1. Inefficient marketing
Online education enters 2021 with the burning smell of money. Under the continuing impact of the epidemic, all major leading companies have chosen to reserve funds to prepare for the winter and even summer enrollment wars. Since October 2020, Yuandaodao, GSX, Good Future, and Homework Gang have successively announced financing news. Among them, Good Future will complete US$4.8 billion in financing in 2020, Yuandaodao has attracted USD 3.5 billion in funds, and Homework Gang has also received $2.3 billion . Aside from these top companies, there will still be 14 companies in the education industry that have raised more than 100 million yuan in 2020.
However, the above-mentioned industry insiders believe that after running wild for a year, all major institutions have discovered that big financing + crazy money burning has become an infinite loop mode of online education.
Due to the influence of the external environment, the penetration rate of online education will be significantly increased in 2020. Online education companies took advantage of the trend of “suspending classes and not stopping school” during the epidemic, and launched free classes. The number of free class registrations at head institutions is in the order of tens of millions. With the increase of marketing efforts, online education such as ape tutoring and homework help are available. The brand has established its own brand recognition. According to the data of iResearch, under the catalysis of the epidemic, the online rate of the education industry in 2020 will increase by 10 percentage points, reaching 23%~25%, and the overall market size will reach 257.3 billion yuan, a year-on-year growth rate of 35.5%.
Even so, the market share of leading online education companies is still not high.According to the report data released by the Chinese Academy of Sciences, ape tutoring, good future, homework, Gaotu classroom, Netease Youdao and other online education platforms have a total of 12.165,700 users of regular courses. According to the “Statistical Bulletin of National Education Development in 2019” published by the Ministry of Education in May 2020, there are a total of 193.83 million K12 students. Calculated, the total market share of several leading companies is only 6.28%, which is a long way from the ceiling.
This is also the source of traffic anxiety for several companies: After several years of death, they have only won less than 10% of the market. The investment is constantly out of control in the competition.
The large amount of financing obtained by online education companies instantly disappeared in advertisements, bus stations, subway stations, shopping malls, elevators, variety shows, and online education advertisements are all pervasive. When the financial report is opened by the end of the year, the marketing investment of each listed company can almost be equal to the total revenue.
NetYi Youdao’s annual revenue in 2020 is 3.168 billion yuan, and marketing expenses are as high as 2.697 billion yuan, accounting for 85.13% of total revenue. Together Education will achieve a net income of 1.294 billion yuan in 2020, an operating loss of 1.334 billion yuan, and an annual marketing expense of 1.098 billion yuan, accounting for 84.85% of the net income. GSX is even more exaggerated. In 2020, the total revenue will be 7.125 billion yuan, and the operating expenses will also increase to 7.117.2 billion yuan. The two are almost even.
This means that the delivery efficiency of these three listed companies is extremely low, and the number of regular-price course users entering from the low-cost course entrance remains worrying.
This phenomenon of enthusiasm for capital buying even with high investment and high losses once appeared in new economy companies such as Meituan, Didi, and OFO. Under this disorderly competition, online education companies have experienced serious industry internal friction.
In this regard, the official website of the Central Commission for Discipline Inspection quoted Fang Shusheng, Executive Deputy Director of the Education Supervision Office of the Guangdong Provincial Government, and pointed out that due to the boost of capital, under this completely Internet-based marketing model, online education may deviate from the law of education itself. Relying on the quality of courses and teaching effects to gain market choice and favor, but gradually dominated and influenced by capital.
There is no doubt that the epidemic has gradually enlarged the demand for online education, and the injection of capital has accelerated the rapid expansion of the industry. After receiving investment from top global institutions such as Tencent, Hillhouse, and DST Global, Yuanjiao began to declare to the outside world that it will be the unicorn with the highest valuation in the global education technology field. The founder of Job Gang, Hou Jianbin, also publicly stated that “online education has entered a long-term competition.
But if you delve into the business model, it doesn’t matter whether it’s a good future that has already been listed, GSX, NetEase Youdao, or Ape Guidance and Homework Gang that have not yet landed in the capital market, there is not much difference. The core competition for big and small giants is to burn money in marketing after they absorb money on a large scale.
Second, advertisers earn blood
The embarrassing problem appeared, the money was burned out, the growth of users and revenue did not happen as expected, and each company ended up at a loss. Expensive traffic has become a heavy burden on online education companies. Live large classes, online small classes, one-on-one, animation AI classes, more homogeneous content is produced on the assembly line, and the process of marketing wars is not visible at a glance .
A co-founder of an online education company once analyzed Quanxian that there are only two models in the education industry. One is the back-end drive to teachResearch and teaching attract parents and let users speak for themselves; front-end driving is another way of thinking. They spend money in advertising, celebrity endorsements or free trial classes, and finally become a sales company.
The person in charge of the aforementioned online children’s English company also said that at this stage, if an education company wants to grow larger, it must take into account the two dimensions of course type and age level, and combine courses to meet the overall needs of users. , When a user comes in, it can turn to five or six to improve traffic utilization. Because of this, at this stage, traffic is the most expensive, and R&D is the second most expensive.
“This kind of routine is to raise more money than anyone else, and even the education industry is the same as other industries, including sharing bicycles, burning money, financing, advertising, subsidies, and the last thing. To achieve the last possible If you feed an advertising company, you will not be able to feed yourself.” The aforementioned online education company co-founder emphasized that education is a unique industry. Without sufficient profits, it is impossible to deliver good teaching results, and there will be no retention and referrals. , The business is difficult to continue.
The truth is also true. On March 25th, the elevator advertising supplier Focus Media announced the 2020 annual results bulletin, achieving annual revenue of 12.097 billion yuan and net profit of 4.004 billion yuan. A person in charge of the marketing of the head children’s English agency once told Quan Now that Yuanxue will spend about 300 million to 400 million yuan on the elevator advertisements of Focus Media every quarter in 2020.
Because of this, under the general trend of peaking traffic and low ceilings, online educational institutions that advocate rapid online growth have begun to organize local teams. The strong rise of Dongfang Youbo, a subsidiary of New Oriental, has brought hope to major companies. Different from other online education institutions that mainly use online purchases to acquire customers, Oriental Youbo mainly uses the form of offline experience stores, and the low-cost classes of offline experience stores are its main traffic entrance. The data shows that in fiscal year 2020, Oriental Youbo paid approximately 360,000 person-times, and the number of corresponding offline experience stores was 172.
According to the research report of Huachuang Securities, assuming that the annual enrollment of 120 stores is completed with 70% of the production capacity, it can be calculated that the average enrollment of each experience store is about 3000 people per year, corresponding to the customer acquisition cost of about 200 yuan/person. Taking into account the repurchase and expansion of subjects, the actual enrollment should be lower than 3000, and the customer acquisition fee will also be higher than 200 yuan/person. However, compared with the thousands of yuan in customer acquisition costs of online large classes in the industry, there is still a significant advantage.
The huge profits make many upstarts coveted. According to a report from Duozhi.com, Yuandaodao is setting up a ground push team with more than 1,000 people; Homework Help uses ground customer acquisition as one of the key channels, and since last yearBegan to seek to acquire ground agencies. GSX founder Chen Xiangdong also stated in the financial report that GSX is seeking multiple ways to acquire customers, including offline channels.
Is the right way to go online and offline? All signs indicate that the offline education and training market will usher in tough regulatory measures in 2021. “Ban Yue Tan” magazine recently published an article pointing to the teaching and training outside the school: When the parents in the “involved” are unable to fight with the whole staff counseling, it is time to mobilize the administrative force to intervene and strengthen the rectification. Make the off-school training return to the professionalism of education and the basic value of education, “You cannot allow the off-school training to train children into’question-making machines’.”
Before that, the regulation of online education institutions was loosened, and the policy space was relatively large. In the past year, the review of the filing management, values, and faculty of the online course platform has been tightened. . Some people in the industry also revealed that in the near future, regulatory authorities may further tighten requirements on online education advertisements that are suspected of being false and exaggerated.
It is obvious that the era of online education purchases will come to an end.
This article is from WeChat official account:20 Club (ID: quancaijing_20she)< span class = "text-remarks">, author: Zhang Ze Xiang