Now that 20 years have passed, what changes have taken place in this industry? Is the industry winter really coming?
Editor’s note: This article comes from WeChat public number “financial report company” (ID: caibaokan kind of 2018 ), the author’s earnings report to see the company’s editorial department.
Information flow (short video, graphic), search has gradually become the main battlefield of BTJ. In this battlefield, the identity of friends and foes, grievances and hatreds have become more exciting with cross-shares and fancy investments. With the opening of the 5G era, the story may have just begun.
Online advertising, the first real revenue model for the Internet, brought the first bucket of money to companies such as portals, classified information sites and search engines, and today is a very important revenue module. Now that 20 years have passed, what changes have taken place in this industry? Is the industry winter really coming?
Traffic dividends disappear, Online advertising growth slows
In the near future, Tencent, Baidu, and Sina Weibo have successively released second-quarter earnings reports. In the financial report, the data of online marketing or media advertising showed a slowdown or a year-on-year decline.
Beijing time on August 20, Baidu released 2019 Q2 financial report, with a total revenue of 26.3 billion yuan ($3.84 billion), an increase of 1% year-on-year and a year-on-year increase of 6%. Among them, the network marketing revenue was 19.2 billion yuan ($2.8 billion), down 9% year-on-year and 9% quarter-on-quarter. Correspondingly, the traffic cost is 3.4 billion yuan (about 499 million US dollars), an increase of 27%. In the financial report, Baidu said that this is due to the increase in TAC (traffic access) costs and the expansion of offline digital screens and other fields. resulting in.
In fact, Baidu’s online marketing revenue has declined for the second consecutive quarter, accounting for 73.2% of Baidu’s overall revenue. (as shown below)
Yesterday, Weibo’s second-quarter earnings report showed that advertising and marketing revenues were $370.7 million, a year-on-year increase, as active users increased year-on-year. Advertising and marketing revenues for the second quarter of 2019 were $370.7 million, compared to $369.9 million for the same period last year. Advertising and marketing revenues from SMEs and major customers were $346.5 million,The third year of the year was $338.7 million, an increase of 2%. Weibo’s net profit was $103 million, compared with $140.9 million in the same period last year, a sharp drop of 26.90% year-on-year.
Before, Sogou’s second-quarter earnings report also revealed that search and search-related revenue was $276.2 million, up only 2% year-on-year. Correspondingly, the cost is rising, Sogou’s revenue cost is 195.9 million US dollars, an increase of 9%. The cost of traffic acquisition is the main driver of revenue costs, at $146.3 million, an increase of 8% year-on-year, accounting for 48.2% of total revenue, compared to 45.0% in the same period in 2018.
The overall situation of Tencent’s online advertising is relatively better: in the second quarter of 2019, online advertising revenue was RMB 16.4 billion, a year-on-year increase of 16%, mainly driven by social advertising. Among them, social and other advertising revenue was RMB 12 billion, a year-on-year increase of 28%, mainly due to the increase in advertising inventory and exposure, such as WeChat friends circle and QQ watch. Media advertising revenue was RMB 4.4 billion, down 7% year-on-year. The reason was that some popular dramas were unexpectedly delayed, and the lack of FIFA World Cup led to a decrease in advertising investment income. The number of live active video accounts on the mobile side was stable, which drove the growth of information flow advertisements in Tencent’s video applications year-on-year and quarter-on-quarter.
Tencent’s financial report revealed that “the negative impact of the current business environment is expected to continue in the second half of 2019. The revenue growth of this business is due to the high demand for advertising in the e-commerce and online education industries.”
In summary, it can be seen that after the disappearance of the traffic dividend, due to the weakness of the macro economy and the strengthening of supervision, search engine advertising, media advertising and other more traditional forms of online advertising are facing challenges.
Online advertising is undergoing structural changes.
Comment flow ads are heating up faster than search engine and media ads. According to the iResearch report, the market for information flow advertising in 2018 reached 109.04 billion yuan, and it is expected to exceed 250 billion in 2020. The share of information streaming advertising in online advertising in China is also rising, accounting for 22.5% in 2018 and is expected to reach 35.8% in 2021.
It is the great potential of information flow advertising. Baidu launched the “search + information flow dual engine model” in 2017. This quarter’s Baidu financial report said that in June, Baidu App average daily users reached 188 million, an increase of 27%. The dual-engine consisting of “search + information flow” and “double-numbered + small program” make the Baidu App’s user duration and search traffic grow.
In Tencent’s 2018 annual financial report, it shows on WeChat friends circle, small program, QQ watch and mobileDriven by advertising alliances, social and other advertising revenues increased by 55% year-on-year to RMB 39.8 billion in the year of 2018, and by 44% year-on-year to RMB 11.8 billion in the fourth quarter.
Citi’s “Baidu.com 2Q19 Preview: Revs Inline w/ Upside to Profit; 3Q19 Likely Soft” report states that the e-commerce advertising platform is expected to remain the number one market share in the next few years, and is relatively stable at 33%. -34%, while the search engine market share is expected to fall from 22% in 2019 to 17% in 2022.
On the other hand, it is expected that by 2022, the advertising revenue contribution rate of social networking platforms will increase from 11% in 2019 to 13%. Even more striking is the rapid increase in the market share of short video platform advertising. It is estimated that by 2020, the contribution of short video to the entire advertising market will increase from 4% in 2018 to 11%.
The Battle of the Giants: Diversified Competition for Information Display
The structural change of online advertising is essentially a more diversified channel for information display, which makes the war of grabbing users’ attention more and more fierce.
Based on this, Baidu, Tencent, and today’s headlines have recently made frequent attempts on content layout.
On August 12, it was announced that it had completed the F-round financing of US$434 million. This round of financing was led by fast-handed investors and Baidu followed, while the original investors Tencent and today’s capital continued to vote in this round. .
On August 19th, Baidu completed its investment in the domestic well-known pan-tech interest community shell network, holding 9.38%. It is reported that this investment has been completed in a low-key manner in June this year. The news was announced before the second quarter earnings report, perhaps to pull the stock price.
For the knowledge of “Yangchun Baixue”, in recent years, the ability to realize liquidity is general. At the moment, two investments are introduced, perhaps because the capital chain is tight, and the community traffic can be greatly increased (after all, iQiyi and where to go) made). The same is true for the shell. For Baidu, in addition to the BBS, Baidu know, Baidu Encyclopedia and other sectors that have been operating in the ecosystem for many years, investment knows and the shell can enhance the content depth.
It is understood that after the completion of the business docking, Baidu and Zhihu will be open at the system and content level, knowing that the entire station has more than 100 million questions and answers will be fully accessible to Baidu APP in the form of “small programs”, users can Interacting in small programs, paying for content, even in the futureIt can be synchronized with Baidu’s APP matrix, especially for long and short video.
The world of competing products is as exciting. On August 14th, today’s headline shares into the first largest shareholder of Interactive Encyclopedia, and the headline has just announced its search business. As early as April, Interactive Encyclopedia reached a long-term strategic cooperation with today’s headlines. It is reported that the interactive content encyclopedia exports popular high-quality encyclopedia content to today’s headlines, covering people, attractions, animals and plants and other fields, providing users with convenient encyclopedia search services.
Today’s headline founder Zhang Yiming once said in an internal speech: “If there is no expansion of the search scene and high-quality content, the headline’s growth space may only have 40 million DAU left.” Visible development of search engines for its strategy The significance of development.
In addition to heavy gold mergers and acquisitions, today’s headlines are currently in action in recruitment, publicity, etc., and it is imperative to fully search the business.
Investing in the interactive encyclopedia or entering the search field, the entry of today’s headlines will definitely move the “cheese” in Baidu’s hands.
On August 6, the Beijing News reported that the negotiations for Tencent’s investment fast are nearing completion. The current round of quick valuation is more than 25 billion US dollars, the two sides may set up a new game joint venture company, Tencent’s shareholding ratio is 30% to 40%. Tencent has been in the new round of financing since the D round, and the capital relationship is very close. This is also seen as a strategic layout against vibrato.
(The picture shows the fast-hand financing situation, source: Tianyan check)
Information flow (short video, graphic), search has gradually become the main battlefield of BTJ. In this battlefield, the identity of friends and foes, grievances and hatreds have become more exciting with cross-shares and fancy investments. With the opening of the 5G era, the story may have just begun.