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Wen / Zhiyi
The story in the elevator is wonderful, but it’s hard to tell the flowers.
On August 20, focus media released the semi annual report of 2020. In the first half of this year, the company’s operating revenue reached 4.61 billion yuan, a year-on-year decrease of 19.35%. The net profit attributable to shareholders of listed companies was 820 million yuan, up 5.85% year on year. Among them, the net profit in the second quarter was 785 million yuan, with a year-on-year increase of 79.2%.
According to the report, elevator advertising in the second quarter has returned to normal, and the demand of advertisers is increasing, especially in consumer goods, online education and other industries. At the same time, the company’s operating costs decreased by 31.63% compared with the same period last year, which was mainly affected by the sharp drop in theater media rental costs (the closure of cinemas) and the contraction of some building media resources.
The decline in revenue narrowed and the net profit increased by 80% in a single quarter
The operating revenue of focus media mainly includes building media revenue and cinema media revenue, accounting for 96.38% and 3.15% respectively. In the same period last year, the two figures were 82.18% and 17.18%. The decline in the proportion of cinema media revenue was mainly affected by the closure of epidemic cinemas.
In terms of media resources, according to the focus media report, as of July 31, compared with the end of 2019, the number of domestic self operated “elevator TV media” resources of the company was 182000 in first tier cities, about 11000 units less than that at the end of 2019, and 354000 sets in second tier cities, 29000 units less than the end of last year; “elevator poster media” resources in the first and second tier cities decreased by 29000 respectively In the report, focus media called it “optimizing and sorting out the media resources”.
Source: Focus Media 2020 semi annual report
Focus Media achieved a year-on-year increase of nearly 80% in the second quarter, which is also due to the “control” of the company’s operating costs and preferential tax policies.
According to the report, the cost of building advertising business decreased by 17.81% year-on-year, while the revenue was only 5.41% less, and the gross profit rate was 51.23%, with a year-on-year increase of 7.36%.
Operating costs decreased by 31.63% compared with the same period last year. The sales expenses decreased by 16.52% year on year. Due to the closure of cinemas and other rental costs, the rental cost of building media resources decreased by 89.77% and 14.35% respectively.
In terms of enjoying tax and other policies, the company’s tax exemption in the first half of the year was 26 million yuan, which was 85.05% lower than 172 million yuan in the same period last year.
It is better to reduce the cost and enjoy the preferential policies of the state, and focus media is better under the pressure of the epidemic situation.
The performance of focus media is also in line with the overall advertising market.
According to the data of CTR media Zhixun, in June 2020, the overall advertising case cost increased by 1.0% month on month, with a year-on-year decrease of 12.6%. From the perspective of advertising channel performance, the growth of elevator advertising is obvious, and the year-on-year growth of posters and LCD is more than 20%. In specific enterprises, ape guidance, XRS and tmall increased the most significantly.
Data source: CTR media intelligence
Although Internet advertising is booming, the offline advertising market is still a good market.
Jiang nanchun, chairman of focus media, said: “focus media has covered hundreds of thousands of office buildings and community apartment buildings, covering 310 million urban mainstream people. They are the mainstream population with the most consumption power and wind vane value in China. Focus media has formed high-frequency and mandatory effective touch in the closed elevator scene that they have to go through every day. In the future, the value of the scarce resources as the core entrance of offline traffic will become increasingly apparent. ”
This “cake” also ushered in the giant’s participation and competition. Ali, Baidu, Jingdong and Tencent entered the market one after another, forming a situation of “competition among the three countries”.
In July 2018, Alibaba group took a strategic stake in focus media with about RMB 15 billion, becoming the second largest shareholder after CEO Jiang nanchun. According to the semi annual report, Alibaba is now the third largest shareholder of focus media, with a shareholding ratio of 5.28%.
Source: Focus Media 2020 semi annual report
Ji Hairong, director and chief marketing officer of focus media, disclosed in March that focus media had transformed most of its screens to the Internet of things last year, enabling remote monitoring of their broadcast status. The combination with Alibaba also enables focus media to get a lot of e-commerce data and make more accurate advertising push. According to the data of CTR media Zhixun, tmall is one of the most important advertising providers of focus media.
The second player in the building advertising industry, new fashion media, is flashing the shadow of Baidu and Jingdong.
In November 2018, new wave media announced the completion of a new round of financing. This round of financing totaled 2.1 billion yuan, led by Baidu. After the establishment of the cooperative relationship between the two sides, Xinchao has become a new member of Baidu juping’s media advertising alliance, realizing the deep integration of the community offline elevator screen network and Baidu’s online data. In August 2019, Jingdong led the investment of new fashion media with an investment of 1 billion yuan.
The third player, Tencent, led the investment in round B financing of Ti Ying media in October 2019. The latter, established in 2017, focuses on digital advertising services of high-end commercial buildings, and is a new player in building advertising.
A large number of Internet advertising players enter the online and offline, which realizes the maximum integration of advertising resources, and has higher accuracy and greater potential for customers.
Focus media has defined the elevator scene with four words: mainstream crowd, must pass, high frequency and low interference, and these four words are undoubtedly the core scarce resources that ignite brand advertising today. However, the story in the elevator is wonderful, but it is difficult to continue to tell the flowers.
Advertising screen to live screen
The development of Internet advertising business will inevitably squeeze the market share of other advertising channels.
According to the annual insight report on China’s online advertising market in 2020 released by iResearch in July, the scale of China’s online advertising market in 2019 will reach 646.43 billion yuan, with a year-on-year growth of 30.2%. It is estimated that the market scale will reach nearly one trillion yuan in 2021, and the budget allocation of advertisers will be transferred to marketing operation and content marketing distribution.
During this year’s epidemic, live with goods fire, become a new favorite of brand owners. According to an employee of an advertising trading platform, during the epidemic period, the number of advertisers seeking the effect of live delivery with goods increased greatly, while the demand for brand advertising decreased a lot. Some customers even directly cut down half of the brand advertising budget, and elevator advertising belonging to brand advertising was inevitably affected.
However, Jiang nanchun still seems to be confident about the future of elevator advertising. He even wrote an article in the media, saying: “most enterprises are busy with traffic, short videos, live broadcasting, and planting grass on the Internet. Every live broadcast is the lowest price of the whole network, just like eating Viagra. After a short period of high tide, it is a longer period of weakness.”
And brand advertising, such as elevator advertising, “brand power is the real immunity of enterprises… The key time is to save lives, is to determine life and death.”.
Having said that, the boundary between brand advertising and marketing advertising is not unbreakable. Recently, focus media, together with Xiao Shen long, Xie Na and Hua Shao, launched a live broadcast of the “focus on good things Festival”, turning the advertising screen into a “live screen”, so as to make elevator advertising more content-based, improve marketing efficiency, and further break the boundary between online and offline marketing.
In the current advertising trend, in addition to the elevator, focus media may need to find more “Internet style” play.
Please note that this document should not be considered as any investment proposal
(statement: This article only represents the author’s point of view, not Sina’s position.)