Here we present you the part two of 2021 This Year, Next Year key observation. during this issue, we mainly discuss the web media market. In 2021, it’s expected that Internet advertising will occupy over 80 share of China advertising marketplace for the second consecutive year and achieve a 23.9% YOY growth. As lifestyle of consumers has turned digital, internet companies benefited tons . However, companies’ exploitation of user value caused the conflict with consumers, which indirectly resulted in stricter regulations.
suffering from the changes within the external macro environment and consumer behaviors, the battle between Internet companies becomes tougher and therefore the future development trend of various segments will differentiate.
Key takeaways are as below：
Driven by severe macro environment, internet industry began to enter a stage of multiple winners: After a rapid period of development, internet companies entered the bottleneck period of accelerating difficulty in obtaining new traffic and therefore the decreasing dividends from growth of online usage time. Meanwhile, users becoming more mature and social ethic gradually shifting to people-oriented, and negative popular opinion on internet companies’ failure in shouldering social responsibility indirectly resulted in stricter regulations. Driven by various factors, internet industry has gradually shifted to emphasis on a win-win sustainable development model.
The key to success lies in meeting user demands of diverse, fast, high-quality, and cost-efficient services: With dividends from the rapid climb of netizen number now fading, and users becoming more mature, the way to keep existing users and acquire new users became common concerns for internet companies. the simplest solution could also be to reshape the connection with users through satisfying people’s everlasting pursuit of a far better life with diverse, fast, high-quality, and cost-efficient products and services.
In the competition for existing users, Internet giants are introducing tougher defensive and offensive measures: updated demands for diverse, fast, high-quality and cost-efficient services has changed the prevailing competition pattern in internet segments. Despite defense, established platforms have made full use of superiority derived from their core business to hunt outward extension. While emerging platforms saw opportunities to expand their businesses and compete with traditional brand companies. The battle between Internet companies thus becomes tougher.
Forecasts of major Internet media types:
As lifestyle of consumers has turned digital, penetration rate of internet is continuously increasing
The COVID-19 in early 2020 expedited the method of converting non-internet users to mobile netizens thanks to the wants of one’s work and life. Taking advantage of their well-prepared infrastructure and ecosystem, internet companies went beyond being simply payment and entertainment tools. They further helped lifestyle of consumers turn digital through logistics connecting online with offline and services transferring to online. As leading Internet companies further dominate physical life, it’s estimated that internet advertising expenditure will grow by 23.9% in 2021.
Driven by severe macro environment, internet industry began to enter a stage of multiple winners
After a rapid period of development, internet companies entered the bottleneck period of accelerating difficulty in obtaining new traffic and therefore the decreasing dividends from growth of online usage time. to take care of fast growth, major platforms have began to accelerate the expansion of their ecosystem and are exploring growth in offline sectors, leading to fierce competition to seize existing users. Meanwhile, as consumers pay more attention to privacy issues and subsided tolerant of being considered assets by platforms, the govt released regulatory documents to make sure the giants take their responsibilities. of these factors have forced the event of the web industry began to enter a stage of multiple winners. Therefore, it’s expected that the expansion rate of the web expenditure will return to a moderate level of 9.5% year-on-year in 2022.
The key to success lies in meeting user demands of diverse, fast, high-quality, and cost-efficient services
With dividends from the rapid climb of netizen number now fading, and users becoming more mature, the way to keep existing users and acquire new users became common concerns for Internet companies. The relation between platforms evolved from Customer is God to Customers as Assets, and under the latter mode, users aren’t seen as individuals but source of profit. As users become more conscious of privacy protection and therefore the government also issued a series of policies to manage the platform’s access to and use of consumer data, the platform and users are gradually developing a interdependent relationship, that is, a healthy one among long-term interdependence and customary development.
The prerequisite of building such relationships is to supply diverse, quick, high-quality, and cost-efficient services, so on meet people’s everlasting pursuit of a far better life. Looking back, the definition of those four dimensions of excellent service is consistently changing. The upgrade of ‘more choices’ and ‘faster logistics’ has satisfied the common demands of users and platforms for efficiency: with developing technology, increasing data and upgraded operating models, platforms are quickly ready to provide users with rich content and keep users from being bothered with an overload of data .
The upgraded definition of ‘better qualities’ and ‘more cost-efficient’ is made thanks to the development of internet platforms forced by upgraded demands of consumers: on the one hand, consumers want platforms to supply product shooting hong kong services satisfying their spiritual needs, in aspects like hobbies, social station and good feelings; on the opposite hand, users are not any longer easily influenced by external factors like trends, but judge what’s good and worthy by their own demands, which forces platforms to enhance themselves.
In the competition for existing users, Internet giants are introducing tougher defensive and offensive measures
Since traffic and usage both decreased, internet giants though control over 75% of the prevailing usage duration, other applications also obtain stable market share by virtue of their differentiation advantages. Hence, internet giants chose to accelerate the expansion of their internet ecosystem and seize usage duration from one another .
When handling the aforementioned demand upgrade, established platforms have encountered some difficulties. for instance , traditional e-commerce platforms did not shake off the stereotype of commodity sellers despite the very fact that they need made huge efforts to feature recreational functions to their apps and make crossover cooperation. Emerging platforms saw opportunities to expand their businesses and compete with traditional brand companies. The battle between Internet companies thus becomes tougher.
All internet platforms have continued to require routine measures like enhancing order fulfilment abilities, improving content quality and user shopping/usage experience to consolidate their core superiority. Some platforms have also developed a portfolio of companies to form up for the weak spots in their core fields, meet various demands of various consumers and stop rivals from exploiting potential loopholes. Take Alibaba as an example, in June 2021, Taobao and TianMao’s YOY growth of MAU is clearly higher in high-tier cities than that in lower-tier markets, while YOY growth of MAU of Taobao Deals is far higher in lower-tier cities.
In addition to defensive measures, internet companies have adopted various approaches to increase beyond their core business supported major strategic goals to push the stagnant growth. Established platforms made full use of superiority derived from their core business to develop outward extension like O2O grocery shopping, omni-chain marketing and other business.
As for emerging platforms, two primarytactics are available to counterbalance established platform’s core business.First, tap into markets which these platforms haven’t foreseen or arereluctant to undertake . Second, specialise in and enhance strengths which theseestablished platforms lack, develop new business models beyond theircapabilities, and defend with formed consumer habits to boost the barriers toentry.
For example, content platforms like Kuaishou added e-commerce function and achievedd fast growth of GMV in Q1 2021.
Forecasts of major Internet media types
E-commerce：
In 2020, e-commerce advertising saw rapid climb since the epidemic forced business to shift online. However, consumers demanded more protection for privacy and rights and opposed negative news like price discrimination supported big data and infringement of the legitimate rights, which indirectly resulted in stricter regulations. Under these circumstances, e-commerce advertising growth in 2021 will decelerate to 9.2%.
After about twenty years of evolving, the epidemic exhausted the expansion of latest domestic internet buyers , and therefore the growth of the entire e-commerce market will hamper as a result. Meanwhile, the well-developed e-commerce advertising system will cause rising marginal costs for brands, who successively will gradually adjust overall budget to become normal. Therefore, we estimate that the expansion rate of e-commerce advertising expenditure will hamper to five .6% in 2022.
Social：
The outbreak of COVID-19 sped up the commercialization of social platforms. Social apps with strong ties achieved a breakthrough in work/education scenarios, while those with weak ties continued to specialise in content and linked up with users supported their hobbies. The advertising market is predicted to continuously grow fast and increase by 26.4% year on year in 2021 for social apps equipped with more lifestyle features. Trust plays an increasingly crucial part in consumer decision-making, and thus the connection value of social apps is attached with a greater importance. Interpersonal relations on these apps are now of strategic importance for marketing, and it’s estimated that spending on social will grow by 14.2% in 2022.
Search：
After the epidemic broke out, consumers used search engines to access relevant news and knowledge , which, in turn, promoted the recovery of program utilization. However, online traffic obtained via news associated with Cygnus atratus events can hardly bring advertising revenues. the use of search engines once more dropped during the post-epidemic period since consumers turned to other platforms. because the economy recovers steadily, the expansion of traditional program advertising expenditure has turned positive in 2021 and reached 4.0%. within the end of the day , it’ll be hard for them to stop traffic from flowing to other platforms, and in 2022 may even see a daily rate of growth of three .8% compared to 2021.
Online Video：
In 2020, we observed that the expansion within the number of online video users and therefore the usage time didn’t cause a rise in advertising revenue. the explanations are as follows: firstly, regulation on content and therefore the epidemic decelerated the assembly of latest videos; secondly, the increase within the number of paying users reduced the advertising inventory; lastly, advertisers trimmed down their budget after since brand advertising on online video 商業影片製作 could only indirectly cause conversions.
However, as advertiser’s confidence has gradually restored and online video platforms have proactively set more commercial spots, online video advertising expenditure grew by 8.9% in 2021 compared to the low spending in 2020. In 2022, platforms will bind and streamline the upstream and downstream industries to supply more diversified and high-quality content and consumers will become familiar with online content consumption. Therefore, it’s predicted that the expansion rate are going to be 8.4% in 2022.
In-feed Advertising：
An in-feed advertisement, by definition, better integrates commercials into the content of an app via algorithms supported user interest profiling, which makes it less annoying surely users and at an equivalent time are able to do better reach and conversion rates. additionally , driven by developments in technology, algorithmic and operational capacity of platforms, the market size of in-feed advertising is predicted to expand with a rate of growth of 16.9% in terms of advertising expenditure in 2021. However, as users become more concerned about privacy online, and therefore the government issued and implemented stricter regulations on data security, it’s expected that the expansion rate of in-feed ads will hamper to eight .6% in 2022.
Programmatic Buying：
With more personalized consumer demands, tailored recommendations can better meet one’s current needs, and programmatic buying driven by tagged group’s data boasts good prospects. Advertisers have swung from signing contracts or place advertising orders to more efficient and accurate programmatic buying. variety of digital media organizations have accelerated the establishment of programmatic buying platforms thus improving the relevant database. As more advertising resources have successively opened to programmatic buying, and advertisers and media platforms have cooperated more smoothly, programmatic buying advertising expenditure is estimated to grow year on year by 18.8% in 2021 and 16.3% in 2022.
Looking at the changes within the Internet industry, the subsequent inspiration for marketing are often found:
Leading companies now use a wider range of media in their ecosystem and can pay more attention to media synergy while extending the frontiers of business.
Advertisers should look rationally at super platforms and take those unique long-tail platforms into consideration to tailor their own characteristics and goals.
Automated advertising will reach a replacement level with innovated data and technology driving the development of advertising effects.