Image source @ Visual China
Text | Kai pineapple finance (kaiboluocaijing)
The lawsuit between Li Ziqi (real name Li Jiajia) and his company Wei Nian is imminent, and the discussion around the rights and wrongs of the two sides has lasted for nearly 150 days in the public opinion field.
Previously, Kai Pineapple Finance mentioned in the article "Li Ziqi Tells Micro Nian, Who Is More Hurt" that one side is a red person with tens of millions of fans, and the other party is a micro nian company that jointly creates Li Ziqi's IP. There are contradictions between the two sides in the control of Li Ziqi's IP and the distribution of revenue. Many industry insiders mentioned that the two parties went to court, and the future outcome will most likely be a lose-lose situation.
Previously, some investors said that investment institutions are crazy to grab micro-ideas, and actually do investment in new consumer areas. What is the logic behind this? While the outside world is "eating melons", there are also many people who hope to understand from a business perspective who has mastered the core value of Li Ziqi's IP.
Let's look at it from a different perspective. In the early years, celebrities in the field of food, such as "Office Ono" and "Miko Jun", always focused on the advertising monetization model, why did they never get involved in the brand? There are many people who want to do IP brands, why are there no shortage of failure cases even if celebrities do IP brands? Wei Nian created the Li Ziqi brand, and how much did it rely on luck and how much did it rely on strength? Can the company replicate the next IP consumer brand? This article attempts to answer these questions.
Internet celebrities are difficult to value, and new consumption is popular?
According to the person in charge of an MCN company, the way to monetize around the RED IP is mainly divided into two types, advertising model and brand model. In layman's terms, the advertising model refers to the fact that celebrities achieve commercial benefits by receiving advertisements; the brand model creates an IP through the form of video and other content, and then shapes the commercial brand through IP.
Pulling the time back to 2017, when among the celebrities in the food video industry who were popular on the Internet, Li Ziqi, Office Ono, and Mizi Jun were among them. Five years later, except for Li Ziqi, everyone else has chosen the advertising model. In other words, the advertising model is the most representative monetization model in the reddist field.
The advantage of this model is that making money is faster and easier, but the disadvantage is that the value of fans is easily consumed in one advertisement after another, the income space is limited, and the life cycle of celebrities is short. The brand model is difficult to start, high risk, and high cost, but the imagination space is large, and once successful, it will have a long life cycle.
A set of data can support this. Nowadays, the advertising offer of the top UP owners of Station B is about 700,000 or so. If you receive four commercial advertisements or cooperation every month, its annual income is about 30 million. Such estimates are not conservative. Jiuqian Middle Office analysts analyzed, "Because the advertising itself is consuming the value of the talent, the vast majority of celebrities dare not take the advertisement too often." ”
In contrast, data from dolphin think tank shows that the sales of the Li Ziqi brand in 2020 are 1.6 billion. At the same time, a person close to Weinian revealed that because Weinian continued to invest in brand growth, until 2021, the Li Ziqi brand still lost 100 million. However, this kind of upfront loss is more common in the emerging consumer goods track, so even if it is a loss, the valuation given by investment institutions to Micro-Ideas is still 5 billion, because it is optimistic about the long-term return of investment.
However, for the red IP, many investors have expressed the view that they are "unwilling to pay for the red IP". The "unspoken rule" of the industry is that it is difficult to count the value of IP into valuation considerations. On the one hand, IP assets are not as easy to "digitize" as physical assets, and even after the emergence of alternative indicator IP, there is no fundamental solution to the problem of "digitization". On the other hand, with regard to people-centered investment matters, there are too many unpredictable factors and changes, and "assets" are not stable.
Source / Network
An investor who had done due diligence on Wei nian revealed to Kai Pineapple Finance that the valuation of Wei Nian's 5 billion yuan was not in the traffic of the red ip, but from the perspective of a new consumer company. There are two actual reference bases for the institution, one is the sales of the company's operating brands over the years and its planning and layout of the brand's next step; the other is that the conventional PS value of the consumer track in these two years is 3-10 times. In other words, valuations are often 3-10 times the size of sales.
On the whole, the commercial brands, ceilings and investment market recognition hatched by a red IP and a red IP are not at the "volume" level. But why do most celebrity IPs still choose to rely on advertising cooperation to complete monetization?
In this regard, Li Chengdong, founder of Dolphin Think Tank, gave an example, in 2015, Huang Lei founded the lifestyle brand "Huang Xiao Kitchen". Six years have passed, and "Huang Xiao Chef has not yet done it." In other words, there are strong professional barriers and thresholds for incubating IP into a brand, and it is difficult to achieve a top brand by relying solely on the influence of top IP.
Hatching a brand from IP requires both preliminary ideas and planning, and the strategic vision and operational capabilities of the team behind it must also withstand the test.
Li Chengdong has previously had contact with Weinian executives, and according to his understanding, Weinian has a long period of exploration before starting the brand project. Because no MCN company in China has the successful experience of building an IP into a consumer goods brand.
In the eyes of many industry insiders, in the end, it was able to incubate the brand from ip, and Weinian made two important choices at that time.
First, it has identified the development direction of the Li Ziqi brand - local cuisine, and equipped with a professional operation team, including design, product and supply chain teams to implement the plan and capital investment. In the view of Wang Chao, founder of Wenyuan Think Tank, local cuisine is indeed very compatible with Li Ziqi's IP and its combination. "In this regard, Weinian's presentation value of IP and insight into the market exceed that of most competitors."
Second, resist short-term temptations, and continue to shape and maintain the image and tone of Li Ziqi's cultural IP.
Compared with stable advertising monetization, the difficulty of doing long-term brands is that this is not a stable business, and it needs to be more firm in the difficult period of start-up.
Wang Yang, head of a fast food brand supplier, said that he was the first fan of Li Ziqi's video. In his point of view, Li Ziqi's IP has been accumulating momentum for a much longer time than the general IP, "there is no swing in the process of IP incubation of brands, and the effect of IP and brand alliance is not released prematurely."
Weinian investors have mentioned to the media that the decision to take the brand route was set at the beginning. "They (referring to the micro-nian team) decided very early that Li Ziqi would not receive advertisements and goods, and that they would make a unified Li Ziqi brand in the future, and the strategic positioning was very clear." When the agency first contacted Wei Nian, Li Ziqi's Weibo account fans were about 100,000, and after completing the investment in Wei Nian, for a long time, Wei Nian focused on supporting the promotion and operation of Li Ziqi's IP content and the long-term creation of IP tone.
Wang Song, a person close to Wei Nian, proved this, and Li Ziqi continued to have cooperation invitations in the process of increasing fans, but they all refused. This is the tacit understanding reached by the two sides in the process of jointly incubating this IP.
We make local cuisine in an industrial way
In the eyes of the outside world, the Li Ziqi brand is almost out of the blue. The online flagship store opened in August 2018 and grew into a billion-dollar consumer brand in 2019, especially snail powder became a super hit in early 2020, and plum snail powder was sold out of stock. According to a data released by Amoy Data, in the first quarter of 2021, Li Ziqi's flagship store sales exceeded 190 million.
It is undeniable that the Li Ziqi brand can go out of the circle, and the timing is very important.
The big trend behind this is that China's local food and industry is on the rise. Especially in recent years, consumers have new expectations for domestic products, and the popularity of self-heating hot pot, snail powder and other products is a confirmation of the market trend.
It can be said that the Plum Ziqi brand has stepped on the outlet of snail powder, and there is a certain luck component. Before the "dawn" of a new round of rapid development of the snail powder industry, WeiNian entered and boosted the outbreak of this subdivision category, and successfully created the explosive product of Liuzhou snail powder.
But the winning rate of entrepreneurship is affected by both luck and strength. In other words, if the entrepreneur chooses a more mature industry, or some industry that is not yet available at the right time and place, it may have to experience more pain and setbacks. An investor once said, "Good entrepreneurs may have to try and make mistakes in ways and methods, but the general direction is generally not wrong." ”
The aforementioned micro-idea investors have also publicly stated that the emergence of many explosive models has a certain inevitability. The entire link of Li Ziqi's IP from content and products to the supply chain is done step by step. The team has done a lot of calculation and selection work behind the scenes, even if the snail powder does not explode, other products will explode.
Judging from the sales of e-commerce platforms, in addition to plum snail powder, the two single products of lotus flour and rice cake created by Wei Nian also stand out and become the first sales volume in related categories. Wu Ning, founder of a local food brand, said that the Li Ziqi brand SKU is relatively small, and it is not to take the "wide net" route, but to see which categories have potential and concentrate on doing a small number of fine products. This may be one of the reasons why it can make a blockbuster in a relatively short period of time.
As a peer, Wu Ning analyzed Wei Nian's behind-the-scenes work in the past three years from the perspective of the food industry, "the most important thing is three moves".
The first step is the IP image creation and content operation that MCN is good at. As we all know, the general institutions will take advantage of the live broadcast channels, e-commerce platforms, social platforms and other ways to carry out marketing promotion, and Weinian has differentiated on this basis, that is, let the Li Ziqi brand and a number of cultural IP and intangible cultural heritage skills jointly named to enhance the cultural attributes of IP.
Li Chengdong mentioned that it is not uncommon to do joint brands, but the joint name of the Li Ziqi brand is generally a cross-border joint name with the top domestic cultural IP such as forbidden city food and national treasures, and the intangible cultural and creative products such as Hangluo, Shu embroidery tuan fan, and blue printed cloth cloak launched by the brand need to be built on the basis of certain resources to be completed. Li Ziqi brand can get these "endorsements", inseparable from the professional vision and operational strength of the team behind the scenes.
As a fan and food industry practitioner, Wang Yang believes that what Wei Nian does is the highest level of "planting grass", which can not only make the IP continue to circle the powder, but also maintain the good feeling of not consuming the brand excessively.
The second move is omnichannel layout. Li Ziqi brand products, do not rely on a single channel. Its products first appeared only in online channels such as Tmall and JD.com, but since the second year of its establishment, its products have been displayed and sold in hema, Wal-Mart, Carrefour, Rosen and other stores and convenience stores offline.
Many practitioners agree that the importance and difficulty of offline channel layout for a consumer brand. "In the entire FMCG industry, 80% of sales come from offline channels. For example, Yuanqi Forest, 85% of sales come from offline. Li Chengdong revealed that the current offline sales of the Li Ziqi brand have been considerable.
On the other hand, offline channel operation is not simple. Wu Ning told Kai Pineapple Finance that first of all, entering supermarkets and convenience stores requires a series of entry fees, and requires enterprises to hold on to at least one and a half months of accounting periods, which is a huge test for corporate financial management capabilities. In addition, the company's market operation and promotion must also keep up. "Otherwise, even if you put the goods in the store, you can't sell them."
The third step is industrial construction. Because the water is too deep and gross margins are low, the food supply chain has always been considered a notoriously hard rock.
In 2020, that is, half a year after creating snail powder products, WeiNian transformed from the industry foundry model to self-processing, announced the construction of a snail powder production plant in Liuzhou, and began to contact Universities and scientific research institutions such as Jiangnan University at the end of 2020 to negotiate the establishment of special scientific research projects for snail powder.
In the view of Wu Ning, who has investigated the snail powder industry, the supply chain of snail powder is longer than that of ordinary bagged rice noodles. Sour shoots are purchased and then pickled from farmers, snail soup involves snail farming, and the processing process of rice flour is more complicated than that of ordinary flour. A large number of jobs are either agricultural work in the field or need to be done manually by industrial workers, characterized by long cycles and non-standardization. "The snail powder industry is bigger than the outside world expects, the threshold of self-production and self-operation is higher than that of other local food tracks, and the amount of capital investment is also larger."
Although the current snail powder industry has initially matured and the supply chain is relatively complete, it is also like most products, "homogenization is serious, and price competition is fierce." If you want to do a good job, you must continue to invest and innovate. A practitioner said.
Analysts at Jiuqian Middle Office said that a large part of the reason why Weinian can be recognized by the industry is that it is going upstream, touching the supply chain and building factories.
In other words, the strategy of MicroNian to operate the brand is not to "play bad" the market through low prices and marketing, but to take a solid way of playing, do industry, from making products to expanding channels, doing markets, and deeply cultivating the supply chain, step by step.
It is not easy to build an IP consumer brand
"The public tends to be drawn to stories of overnight fame, but ignores behind-the-scenes efforts." Some insiders lamented that behind the growth of a brand, not only the front-line figures, but a whole behind-the-scenes team, not only the trend, but also long-term trial and error and investment. This is true for Li Ziqi IP, and it is also true for Wei Nian.
More than one industry insider mentioned that whether it is to create IP or build an IP brand, there is a very high professional threshold.
"Good content doesn't necessarily have to be widely disseminated, and IP needs both multi-platform operation and protection. Now a head Influencer, behind the scenes, there are at least thirty or forty people in the public relations team, specializing in public relations crisis events. Li Chengdong said.
Just as many people underestimate the difficulty of creating IP, Li Chengdong believes that the ability to "build an IP brand" is not easy to have, "there are many people who do IP, but they can really make a brand, and more than a billion scale, micro-ideas are the first."
Wang Song said that because there is no "reference answer", the process of operating the Li Ziqi brand, WeiNian has encountered almost all the difficulties that an innovative company can encounter. "Looking back now, many points were stepped on correctly, but at that time, it was completely felt like stones to cross the river, and the depth of the water was not clear."
If you refine the core ability of the Weinian trader Li Ziqi brand, the answer he gives is that one is the ability to build a "culture + consumption" brand, and the other is the ability to select and copy explosive products.
Now, the outside world's doubts about Weinian are that if the core asset of Li Ziqi "runs away", even if it has obtained the blessing of capital, the food brand and commercial territory created by Weinian mainly relying on Li Ziqi's IP may also be "cleared overnight". This situation also forced Wei Nian to come up with the next "work".
Can Micro-Nian replicate the next consumer brand? This may have yet to be tested by time and the market. However, it is certain that it will not be a cold start, and Weinian can put the layout of channels and supply chains into use.
In addition to this sensational controversy, a number of investors mentioned to Kai Pineapple Finance that in the future, content and consumption will continue to be deeply integrated. Under the wave of new domestic products, celebrities need more high-quality and rich monetization paths, and the food industry needs more product development paths suitable for the times. Therefore, entrepreneurial opportunities will also arise in the industry, and innovative companies with the ability to integrate IP and industry will be born. Regardless of the outcome of this controversy, at this juncture, the model and methodology of micro-conception provide a valuable and reference model for the industry.
*At the request of the interviewees, Wang Song, Lin Zheng and Wu Ning are pseudonyms.