Advertising is an economic barometer. In the macroeconomic pressure environment, the size of the domestic advertising market has declined. Statistics show that China's advertising market fell 8.8% year-on-year in the first half of the year, while the decline in traditional media was even worse, reaching 12.8% year-on-year.
Against this background, Ruicheng China Media successfully completed the listing of the main board of Hong Kong stocks, and handed over a different answer. According to the prospecto, Ruicheng's revenue for the three years 2016-2018 was RMB313 million, RMB661 million and RMB783 million respectively, with adjusted net profit of RMB15.76 million, RMB37.74 million and RMB50.76 million, respectively.
The results-driven share price has risen, making it one of the top 10 new shares in Hong Kong in 2019.
Advertisers' willingness to deliver has declined, the overall size of the market has declined, and where are the incremental opportunities in the market? How do advertisers break through? As a well-known domestic advertising marketer, whether from the current industry environment, or the company's development strategy adjustment, the trend of growth of Ruicheng to answer these questions to provide an important observation sample.
01, the number of forcesword advertising service
According to the prospecto, Ruicheng's revenue has maintained rapid growth in recent years. From the revenue structure, as the main revenue source of the TELEVISION advertising business followed the trend of the entire industry, there has been a decline, and digital advertising and outdoor advertising business perfect, for ruicheng's growth into a new impetus.
Among them, Ruicheng's 2016-2018 digital advertising revenue was 4.33 million, 33.15 million and 196 million yuan, respectively. The company continued to grow several times as strongly in the first four months of 2019, on the basis of a 491% year-on-year increase in 2018.
It is worth noting that in the first four months of 2019, Ruicheng's digital advertising revenue accounted for 46.7%, surpassing tv advertising revenue of 43.7%, becoming the largest revenue contribution.
In addition, the gross margin of the digital advertising business remains higher than that of the television advertising business, despite the price competition strategy adopted by Ruicheng in exchange for the growth of the digital advertising business. Driven by high growth and a high gross margin digital advertising business, Ruicheng has successfully highlighted the focus.
Ruicheng to start with television advertising, after years of development, has accumulated a number of advertisers from all walks of life, such as well-known beverage enterprises Wang Laoji, well-known kitchen electrical manufacturers, domestic telecommunications giants. At the same time with the first-line provincial satellite television stations to establish a deep cooperative relationship, such as Jiangsu Satellite TV, Hunan Satellite TV, Zhejiang Satellite TV and so on. With the advantage of resources, Ruicheng has established a leading industry position.
Subsequently, in 2007 and 2011, Ruicheng signed the first outdoor advertising and digital advertising service contract with advertisers, respectively, through the horizontal expansion of the business layout, to achieve the layout of all-media advertising services. Not only that, in 2017, Ruicheng will shift its strategic focus to digital advertising, and continue to focus on digital advertising.
It can be said that it is this forward-looking strategic adjustment, so that Ruicheng in the industry down period to seize the development opportunities, to achieve steady growth. The bright operating data of digital advertising business verify the correctness of Ruicheng's strategic layout and give the confidence of the capital market to increase its holdings.
02, the advertising industry's structural opportunities
After a long period of high-speed growth, China's advertising market is turning to a stable stage of development.On the one hand, advertisers will be more cautious about running ads as the macro economy enters a period of bottoming out. On the other hand, the domestic population dividend peaked, especially the Internet traffic dividend subsided, access to new traffic is becoming more and more difficult, advertising effect is not as good as the dividend period.
In the stage of the transformation of the incremental market want stock market, the differentiation of the advertising industry becomes more and more obvious, and finally forms the two categories of brand advertising and effect advertising. Among them, the effect of advertising mainly concentrated in the online platform, while brand advertising is online and offline. Relatively speaking, the effect advertisement is oriented to the transformation effect, can directly promote the sales, bring the revenue.
At a time of increasing macroeconomic downs, advertisers tend to shift more and more budgets from brand advertising to performance advertising, which means there are structural opportunities where performance advertising is counter-cyclical.
As can be seen from the advertising revenue of domestic Internet companies, in the first half of 2019, not all Internet companies have seen a decline in advertising revenue, including Baidu, NetEase, Ai Qiyi and other advertising revenue growth is weak, while Alibaba, fun headlines, byte beat and other enterprises to achieve counter-trend growth.
In such a big trend, Ruicheng through the strategic layout of digital advertising and outdoor advertising business, to seize the effect of advertising rise of new dividends.
Digital advertising mainly through search engines, e-commerce advertising, information flow advertising and other ways, online multimedia platform to consumers to convey marketing information, is the fastest growing advertising sector. Specifically, search engine ads, advertisers can buy specific keywords and sites of organic search rankings, with consumer search results to match in order to promote. E-commerce ads are usually clickable and linked to related product pages to drive online sales. Streaming ads match the form, style, and functionality of their presentation platform and appear as articles or short films.
Because it can be more accurate, performance advertising is a major use of digital advertising, advertising resource providers by attracting Internet users to browse or click on the platform ads to help advertisers promote and sell. The performance ad pricing model charges advertisers based on the cost per thousand exposures or per click.
And the building advertising as the representative of the outdoor advertising price-performance ratio is gradually emerging, in the price tends to be reasonable at the same time, the effect is also improving, more and more attract advertisers to increase delivery. Now advertising resources providers of building video and frame thousands of displays about 30-40 yuan, has been lower than the Internet end brand advertising type. And building video advertising and other high traffic and repeated to make the effect of improved.
From the financial report, Ruicheng's new business strategy has achieved remarkable results, in which the proportion of digital advertising contribution to revenue continues to rise, almost half of the revenue, has become its largest source of revenue. The importance of digital advertising speaks for itself.
03, drive into the fast lane of development
According to research by third-party agencies, China's advertising capacity will reach about 1110.4 billion yuan by 2023, based on advertisers' spending. However, it can be noted that the compound growth rate for 2019-2023 has slowed to a single-digit growth rate of 8.2%, while digital advertising has maintained a rapid growth rate of 13.8%.
According to the study, China's digital advertising market increased from about 147.5 billion yuan in 2014 to about 348.1 billion yuan in 2018, with a compound annual growth rate of 23.9%. The market size is expected to further increase to about 664.3 billion yuan by 2023 at a compound annual growth rate of 13.8%.
Faster growth creates tremendous opportunities. Compared with the 348.1 billion yuan digital advertising business in 2018, Ruicheng's digital advertising revenue is only about 196 million yuan, accounting for about 0.6% of the digital advertising media service market, with great potential for development. In addition to enjoying the overall dividend of the digital advertising business, but also through the listing to enhance capital strength, and so on, to further expand the market share of digital advertising, is expected to achieve far more growth than the industry.
First, in a more precise trend, digital advertising requires advertisers to use the latest media platforms and strategies to reach consumers, content, channels and operations have higher requirements. And Ruicheng in the industry for many years, formed a set of mature advertising methodology, can make its rapid layout of the new digital advertising platform.
Second, digital advertising marketing resources are highly concentrated. Basically, the leading providers of digital advertising resources are Baidu, Alibaba, Tencent and Byte Beats, and the big five Internet giants already account for more than 80% of online traffic. Most of the advertising resources of these internet giants are already in the possession of leading digital advertising services. As a head advertising service provider, Ruicheng occupies a significant resource advantage.
Finally, based on the results of the BIDDING, the listing raised about HK$125 million and is expected to be used to further develop the digital advertising business. With the addition of capital, Ruicheng's digital advertising service is expected to maintain high growth and become a major source of revenue, pushing the company into the fast track of development.
Looking to the future, with the macroeconomic slowdown, advertisers demand pressure, the advertising industry ushered in challenges and opportunities coexisting situation. In the process of industry adjustment, the effect advertisement will become the trend, only seize the new development opportunity to grow against the trend.
The essence of the sustainable development of enterprises is to constantly create new growth points. Charles Handy, a well-known management scholar, points out in "The Second Curve: Secondary Growth Across the "S-Curve" that if a company can find the "second curve" that leads the company to its second take-off before the first curve reaches its peak, and the second curve begins to grow before the first curve reaches its peak, the vision of sustainable growth can be realized. It can be said that the digital advertising business is the second curve of Ruicheng's re-development, which paints a rapid growth vision for the capital market.
Introduction to operating accounts:Weibo: The Big Bear: Fans2.55 million
Wechat.:A total of fans of the adnable big bear (zn10961242), the big bear financial review (daxiongcaijing), and the big bear club (daxionghui2015).500,000 plus
100 numbers: Fans.490,000 plus
Today's headlines: Fans.170,000 plus
Honors:
Weibo 2015-2019, five years in a rowTechnologyE-commerce's top ten most influential double material big V
2019 Baidu 100 Number of the Year high-quality personal creator
2019 Economic Observer Annual Financial Self-Media
2018 Baidu dynamic influence red people
Crowley's most influential technology connected from the media from 2017 to 2019
Blue Whale 2017 From The Media Alliance's Technology Big V of the Year
2017 From the Media Writer Geek Awards
2016 Sina Technology from the media industry leader
Phoenix Self-Media Person of the Year 2015
The top 10 self-media of the 2015 Fast Track Network New Media Alliance
Go to "Discovery" - "Take a look" browse "Friends are watching"