Internet Business Thinking

Chapter 34 New platforms and new ways of playing in the Internet era (2)
Regarding the Daren business operation platform, Wang Licheng concluded: First, the traffic of Lefeng.com has been increased, because these talents have many fans, which can drive fans to Lefeng.com, and the increase of traffic is free, which is similar to that of other industry players. It is different to buy traffic with money, which is profit in itself for Lefeng.com.Second, all the brand attitude and brand spirit of Lefeng.com are conveyed through products, and the profits brought by these talented brands to their products can be shared by Lefeng.com.The third is that the talent effect will bring corresponding customer return rate.

Wang Licheng said that the "talent economy" has just started in China, and he hopes that Lefeng.com will become the gathering place with the largest number of celebrity talents in China in the future, and turn Lefeng.com into a media-oriented community. "But whether it is now or in the future, the biggest challenge we face is how to tap the imagination of the star talent brand."

Brand product autonomy

The Daren brand and its category expansion under Lefeng.com are based on the evolution of Daren’s business operation logic.Wang Licheng believes that if vertical e-commerce does not develop its own brand, it is basically useless.Therefore, Lefeng insisted on making its own brand and products from the very beginning.In foreign countries, there are two kinds of talent economic models: one talent with multiple products and multiple talent with one product.However, Lefeng.com adopts the model of multiple talents and multiple products.

In December 2009, Lefeng Online launched its first self-owned brand "Jingjia", which involves cosmetics and health care products.The star talent that the Jingjia brand relies on is Li Jing.Li Jing is a TV host, producer and founder of Dongfang Fengxing.Now, there are hundreds of products in Jingjia series.

The second brand of Lefeng.com relies on Xiao P, an expert expert.According to Xiao P's professional and fan characteristics, Lefeng.com positions its product as "Magic Makeup Princess". Currently, there are dozens of products.

The third brand of Lefeng.com relies on Mei Lin, an expert from Taiwan.Lefeng.com positioned the stylist as a "Master of Life Aesthetics" and developed a series of "Skin Age" products.

In 2011, Lefeng.com successively launched Jplus, Jmixp, Siqi, Kevin and other talent brands.Wang Licheng said: "We hope to develop [-] to [-] talent brands in the future." Lefeng.com is a full-line open platform. In addition to its own brands, it also operates other agency brands.The self-owned products developed by Lefeng.com also correspond to the Daren brand.

At present, Lefeng.com's products are divided into three categories: skin care products, health food, and clothing accessories.Wang Licheng said that around March 2013, Lefeng.com had many new products on the market, and when the self-owned products reached 3 categories, they might consider opening offline stores. "We hope to make Lefeng.com a socialized e-commerce company and a platform for displaying lifestyles."

resource-driven effects

Whether it is the construction of Lefeng.com's Daren business platform, or the self-owned brands and products evolved from Daren, they are all driven by the resources of Lefeng.com's parent company, Dongfangfengxing.In Wang Licheng's view, the key to Lefeng.com's successful start is that it successfully borrowed the resources of the parent company: on the one hand, it gathered fans and popularity with the help of the celebrity resource effect of celebrity Li Jing; on the other hand, With the help of the diffusion effect of the TV programs owned by the parent company.

In 2000, Li Jing founded Dongfang Fengxing, which specializes in producing entertainment and lifestyle TV programs: one is celebrity interview programs, such as "Super Interview" and "Very Quiet Distance", etc.; the other is fashion and life programs, such as, "Pretty Blonde", "I Love Everyday" and so on.It is said that in 2007, Li Jing wanted to sell the company to Huayi Brothers.During this period, she got acquainted with Shen Nanpeng of Sequoia Capital, and accepted Shen Nanpeng's business views-other commercial platforms derived from TV programs.Therefore, Li Jing finally decided not to sell the company. In 2008, Sequoia Capital invested millions of dollars in Lefeng.com.

At present, Dongfangfengxing has three major business segments: TV programs, Lefeng.com, its own brand Jingjia and other talent brand businesses.TV programs are the resource extension foundation of Jingjia brand and Lefeng.com, and Lefeng.com is a business platform for Jingjia brand and other talent brands to expand sales.Wang Licheng said that the three major businesses rely on and interact with each other to form a closed-loop business ecosystem.

Online Business Tips
Three modes of e-commerce profit
Authorization method: Commissions are charged by authorization method, represented by Taobao.

Horizontal way: reduce the break-even point through economies of scale, represented by JD.com, Suning.com, and Amazon.

Vertical way: Create its own brand, products and its platform, and obtain higher profits through brand operation, such as Lefeng.com.

(Section [-]) To be a "Tomahawk" on the Internet: the platform must have big data

Easy Media, as an Internet company with an annual revenue of RMB 4 million, was established only 5 years ago.If it hadn’t been for the IPO application in 2012, most people probably wouldn’t know about this explosively growing Internet advertising platform company.

"Pay for performance" inspires entrepreneurial dreams
Six years ago, Zheng Jingwei, who was the vice president of Adify, received an extremely important call. Yan Fangjun, who was studying for an MBA at the Massachusetts Institute of Technology, wanted to find an internship during the winter vacation.As an old eBay colleague before, Zheng Jingwei readily agreed to help him arrange, and then Zheng Jingwei recruited Yan Fangjun to his department.

Zheng Jingwei and Yan Fangjun, who had more communication opportunities, saw the opportunity to start a business from Adify's advertising model, so they found Cheng Huayi, the technical master at Paypal at the time.Three old colleagues from eBay gathered again, and the common goal of "trying to change the domestic online advertising model" led them to jointly create Yi Media.

Zheng Jingwei, COO of Easy Media, told reporters: "Five years ago, the domestic online advertising market was dominated by portals. Most of the advertisements were purchased by the number of days, and Internet advertisements were sold as outdoor advertisements. At that time, the real use of There are actually very few people who use the characteristics of Internet advertising to do Internet advertising.”

In fact, the biggest feature of online advertising that differs from traditional advertising is that it can well count the advertising effect.Therefore, compared to the CPD (Cost per day) model of paying by the number of days, the CPM (Cost Per Mille) payment model based on the number of advertisement impressions is obviously better.Seeing an opportunity, Yan Fangjun, Cheng Huayi and Zheng Jingwei found several well-known angel investors in the United States, and then they returned to China with US$120 million to establish Easy Media.

Simple but effective business model

So, how did Easy Media grow into a company with an operating income of RMB 5 million in just five years?

The answer is Easy Media's business model.Easy Media's model is simply understood, it is to integrate the remaining advertising spaces of hundreds of media, to make a unified delivery for advertisers, and to help advertisers find users accurately through technical means.

Easy Media's business model is not complicated, but why are advertisers willing to pay a higher price for advertising space on Easy Media?Why are online media willing to sell advertising space to Yi Media to make money?As Zheng Jingwei said: "Because we create value in the middle, we help the media sell the advertising space that it cannot sell, and we help advertisers find the target audience more accurately." —Easy Media's model is on the supply side Create value between the demand side and meet the needs of advertisers and media.

"The media's website has a lot of residual traffic, no matter how good a website's performance is, it must have a lot of residual traffic, and even some high-quality advertising spaces cannot be sold." Zheng Jingwei said, especially in the current economic downturn, major The website has more remaining traffic. In this case, the media’s demand is very simple, that is, to sell as many remaining advertising spaces as possible, and turn the remaining traffic into cash flow.

For advertisers, the demand side, it is necessary to negotiate with many different websites to purchase advertising space, which is obviously a labor-intensive task.More importantly, advertisers do not know which advertising spaces are the most cost-effective for them.Zheng Jingwei gave an example: "The target audience of an automobile advertisement should obviously be some people with high spending power. It is obviously meaningless to show a BMW advertisement to a child playing games in an Internet cafe. On the contrary, it should be It was pitched to a target audience who liked financial news, cars and golf information."

RTB advertising is the future

However, Yi Media is still dissatisfied with this business model of buying low and selling high, and is trying to transform.Zheng Jingwei said: "There are many costs in the business model of buying low and selling high, including sales costs, planning costs, and operating costs. The future trend of RTB advertising is another model that collects service fees from both the demand side and the supply side. "

RTB (Real Time Bidding) is a real-time bidding advertisement that allows different advertisers to bid for a user's display behavior at the same time, and the advertiser with the highest bid wins.

For the media, through this bidding model, each exposure can be sold at a higher price, and the sales process can be automated to reduce various expenses.

For advertisers, it makes the delivery of advertisements more accurate.In a sense, advertisers of RTB ads no longer buy advertising space, but people. "The current network technology can tell advertisers almost all attributes of a target audience except name, including his gender, age, preferences, region, consumption ability, etc." Zheng Jingwei said.

In this mode, Easy Media no longer needs huge operating costs and sales costs. It only needs to hand over the SSP (Supply side platform, supply-side platform) to the online media, and let the media connect the remaining advertising spaces to the SSP, and then use the DSP (Demand side platform, demand side platform) is handed over to advertisers.

In this way, when a user visits a webpage, the supply-side platform will send the bidding demand to different demand-side platforms through HTTP. The bidding demand will include various attributes of the user, and the demand-side platform can decide whether to buy or not. The target audience, how much to buy this target audience, and all of this is operated through the system and software, which greatly saves the cost of both parties.

Now, many large media have established their own advertising trading platforms. Google has Ad Exchange, Taobao has TANX, and Baidu has also started its own advertising exchange. The advertising trading platforms established by these media and the DSP of online advertising companies such as Easy Media Platforms share many similarities.But Zheng Jingwei believes that the two are not in a competitive relationship: "Our demand-side platform has now realized the docking with Ad Exchange, Taobao TANX, etc., so we are in a cooperative relationship. They do not lack resources, but they also hope that more of DSPs to access their trading platforms."

As Zheng Jingwei said: "Although RTB advertising is still in its infancy in China, there are already several advertising trading platforms, more than 20 DSPs, and several SSPs in the market. What is needed now is wider recognition from advertisers. "

Once the RTB model is recognized by advertisers, the entire industry will inevitably face blowout development.At that time, for various online advertising platforms, the competition will be technology. "Because advertising requires bidding, there is no accurate price. If the bid is too low, you may not be able to buy it, and if it is too high, you will suffer. Therefore, whether Internet advertising will do well in the future depends mainly on data and algorithms. The more data accumulated, the better the algorithm will be. Well, the more accurate it is, the less money it saves, which allows advertisers to buy the target audience they need at the lowest price on the advertising exchange platform.”

Internet advertising can be said to be the most important business model of Internet media, so it is unexpected but reasonable that Yi Media has reached today's scale.Regardless of the business model, the core of Easy Media is to fully meet the needs of customers—media and advertisers. This case tells us that as long as it can truly create value for customers, starting a business is not difficult.

(Section 2.0) The era of group buying [-] is coming
If we say that the group buying industry during the war of thousands of groups is the era of group buying 1.0, then as most of the good and bad websites are eliminated, until Meituan is profitable, and the gap between companies in the industry is further widening, the group buying industry has entered Group buying 2.0 Times, its future development trend has three aspects: 1. The mobile terminal will become a huge power channel; 2. The market in third- and fourth-tier cities will become a new round of competition hotspot; 3. The group-buying industry will become more and more vertical.

At the beginning of 2013, Wang Huiwen, vice president of Meituan, revealed that Meituan’s annual sales in 2012 reached 55 billion, and it finally achieved profitability.So far, the group buying industry, which has been losing money for three consecutive years, has finally seen its first profitable player.

Not long ago, after the first "reservation-free" service was launched in the group-buying industry, Meituan.com's performance continued to maintain rapid growth. In July 2013, the monthly transaction volume reached 7 billion yuan, surpassing the second and third largest in the group-buying industry. , the sum of the four.The group-buying industry, which has always been a mixed bag, has finally formed a clear industry structure after the group-buying industry with thousands of regiments fighting and countless farces staged.

The stormy 2010
"At that time, everyone thought that group buying was the best entrepreneurial opportunity in the history of China's Internet." Recalling the scene when the group buying industry first emerged in 2010, Wang Huiwen was quite emotional.At that time, Groupon was in full swing, and Wall Street's preference for Groupon led many domestic entrepreneurs to enter the group buying industry without hesitation.

Due to the simplicity of the model, in early 2010, Chinese group-buying websites sprung up like mushrooms, with three or four new group-buying websites appearing every day, and hundreds of them appeared in just two months.By the end of 2, there were more than a thousand group buying websites in China, and the "thousand group war" became the hottest topic in China's Internet industry that year.

At that time, the group-buying model was undoubtedly the industry most favored by capital. Therefore, for the group-buying industry, it was very easy to get financing.But with the intervention of capital, crazy expansion and competition also started.

Since the beginning of 2011, due to market competition and pressure from investors, the group-buying websites that have received investment in succession have continued to expand their market by expanding employees and sub-sites. The easiest way is to directly recruit people from competitors with high salaries. It can suppress competitors and expand its own power.Some group buying websites even directly poach the entire team of a competitor in a certain city, and poaching people with double or triple salaries has even become the norm in the group buying industry.Accompanied by vicious poaching, the group buying industry seems to have suddenly become a chaotic vegetable market.

In addition, advertising has also become another direct means for group buying websites to develop markets and build brands.Whether it is inviting celebrities to endorse, or various media such as radio, television, newspapers, and various channels on the ground, the overwhelming advertisements have been boiling this market since 2011.Therefore, 2011 was also a year when the advertising industry made a lot of money.Statistics show that in 2011, Focus Media achieved a net profit of 2 million US dollars, of which more than 50% came from the contribution of group buying websites.

2012 with sudden changes
Wang Huiwen said: "Group buying is actually a marathon race. For long-distance runners, it doesn't matter how many people participate or how fast they run at the beginning. As long as you stay in the first camp, continue to exert strength steadily, and have the last laugh." The winners are the winners.” But obviously, many group buying sites don’t realize this.Crazy expansion and a large number of offline advertisements are quickly consuming their not very rich funds. When the capital market changed suddenly in 2012, some funds were out of control due to the rapid expansion in the early stage, conflicts with the capital, and no follow-up funds. Group buying sites are starting to have more and more problems.

Ever since, in 2012, the "thousand groups" that once fought quietly disappeared, and only less than a hundred group buying websites persisted. Even many group buying websites were still flourishing in the first half of the year, and the capital market suddenly tightened in the second half of the year. The money bag, only to realize that there is no money.

The reason for Meituan's success is that instead of spending money on flashy advertising and marketing and vicious poaching, it focuses more on merchants.Wang Huiwen said: "Local merchants will consider many aspects when cooperating with group buying websites, but they are most concerned about the speed of settlement. For many companies, it is not the boss who decides whether to cooperate with group buying websites, but the person in charge of the marketing department. If the payment is very slow, the financial person will come to remind you. For example, the financial department settles the payment on the 3rd of every month. If the payment is late and the financial department cannot receive the payment, the boss of the financial department will scold people. If you let this When things happen, the person in charge of the marketing department will never dare to cooperate with this website again.”

Wang Huiwen has been in charge of the product department of Meituan since the end of 2010, but throughout 2011, from the perspective of individual users, Meituan’s products have not changed at all. Not only the outside world, but also Meituan’s internal staff are puzzled by this. .In this regard, Wang Huiwen, the VP in charge of products, said: "Why don't we make any changes to our products, because we are doing more important things, we have to concentrate our product departments on more It's done."

Three major trends in the new era of group buying
(End of this chapter)