020, the number of live wechat apps has reached 832 million. The complete connection from advertising to payment also further improves the conversion rate of advertisers.
Tiktok is not only a tool type of WeChat, but also a live broadcast of Kwai Chung. Baidu also caught up with this trend and showed a certain growth.
Baidu started to develop small programs from Q4 in 17 years. In only three years, baidu smart app 2020q3 has an average Mau of 355 million.
The small program reduces the intermediate links and avoids the cooling of customers' consumption, which improves the conversion rate to a certain extent.
For example, if you search Jiuzhaigou travel on your mobile phone Baidu, you can use the little red book app in Baidu to browse other people's travel notes, and then place an order directly through Ctrip.
However, after increasing the probability of users clicking on ads, the problem comes again. No matter how it's packaged, it's still advertising. So, how to make users not disgusted with advertising, even used to advertising?
We have noticed that there is an obvious trend change in the advertising industry: the optimization of customer structure.
From 2018 to 2020h1, the proportion of focus media's customer structure is always changing. Among them, the proportion of daily consumer goods customers with rigid demand characteristics has been increasing, and the proportion of Internet enterprise customers vulnerable to economic fluctuations has declined.
According to focus media's annual report in 2019, customers in traditional industries, represented by consumer goods, have continuously improved their recognition of the company's media value, and the proportion of the company's income from customers in traditional industries has continued to grow, which has led to the continuous optimization of the overall customer structure.
From 2019q1 to 2020q2, the ranking of Baidu advertising top 5 industry is also constantly adjusted, and the income source becomes more uniform.
From the current customer structure, Baidu in medical, medical and American, P2P advertising business to
There has been no medical advertising in the top 5 industry for six consecutive quarters; the proportion of financial industry advertising in the top 5 has been decreasing, and Q4 in 2019dropped out of the top 5 list (the financial industry advertising in 2020q1 and Q2 again accounts for a large proportion, which is supposed to be affected by the large-scale launch of financial technology enterprises such as ant group, Jingdong finance and lufax).
Compared with 2019q22020q2, the huge amount of engine advertising under bytecomb has a big adjustment, and the proportion of application promotion and e-commerce promotion has increased.
According to the characteristics of the advertising industry, we believe that the diversity of customer structure has two functions
① Avoid over dependence on head customers and be affected by the fluctuation of single industry.
② Multiple advertising information, user portrait screening, more accurate control of what users like advertising, improve the quality of advertising.
For example, baidu self-developed hosting page products are trying to improve the generation and transformation of sales leads through user insight and CRM (Customer Relationship Management) functions.
The structured data of hosting pages, on the one hand, enables Baidu to monitor information from third parties, and standardized advertising forms enhance users' trust in advertising; on the other hand, it can save advertisers' web development and server costs, especially for small and medium-sized advertisers.
According to the 2020q3 financial report: the revenue from Baidu hosting page accounts for nearly one third of Baidu's core online marketing service revenue.
Information stream advertising
We can see that advertising platforms are making some positive changes. Baidu executives also revealed on the Q3 financial report telephone conference that in the third quarter, baidu app advertising CPM has achieved year-on-year growth. These changes are also affecting the future competitive pattern of the information flow advertising industry, but it is not clear what the next stop will be.
MAU： the epidemic's dividends run out
In the first quarter of this year, due to the epidemic situation, most people choose to spend time online, and the user scale of each platform has increased dramatically. But different from natural growth, this kind of pulse growth actually overdraw the user growth in the future.
By comparing the trends of video, social, information and short video platforms, we can find that:
2020Q2, tiktok tiktok, micro-blog, jyoon Moon Live users grew year by year, all slowed down compared with 2020Q1, Q3 micro-blog, jitter growth rate continued to decline, B station growth rate has picked up. The B growth rate of B station has been rising.
In comparison, although the year-on-year growth rate of Baidu in Q2 of 2020 was slightly higher than that of Q1, it was still affected by the disappearance of epidemic dividend, and Q3 growth rate was basically the same as that of Q2.
Baidu's user scale is excellent in the information platform.
According to QM data, in 2020q3, Baidu's average appmau reached 540 million, with a year-on-year increase of 14%; today's headlines' average appmau was 260 million, with a year-on-year increase of 4%; Tencent News Mau average of 280 million, flat with last year, basically zero growth.
However, taking into account the catalytic impact of the epidemic, perhaps the more important indicator for Internet platforms is not user growth, but user retention.
From 2017Q3~2020Q3, Baidu, micro-blog, fast hand, Kwai's retention rate trend change, there is little correlation with the epidemic situation.
By comparing the retention rate of today's headlines, Tencent News and Baidu app, we find that after 2018q3, Baidu's retention rate has been higher than that of Tencent News, maintaining a steady growth, and even with today's headlines in 2020q1. After the epidemic subsided, there was a rise in 2020q3.
The reason why users are willing to stay on the platform is that the platform can meet their own needs, which reflects the recognition of its content ecology.
Under the background of industry recovery, the impact of Mau factor on income is less obvious due to the change from growth to retention. But in the long run, retention may become a new competitive ecology for the industry.
Advertisers demand release, let the advertising industry now
Undertake the industry boom recovery, baidu core out of the inflection point earlier than the average Wall Street expected. Baidu is also more optimistic than Wall Street for the guidance of Q4.