Produced by Tiger Sniff Commercial Consumer Group
Author|Huang Qingchun
Visual China
The little red book shrouded in the halo is quietly wrapped in a profitable "fur".
Recently, "LatePost" reported that Zhao Weichen, the former secretary of the board of directors and general manager of the corporate development and investor relations department of Yika Technology, was recruited by Xiaohongshu to serve as the head of commercialization of the Internet industry, and reported to Zhiheng, CMO of Xiaohongshu.
Tiger Sniff understands that Xiaohongshu's advertising business continues to iterate, and the model is mainly divided into three categories: one is for the resource package of brands \ advertisers, which is charged according to different pricing models, the second is based on the content of weeding "commission", and the third is the flow of bloggers and brand merchants - it is reported that Xiaohongshu regards the Internet industry as one of the directions for advertising revenue in 2024.
Previously, foreign media quoted sources familiar with the matter as saying that Xiaohongshu's revenue in 2023 will be US$3.7 billion, an increase of 85% from US$2 billion in 2022, and its net profit will be US$500 million, significantly exceeding the US$50 million expected at the beginning of the year, and turning losses into profits compared with 2022 (loss of US$200 million) - mainly due to the growth of advertising business with high gross margins and the transformation of e-commerce models.
In this regard, a person close to Xiaohongshu told Tiger Sniff that there are two backgrounds for the rise of Xiaohongshu's e-commerce in 2023: one is that the community is integrated into e-commerce (previously biased shelves), and the product feed stream will increase the proportion of live broadcast rooms and business notes;
"Dong Jie and Zhang Xiaohui grew up naturally, and the buyer model is mostly the marketing effect, and it is more about strengthening the mentality of 'Xiaohongshu live broadcast (bringing goods) to the outside world. According to the above-mentioned person, in 2024, Xiaohongshu e-commerce will focus on mid-waist IP incubation.
So far, advertising and e-commerce have outlined the prototype of Xiaohongshu's business territory from dots into lines - and in the narrative of traffic leading the tide, Xiaohongshu has already torn a hole in the live broadcast territory full of giants.
Hold the thighs of the advertisement
Xiaohongshu's commercialization is inseparable from the pumping blood of the advertising business - specifically, it is mainly supported by brand advertising and effect advertising:
- Brand advertising mainly includes various forms such as opening screen, flame topic, surprise box, etc., and the billing method can be display duration, impression volume, fixed price, etc.;
- Performance advertising is mainly digested through the spotlight platform (in-feed advertising, video streaming advertising, search advertising, etc.) and Qianfan platform (note marketing, live broadcast promotion, etc.), and is charged according to the effect - for example, in-feed advertising and search advertising are mainly billed on a CPC (click-through) basis, and the CTR (click-through rate) of search advertising is generally higher than the pricing of in-feed advertising.
Therefore, Xiaohongshu has successively launched products such as "Search Quick Investment" and "Search Direct Investment" to attract high-intent users and improve brand conversion - its advantage lies in opening up search + push, for example, the whole site intelligent investment can be both searched and pushed (similar to the byte of the huge engine, the core bidding form of effect advertising is divided into two types: search bidding and information flow bidding);
Tiger Sniff communicated with three brand marketing leaders and found that there are two data that the brand is core concerned about in the launch of Xiaohongshu: one is the interaction data, and the other is the cost of a single UV spillover from other platforms in the notes - some cooperation notes in Xiaohongshu (in the search field) can be directly jumped to the outside to help brands evaluate the effect of advertising and spillover.
A person close to Douyin told Tiger Sniff that the Douyin e-commerce team once thought that it could learn from the two advantages of Xiaohongshu's grass planting and content marketing:
- On the one hand, Douyin focuses on the technology of drainage and user group growth, and continues to enrich user portraits in historical UG (user growth) to reconstruct users' potential consumption demands.
- On the other hand, Douyin actively promotes the effective introduction of Xiaohongshu influencers and service providers, which in turn feeds back its e-commerce ecosystem.
In particular, Xiaohongshu live ads began to be valued by brands from the end of 2022 to 2023. Tiger Sniff understands that the ROI of Xiaohongshu's live broadcast advertising is usually between 3-4, which is lower than that of platforms such as Douyin and Taobao, but for new and old brands, it can drive the overflow of brands on the whole platform, which is still a good increment - from the perspective of traffic, traditional e-commerce platforms are traffic devourers, and they do not generate enough traffic by themselves, and they need to continuously divert traffic from various places, and there will always be traffic anxiety; Note-taking boosts business efficiency.
A Xiaohongshu commercializer analyzed to Tiger Sniff that the company's commercialization has indeed accelerated in the past two years. "The internal strategy in 2022 is to 'capture the grass planting mentality' - before grass planting was more of an advertiser's marketing direction and brand thing, and it was difficult for brands to measure the value of Xiaohongshu's advertising, so Zhiheng (CMO) said that it is necessary to turn grass planting into 'science' (launch grass planting value - TrueInterest to make grass marketing measurable and optimized);The most important piece in 2023 is the expansion of the commercial team, covering the automotive industry and life services (Swan to Home, 58 The main business in the same city), and even games have begun to be launched on Xiaohongshu. ”
In addition, Douyin's traffic is mainly achieved through Qianchuan's effect advertising to achieve closed-loop transactions, while Xiaohongshu content and KOL notes have always existed on the platform, and the information flow can be observed through the upward trend of search on other e-commerce platforms after heating - after all, advertisers usually determine their advertising strategies based on expected ROI, other e-commerce platforms (Tmall, Pinduoduo, JD.com, Douyin, etc.) pay more attention to transactions, while Xiaohongshu pays more attention to brand advertising and content promotion, which is mainly used for brand promotion and improving users' minds.
Judging from the development of the past ten years, the core of Xiaohongshu's spirit is the desire to share, which is supported by the community atmosphere and friendliness, that is, the extent to which the platform can accommodate ordinary users;
The two influencer brands of Tiger Sniff Communication have adjusted their marketing strategies in 2024 - Xiaohongshu has the fastest growth in the proportion of online advertising investment. Specifically, Douyin accounts for more than 50%, Xiaohongshu accounts for about 15%, and the rest are channels such as Shuangwei (about 15% on WeChat + Weibo) and Kuaishou (about 10%).
However, there is still a big gap between Xiaohongshu's data analysis and algorithmic crowd portrait compared with Douyin - Xiaohongshu's recommendation accuracy still needs to be continuously improved through algorithm models, while Douyin can circle brand-related people and people interested in categories through cloud map tools to ensure the quality of delivery.
It is worth mentioning that Xiaohongshu has launched the "crowd anti-funnel model", trying to locate core users first, and then expand high-potential groups and pan-interest groups, so that the product continues to break the circle - but a person in charge of brand operation told Tiger Sniff: "At present, most of the basic tags given by Xiaohongshu are basic tags (such as region, number of people entering the live broadcast room, length of stay, etc.), and the in-depth crowd portrait information is limited. ”
In contrast, platforms such as Tmall and Douyin offer more data analysis tools to help brands evaluate their performance on the platform. For example, Tmall can judge the brand's attention and the number of potential customers on the platform through the concept of data banking and brand equity, and help the brand make decisions; Douyin evaluates the brand's voice and potential customers on the platform through SaaS software in multiple dimensions, and the Douyin streaming data report includes data such as the number of people attracted to the live broadcast room, dwell time, repurchase and secondary repurchase of specific products, etc., which can better understand the advertising effect and problems.
However, another agency service provider told Tiger Sniff that Xiaohongshu is improving similar data analysis tools to help brands decide on delivery strategies, "Xiaohongshu's Lingxi platform is solving this problem, and some leading brands and agents are already using it."
Sheng Xiang, head of Xiaohongshu's marketing lab, previously shared, "Xiaohongshu has more than 200 special group labels, and the home category alone has launched 20 Xiaohongshu characteristic lifestyle groups according to 7 latitudes and 21 indicators." ”
The ceiling has to be supported by e-commerce
In fact, Xiaohongshu has been secretly building up momentum for e-commerce.
Since 2014, Xiaohongshu has successively tested the waters of self-operation, live broadcasting, and note-taking delivery, but unfortunately it has not cultivated the user's on-site consumption mentality, which is largely due to the swing of Xiaohongshu's strategy - previously, e-commerce and commercialization were cut into two parts, and Xiaohongshu's live broadcast business was officially launched in early 2020, and the two forms of live streaming (store broadcasting, Dabo) and content live broadcast were parallel, until the management sensed the huge potential energy swept by live broadcast e-commerce, in 2022 The community e-commerce strategy was vigorously promoted before the e-commerce was merged into the community department.
The turning point began in early 2023 when the "Dong Jie effect" broke the circle, and Xiaohongshu finally waited for an opportunity:
- On the one hand, organize the cultivation of internal strength. Invest a lot of manpower and resources to improve the service capacity of brand production chain, logistics chain, after-sales service and other aspects;
- On the other hand, in September 2023, Xiaohongshu successively shut down self-operated e-commerce companies such as Little Oasis and Welfare Society, and established a "buyer-centric" e-commerce model after prioritizing commercialization and community atmosphere.
In horizontal comparison, Taobao is a shelf "people looking for goods" model, the core of which is to match goods and consumers to the greatest extent, while Douyin and Kuaishou build a link of "goods looking for people" from the two dimensions of interest and trust respectively, with higher accuracy - the head anchors of the above platforms are essentially bargaining with brands through fans\traffic, and users pay more attention to price.
On the other hand, Xiaohongshu, the head anchor has a more professional understanding of grass planting, and the live broadcast is mainly based on user needs + product selection, and users complete the "weeding" based on grass planting recommendations - and other platforms give priority to GMV, monetization rate and other indicators, while the Xiaohongshu e-commerce team lists DAB (average daily order users) as one of the important monitoring indicators.
Behind this is that Xiaohongshu has completed the purchase conversion under the endorsement of KOL + KOC by virtue of the unique consumption field of "content + social", and Xiaohongshu's UGC content precipitation and user loyalty are very high, and even gradually formed a certain temperament and values.
Tiger Sniff got the data: Xiaohongshu publishes more than 3 million notes every day, including ordinary notes, business notes, video notes, graphic notes, and after the content is released, the system will conduct a "horse race" on the like rate, collection rate, and interaction rate based on natural exposure, and if it is higher than the market, it will enter a new traffic pool and continue to allocate 1000 ~ 5000 exposures, and so on to provide a maximum of 1 ~ 100,000 natural traffic exposures.
Based on the rich content supply, 60% of the 100 million DAUs (daily active users) will actively search, the average daily search query volume is close to 300 million, nearly 3 million comments related to links and purchases, and the proportion of content related to shopping decisions is as high as 87%, which in turn has driven the scale of Xiaohongshu's e-commerce buyers and managers to increase by 27 times, the number of dynamic sales merchants by 10 times, and the number of purchasing users by 12 times in the past 18 months—another three-party data shows that Xiaohongshu 2023 After betting on buyer e-commerce, the overall number of active customers increased by 1.6x.
In this regard, He Yi, the founder of the East Beast, analyzed that the product and brand touchpoints are richer from the buyer's point of view, and the brand can be comprehensively expounded from all dimensions;
"Xiaohong Bookstore allows fans or people who have been reached by planting grass to get to know the product up close in the live broadcast room, creating more opportunities for in-depth communication with users. He Yi said.
It is no wonder that Yinshi, the person in charge of Xiaohongshu's live broadcast, compares the buyer ecology to a "subset" of the blogger ecology, which is roughly divided into two categories: one is that vertical people operate accounts in a certain field (such as fashion, beauty care, furniture, mother and child, education, digital, outdoor and other categories), and this kind of buyer is more likely to have a quick chemical reaction with certain brands;
At this stage, although the frequency of live broadcasts of Xiaohongshu's head anchors is not high, there are many anchors with a GMV of more than 10 million in a single game, including Dong Jie (130 million +), Zhang Xiaohui (100 million +), Yi Nengjing (beauty care), a KK (home furnishing), etc., middle-waist buyers have also established subdivision labels in specific fields (such as home furnishing, trendy outdoor), and brands can achieve integrated marketing layout by cooperating with buyers.
In this regard, Conan, COO of Xiaohongshu, believes that live streaming is more about building a shopping scene. "This scene could be a store, or it could be like a stall business. Rather than defining what they are and what they are not, they connect user needs with products through a wealth of individuals, and are a content market rather than a select market. ”
In particular, the advantages of Xiaohongshu SKUs lie in non-standard products, D2C, designer brands, etc., and the advantages of content lie in the recommendation of good things, real user feedback, and product evaluation, which have penetrating power throughout the entire link from purchase.
Tiger Sniff understands that the product owner spends a lot of time on Xiaohongshu every day to follow the community, digging out unmet needs and new consumer trends - for example, Huazhi has developed blue and purple in addition to thousands of purple blushes, and Babycare has made a changing bag with the help of mountain wear in addition to the rich maternal and child categories.
Behind this is the differentiated advantages of Xiaohongshu's community genes:
- On the one hand, users' active expression and interaction stimulate the demand in the field of life consumption, and buyers and product managers use UGC content to drill down the analysis dimension from "brand" to "product".
- On the other hand, through the continuous upgrading of UGC content, semantic understanding, user portrait analysis, and consumption decision-making link attribution, including track selection and what pain points consumers have expressed in different categories, these unstructured expressions can help brands find deterministic growth in refined operations.
Of course, due to Xiaohongshu's vacillation in the e-commerce business in the past, some market participants are also worried about Xiaohongshu's determination. "When the company's new business attack, it must be laid infrastructure, this process with the continuous investment of manpower and resources, not necessarily the right direction at the beginning, one is to test the tolerance of the management, in the end how much freedom of exploration can be given to the following business; ”
Moreover, Xiaohongshu has not yet placed live broadcast at the first-level entrance - in contrast, the first-level entrance of Douyin has gradually increased, from short videos to Douyin mall to the same city and group buying; secondly, consumers have not yet developed the habit of jumping to the live broadcast room in Xiaohongshu - so the penetration of Xiaohongshu's live broadcast is still difficult and long.
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