As a leading user operation SaaS and interactive performance advertising service provider in China, 1753.HK Group released its 2021 annual results on March 31, 2022.
From the performance data, we can see that the revenue and net loss of the bar have stabilized and begun to develop in a good direction. The company's revenue increased by 23% over 2020 to 1.312 billion yuan; at the same time, the net loss attributable to the mother also narrowed by 81.5% over the same period last year, reducing the loss to -11.773 million yuan, and the adjusted net profit of the year achieved a turnaround to a profit of 11.97 million yuan.
At the same time, the growth in gross profit reflects the resilience of the company's main business. In 2021, the gross profit of the bar recorded 370 million yuan, a substantial increase of 65.2% year-on-year; the gross profit margin was 28.2%, an increase of 7.3 percentage points year-on-year; and the balance of cash and equivalents at the end of the year increased by 66.9% to 226 million yuan, with relatively sufficient reserves.
In particular, it is worth mentioning that the company's interactive advertising platform pushes ah, and the performance shows a certain recovery trend in 2021. The mid-tail APP aggregate traffic contributed by it provides strong support for the steady growth of customers under the dome.
However, the announcement also mentioned that the interactive effect advertising business, as a "cash cow" driven by dual main business operations, suffered a sudden budget loss of important head customers in the second half of 2021, and did not tap into similar sizes of customers in the short term to make up for it, resulting in the overall recovery of the business being dragged down. The important customers mentioned are the sudden changes in their delivery strategies due to changes in their own market environment, and they are associated with the increasingly stringent Internet regulatory policies in recent years, and the performance impact of such cooperative customers may come from the whole industry rather than the advertising model specifically for the exchange bar.
Although the State Administration for Market Regulation only issued the Measures for the Administration of Internet Advertising on November 26, 2021 to further improve the industry regulatory system, the Internet advertising market has already shown a chill in advance. According to the results of the third quarter of 2021 disclosed by some Internet companies, the growth rate of most advertising businesses has slowed down. According to the financial report data of each company, the year-on-year growth rate of advertising business revenue of Tencent Holdings, Alibaba, Baidu, Kuaishou, Pinduoduo, Meituan, iQiyi, Bilibili, Weibo and Zhihu was 5.4%/6.0%/5.3%/76.5%/44%/41.7%/-9.8%/109.3%/22.9%/38.9%, respectively, compared with the year-on-year growth rate in the second quarter of that year. Not only that, the recent fourth quarter results of 2021 disclosed by Tencent Holdings also show that due to the macroeconomic environment and weak advertising demand in education, games and Internet services, etc., the 2021Q4 fell by 13% year-on-year, and the advertising business is expected to resume growth in late 2022. According to AppGrowing data, in the mobile advertising market in 2020, the number of games, education and training, and financial ads accounted for 13%/6%/4% respectively, while the recent slowdown in the pace of game version issuance, the "double reduction" of K12 education and training, and the tightening of supervision in the Internet financial industry have led to pressure on the advertising demand side of key industries.
According to the analysis of the media research team of Huaan Securities, the new regulations on Internet advertising supervision will further promote the high-quality development of the Internet advertising industry in the long run for advertising forms such as "one-click closure", advertising content such as K12, and the main responsibilities of advertising publishers and spokespersons. The interactive effect advertising business of The Bar belongs to the "small and beautiful" form of effect advertising, and if the business risks caused by the singleness of customer structure can be alleviated as soon as possible and the diversified customer marketing strategy can be implemented in a timely manner, it is expected that the stability of the future business will be strengthened.
01
The overall quality and efficiency of the business are improved
Duiba is the first share of interactive advertising in China, with a domestic interactive advertising market share of more than 80%, and its revenue has maintained steady growth all year round, and now it has more than 100 million UV visits per day.
The overall logic of the company's business model is to help companies achieve user acquisition, retention and contact in a more cost-effective way, that is, by accumulating traffic on the SaaS platform and monetizing through interactive performance ads. In terms of interactive effect advertising, Tui Bar has more than 6 years of Know-how precipitation, making this part of the business growth very stable.
This business increases user engagement through interactive activities, which in turn direct users to the advertiser's designated mobile Internet page, where the bar is billed by the user's clicks.
In 2021, the revenue of interactive effect advertising reached 1.31 billion yuan, an increase of 15.1% year-on-year; there were 4923 distribution channels and 1492 terminal advertisers. More specific data intuitively shows the results of improving the quality and efficiency of the advertising business - although the number of channels and advertisers has declined, the number of daily active users and monthly active users has increased significantly, the click conversion rate has remained stable, and the average revenue per billing under the CPC model has remained unchanged. In other words, using fewer channels, the Interactive Huanggao business has shown no less effective than in previous years in 2021, and the overall revenue has even maintained steady growth.
In the long run, the growth space of the advertising business of The Bar lies in further exploring the opportunities brought by the existing resources in the Internet market where the traffic dividend has peaked. The peak of the head traffic dividend has become the consensus of the industry, the marginal increase in the cost of obtaining customers by Internet companies, the acceleration of the industry as a whole from traffic-driven to profit realization, and the stock competition in the traffic market has actually begun.
In short, the head traffic peaked, and the giants have rummaged down in search of incremental space.
02
Grasp the pain points of the stock market
It is at this time, relying on the business logic of the exchange bar, the interactive advertising business has steadily cashed in.
According to the data provided by the insiders of the exchange bar, the current interactive advertising platform of the company, Tui Ah, the location of the operation scene in its APP and other entrances can exceed 150 million times a day of advertising exposure; during the Double Eleven and Double Twelve promotions, Taobao, JD.com, Meituan and other large platforms can be revitalized through Tui Ah interactive advertising, and even reach a budget consumption of 1 million to 2 million per day.
What does an average of 150 million daily exposures mean? It should be noted that the peak of daily consumption of a single e-commerce promotion is already at the level of one million, so it needs huge traffic to undertake. Bring in the traffic generated by 150 million exposures, assuming that the e-commerce traffic conversion rate range (0.4% to 65%) calculated by the Zhejiang Securities Research Institute is measured, then the daily traffic of 150 million times means that the ability to bring flowing water to customers every day is between 600,000 and 97.5 million yuan.
According to insiders, the interactive advertising traffic of Tui Ah is not only rich in sources, but also very fragmented. It can be speculated that this part of the traffic does not come from the header traffic port, but from the aggregate traffic of the middle and tail APP. The value of this part of the traffic still needs to be fully tapped, because there are still more than 50,000 mid-tail APP traffic ports in the Chinese market, and these traffics are gathered together to form a huge scale and bring huge opportunities for traffic monetization.
In 2016, Tui Ah launched the first interactive advertisement, aiming to "let users interact with the brand/content", without disturbing users to use the original functions of the APP, to attract users with fun and interesting interactions.
In the next 5 years, its advertising form continued to iterate. For example, for different scenarios to complete the optimization, so that users and advertising interaction and APP use scenarios closely integrated, the user passively accepts information to active acceptance; the operation from watching ads to payment is simplified, the traffic conversion process is more direct; fine user research, optimize the entrance material, so that users have the desire to click on the advertisement; improve the algorithm matching mechanism, with the help of AI for efficient data analysis and decision-making, etc.
Considerable traffic scale, excellent browsing experience and even accompanying process have formed a logical closed loop of continuous self-realization, bringing new traffic dividend growth space in the Internet industry.
Based on these abilities to alleviate industry anxiety, interactive advertising has been launched so far, and Tui Ah has served a large number of head budget customers, including JD.com, Kuaishou, Taobao, China Merchants Bank, Pinduoduo, etc. At present, the annual budget of insurance, operators, e-commerce, membership cards and other advertising types of Tui ah service exceeds 2 billion, and the number of advertising resources invested in the market exceeds 400. Recently, Tui Ah has brought another round of breakthroughs to the exchange bar - Taobao sale, Baidu, Beijing Tokyo Hi, and Meituan have all become the company's advertisers.