The underlying logic of e-commerce paid promotion

E-commerce is a hot industry now, but how can we get more promotion? This article will introduce the paid promotion method, explaining the underlying logic of paid promotion in e-commerce from the perspective of what, why, and how.

The understanding of promotion can be simply explained in one sentence, that is, using money to buy money. To do promotion, you must spend money, and whether you can get your money back after spending money is a big question. For those of us who do paid promotion, the most important thing we care about is ROI, which is the investment-output ratio.

The boss hopes that everyone will spend 100 yuan and bring an investment-output ratio of 10 or even 100. If it were not for the platform restrictions, the boss would not be satisfied even if the investment-output ratio was 10,000 . The unanimous wish of all those who do paid promotion is to spend the least money and bring the greatest or infinite returns . This is human nature!

Here we talk about paid promotion of e-commerce. Since we have some experience in information flow advertising before, combined with Pinduoduo's full-site promotion, it is estimated that it will have a different flavor.

E-commerce promotion is much simpler than information flow advertising, but the underlying logic is similar. The difference lies in the complete conversion and back-end data links of e-commerce, which can track and judge the quality of the plan well. The weight of e-commerce lies in the link, while the weight of information flow lies in the account.

If you only know the surface of things but not the causes, you can only do things according to the methods others tell you. When you encounter a situation you have never seen before, you will be at a loss and don't know how to deal with it. Understanding the essence of things, that is, the underlying logic, will really help us do things well.

So what is the essence of paid promotion in e-commerce? Based on my experience and that of many e-commerce leaders, there is only one underlying logic of paid promotion in e-commerce: money for weight and weight for money . As the saying goes: truth can be conveyed in one sentence, but falsehood can be conveyed in thousands of books. It is enough to remember and understand the above sentence when doing e-commerce.

1. What does it mean to exchange money for weight?

First of all, how many new links did you add this month? Did you run any promotions? Anyone who has been promoting new products probably has this feeling: why is it so much harder to create links this year than last year? Is it because the market is not good, or because consumption has been downgraded? Actually, neither of them.

The real reason is that the old links on the platform have been running for a year or longer, and their weight is already very high. If you promote new links a year later, it will cost more to get the same weight as the same period last year . The number of orders itself remains unchanged, but the cost of starting up has increased, which will give people the illusion that it is so difficult to start up links now.

In the past few days, I have tested the difficulty of creating links for new products. It is no different from last year. If you promote them at a break-even or profit-making investment ratio, you can still create volume. However, it is indeed difficult to create new links for old products, but it is not impossible. I quoted 584, and after a wave of damage, I was able to create them after a month.

This is the surface of the matter. A new link could achieve a thousand orders a day in the past, and it can still achieve a thousand orders a day now. What you think is that once the link is put on the shelves, if it is profitable, the number of orders a day will reach a thousand orders in seven days. Sorry, everyone doing e-commerce thinks this way.

The platform said: You might as well just kill me! It is impossible for me to make every new link reach 1,000 orders per day in seven days. So why can some people do it? Because others have seen through the logic of exchanging money for weight.

The number of links is affected by ranking and bid. If the bid remains unchanged, the number of links is affected by ranking. Others' old links have long been settled, and they have lined up to share the fruits. Why do you have to squeeze in? Of course, it's money.

For example, if your link costs 10 yuan, you sell it for 20 yuan, and the profit is 10 yuan. How much should you bid to rank? 15 or even more than 20 yuan. You may say, then I am losing money? Sorry, if you don’t lose money in the early stage of link building in exchange for weight, you will not be able to exchange weight for money in the later stage, and you will not be able to make big money in e-commerce , remember, big money.

Of course, if you don’t lose money at the beginning and run away, it doesn’t necessarily mean that you don’t have any orders. That kind of thing is just a small matter, and the result will be just that.

I know what everyone is thinking. Losing money is fine. As long as you can make it back, it doesn't matter how much you lose. People nowadays are like this. They want to make money but don't want to take risks. No wonder they can't make big money.

Now Pinduoduo's through train promotion has become extremely simple, and there is no technical content. The only uncontrollable thing, which is also the most difficult thing in the through train promotion, is: how much loss is considered a limit , that is, how much loss can buy the expected weight and enter the second stage of exchanging weight for money.

2. What does it mean to exchange weight for money?

When you use money to exchange weight in the early stage and pull the weight of the link to above the top 20, you can basically use weight to exchange money. As for losing money to increase weight, how much loss is expected, some links only need to lose 2,000 to 3,000 yuan, and some need to lose 200,000 to 300,000 yuan. The specific amount depends on the category.

In the competitive and stimulating categories, such as mobile phone screen protectors and data cables, you cannot even get an entry ticket unless you lose hundreds of thousands of yuan. Therefore, the bolder your heart is, the more productive your land will be.

After spending money, the next step is to start making money. In one sentence, the more painful it is to spend money in the early stage, the happier you will be to make money in the later stage. When your link has thousands of orders a day, your weight is high enough, and other people's new links are no match for you .

It’s still the product that costs 10 and sells for 20. You have 2,000 orders a day and a daily turnover of 40,000. If you bid 5 yuan, you can instantly kill all those who bid 15 yuan for new links. At this time, you become a dragon in the eyes of others.

See? You make 5 yuan for each order, while others lose 5 yuan for each order, but they still can’t beat you. Why? Because your initial investment of hundreds of thousands of yuan was exchanged for the weight of the link, which strengthened the wall of the link. Who can beat you?

I created a new link, and the selling price was lower than that of the competitors, and the bid was higher than that of the competitors. Others had 999+ orders a day, but I had less than 9 orders a day. I couldn't beat them at all. Why? Because my weight was not as good as theirs.

3. How to operate

After you have memorized the above two theories, and then put them into practice, you will find that losing money while driving has a purpose, instead of just knowing how to lose money but not knowing the purpose of losing money as before.

Take Pinduoduo as an example. The platform's second-in-command has mentioned the operation method many times. In the early stage, you either force payment, make a loss in the through train to increase the weight, or participate in activities with damaged goods . As long as you place an order, you can increase the weight.

Our operations only need to consider how to attract a thousand orders a day and lose the least money. If you want to increase volume without losing money, don't even think about it; it's unrealistic.

When the weight is increased in the later stage, you can realize the profitability of the link by limiting the quota or supporting the price. A more reliable approach is to support the price. After the weight is raised by forced payment, the investment-output ratio can be raised to above the break-even point and then run slowly.

The higher risk is pure activity without driving. This way of playing is more suitable for seasonal products. It can quickly generate orders, quickly clear out, quickly make money, and then call it a day.

4. Final

In fact , e-commerce is just like this, it's just about spending money and making money . There is one point that determines whether you can make money after spending money, that is, you have to spend money on good links. Many e-commerce companies lose money, one of which is that they don't dare to spend money halfway and lose money.

Another reason is to add the wrong link. Spending money like crazy to increase the weight of junk links is a bottomless pit. It would be strange if you can make money. The hustle and bustle of people is all for profit. Link building requires experience. The more e-commerce experience you have, the better you will be able to grasp this game.

Author: Tiger Talks Operations, WeChat Official Account: Tiger Talks Operations