Why is the cost of advertising on Xiaohongshu getting higher and higher?

In the wave of digital marketing, Xiaohongshu has become an important platform for many businesses to place advertisements and carry out marketing activities with its unique community atmosphere and precise user groups. However, with the intensification of competition and changes in the market environment, businesses generally feel that the cost of Xiaohongshu's advertising is rising, and the conversion effect is not as good as before. This article will deeply analyze the reasons for the increase in Xiaohongshu's advertising costs and explore how to effectively accumulate brand assets on this platform to cope with the increasingly fierce market competition.

This year, too many merchants reported that the cost of advertising on Xiaohongshu is getting higher and higher, and the transaction conversion cycle is also lengthening;

The cost of private messaging was 5 yuan last year, but it has to be 15 yuan this year. What’s more frightening is that last year, 2 out of 10 transactions were completed, but this year, only 1 out of 20 transactions is completed. The conversion cost is getting higher and higher, and it is becoming more and more difficult to do.

1. Why is the cost of advertising getting higher and higher?

1. More merchants

As more merchants join Xiaohongshu, competition intensifies. There may have been 10 competitors last year, but this year there may be 50.

Xiaohongshu itself has limited traffic. When everyone is competing for it, the traffic cost will inevitably increase linearly. The click cost of some words has soared to 10, and the cost of WeChat is naturally more than 100;

2. Traffic strategies are gradually becoming ineffective

Previously, everyone was focusing on traffic, with little emphasis on brands and little focus on accumulating brand assets, resulting in customer reach still being the cost of new customers.

Santonban Coffee’s new and transaction costs are lower than those of new brands. Without brand equity accumulation, it needs to tell customers over and over again, “Who am I, what’s different about me, why choose me?”

3. Poor repurchase rate

Poor product and service quality leads to no repeat purchases by users, and the spread of tap water is the reason why many new consumer products fail. People give up as soon as they try. Who still remembers ginseng water and various fruit wine brands?

The number of merchants has increased and the platform traffic has peaked. We have no way to control it. What we can do is to change the traffic strategy to brand asset management.

At the same time, we should improve product quality and, most importantly, describe our contact points with users, which ones can accumulate brand assets and reduce our customer acquisition costs;

Figure: Xiaohongshu user brand contact point management

2. What is brand equity?

Brand equity refers to consumer brand recognition that brings benefits to a company, including words, symbols, discourses, and stories that can be told;

Such as the brand name, logo, products, packaging, store, advertising, promotional activities, public relations activities and everything related to the brand, which can bring benefits to the brand such as buying my products and spreading my good name;

Let’s look at the definition of brand assets. It is the user’s brand awareness, that is, the user’s perception of you, the content you convey to him, the feeling he gives him, and what kind of perception your product will give to the user on Xiaohongshu. Combined with the user contact point view in the above figure, design how to accumulate brand assets;

Many businesses use matrix logo design and always like to change multiple logos. This is essentially diluting brand assets. Users may remember and buy a brand name only after seeing it seven times. If it becomes seven logos, it will reach users 49 times, which obviously cannot build brand assets.

3. What brand assets does Xiaohongshu have?

To count the things that can become brand assets, you can start from the following aspects. The following is the ranking, you can make the ranking according to your own situation;

1. Brand Name
2. Brand founder IP/symbol
3. Product (product form, product packaging, reasons for purchase)
4. Xiaohongshu Notes (hot-selling notes, note format)
5. Celebrity live broadcast and Xiaohongshu joint activities

1. Brand Name

Naming is a strategy and is Xiaohongshu’s first brand asset. All the brand’s actions are in the service of the name.

Choose a brand name rather than a category name. For example, the name of Guangzhou Wedding Photography can intercept user traffic, but it is obviously not conducive to building a brand.

The name must include the brand name; the matrix also needs to be developed around the brand name, including brand professional accounts, KOS accounts, amateur accounts, etc.

Picture: Platinum Travel Photography Xiaohongshu account

2. Brand founder IP/symbol

Founders or IP symbols are also important brand assets. When the founder often appears in Xiaohongshu notes and is positive, users will also think of the brand when purchasing products. The symbol can be a logo or a mascot.

Figure: Brand founder IP symbol

3. Product (identification/packaging/reasons to buy)

Products are always the protagonist of brand marketing. For commodities, how is your product recognized and whether users can remember it? Some brands’ products are super brand assets. Users can easily know what brand it is by taking a photo. This is brand asset. For example, Santonban, Xiaoguancha, Guanxia, ​​and HBN are all specific and have strong symbolic characteristics.

Figure: Products with brand equity

The brand assets of products are not limited to commodities, but also reflected in some non-standard private domain customers. The words and brand promises made in every communication with users are all brand assets, such as refund if not satisfied, 10 years of focus on postpartum rehabilitation, and local people taking you to play.

4. Hot-selling notes

Notes are also our brand assets, including professional notes, KOS notes, expert notes, and a large number of amateur notes. These notes are also our brand assets.

After seeing a note, users search for brand words, and related notes appear. Then the system tags them and keeps promoting our services and products. Finally, users place orders, post reviews, and actively promote products and services. These are also our brand assets.

Notes are the largest combination of the previous three factors and are also the largest information energy package of Xiaohongshu. It contains brand names, reasons for purchasing products, and usage experience, making it easier for users to place orders.

When a note has high interaction and high conversion, continuous and saturated delivery will allow the note to occupy a high position in search results;

Figure: IKF headphones

5.Celebrity/DaBo/Brand Activities

Regarding brand assets on Xiaohongshu, there are also celebrity live broadcasts and expert live broadcasts, which can also increase brand assets, such as the celebrity live broadcast rooms of Dong Jie, Wu Xin, Zhang Xiaohui, etc. After being on the live broadcast room, they can be used as materials for delivery, and there are also some joint brand activities with Xiaohongshu, all of which are to deepen users' understanding of the brand;

Once we have figured out what brand assets we have and know which brand assets we should invest in first, we will continue to invest in Xiaohongshu and other channels.

The more content you invest in and the more assets you have, the higher the cost of resisting the platform's price increases. Is your brand accumulating brand assets on Xiaohongshu?