From Traffic to User Remaining, New Strategy in Current Inventory Game

Competition in China Giants has never been so fierce as it is today.

In the past, the giants would be keen to tell a story to everyone: “My field is a fertile, uncultivated land. In this land, I have a huge advantage.”

Today, this story is difficult to continue. The reason is: “Yes, you still have an advantage on this fertile soil. The problem is, this fertile soil has almost been cultivated by you!”

The mobile Internet market enters inventory from increment.

1. From increment to inventory, the change of mobile Internet game

Since the birth of the iPhone in 2007, the human Internet has experienced a period of vigorous growth. Countless new companies were born, countless great companies emerged, countless people wrote about their success in this industry.

Today, the mobile Internet has reached the end of the industrial cycle, and the new industrial cycle has not yet begun.

• In the first half of 2020, China’s mobile Internet monthly active users only grew by 8.47 million, a pitiful 0.75% growth rate.
• The growth rate of spending time of mobile Internet users is only 5.2%.
• The number of open apps per capita was 24.5 in 2019, and it will still be 24.5 in 2020. With 0 growth, people are no longer willing to try new apps.
• In Q1 2020, China’s smartphone sales were only 66.6 million units, a year-on-year decrease of 20.3%.

All the Internet macro data show that the mobile Internet has entered the inventory game. This change will inevitably lead to changes in the rules of the game. The era of rapid expansion is over, and the era of careful operating has begun.

2. Transition from monthly active users to daily active users

For Chinese Internet giants, monthly active users is an important KPI.

Beginning in 2019, Twitter announced that it would no longer disclose monthly active users data in its financial reports, and changed it to “monetization of monthly active users.”

This transformation of Twitter reflects on the one hand that it is becoming more and more difficult for the monthly active users data to grow under the inventory game. On the other hand, it also reflects that companies are paying more and more attention to more tangible indicators.

Let’s look at another important indicator. Penetration rate is the ratio of the number of users of the company’s products to the total number of users on the Internet. In June 2020, Tencent’s penetration rate was 98.6%, Ali’s 97.6%, Baidu’s 91.2%, Toutiao’s 66.7%, and Kuaishou’s 44.7%.

For the giants, their penetration rate has reached a very high level and is close to the ceiling. Therefore, for these head giants, a more realistic strategy is to convert more monthly active users into daily active users. In this conversion, spending time is the key to KPI.

How to convert monthly active users into daily active users, thereby increasing user spending time?

Many people’s answers may be more activities, cash subsidies, etc. But today, such an operation is difficult to bear fruit. Advertising may be one of the few effective strategies of all growth methods, but advertising is an extremely professional science.

What kind of media to choose? What kind of creativity? How to grasp the delivery rhythm? How to get the best price correctly? How to effectively measure ROI? These problems have posed a lot of challenges for advertisers.

Advertising is actually an investment in essence, and every time you choose to shoot, you need to get benefits and results. Since it is an investment, it pays attention to the rate of return. Good advertising operation is the key to inventory game.

3, Careful Operating & Management

The current growth of the mobile Internet requires a careful operation of technology, products, operations, and markets to improve conversion and ROI at every step.

Now many platforms in China have developed RTA (Real Time API) systems for precise advertising. It allows advertisers to control the target population of advertisements in a more precise way, thereby achieving precise approaching and improving conversion efficiency.

Tencent’s RTB (RealTime Bid) system realizes 50% of User Remaining, truly transforming the “Traffic” of advertising into “User Remaining”. User Remaining is far more important than Traffic.