Whether it’s CPM or CPS, you should talk about brand ROI in the end

To build a good brand, the first thing is to run through the efficiency of traffic and conversion. Traffic, channels, and hot products are three important links to ensure the long-term profitability of a brand. The author of this article expressed his own views on this and shared them with you.

01 First of all, the logic of hot selling is the logic of conversion efficiency

Whether it is CPM or CPS, the core is the issue of ROI. As long as the investment and conversion are sustainable, the value of traffic can be brought into play. In simple terms, it means that the cost can be covered, the investment can be earned, and the conversion can be profitable - the specific amount depends on the operational efficiency.

To become a brand, the first thing is to solve the problem of traffic and conversion efficiency, that is, to produce hot-selling products.

The so-called hot-selling product: From the perspective of the organization, it is a question of efficiency and effectiveness of input and output.

Hot sale = continuous high ROI conversion

Hot products = continuous high ROI conversion. On one side is the cost of acquiring customers, and on the other side is the conversion rate. Either the cost of acquiring customers is reduced, or the conversion rate is increased. The core of a product becoming a hot product is high cost performance. High cost performance is not only about product functions, experience, and user end; high cost performance is also reflected in the cost performance from CPM/C to ROI. (Social efficiency of organization)

In simple terms, the most important thing is to make some money.

Brand No. 1 needs to do down-to-earth business: have a long-term vision, do business in the present, and live in the present. Capital has always been extremely shrewd. They want the future, but they also look at the current data. You can tell a story, but the more exciting the story, the more you need a visible foundation.

From products to hot products, and from hot products to brands, the brand is No. 1, which means making money at every step. A business that is not profitable at the moment is likely to be illogical in terms of products and business. How can you guarantee that a business that is not profitable at the moment will make money in the future? The result is the result of each step, not a loss at the 99th step and a huge profit at the 100th step. This is unlikely for most businesses.

The so-called traffic dividend: the profit comes from the cost-performance ratio of cost and conversion. This is the first step for a brand to become a brand: creating a hit and becoming a hit product.

The so-called traffic involution is actually a non-positive correlation between input and output. In essence, it is a dilemma that you cannot maximize the cost of traffic acquisition and conversion efficiency.

02 Secondly, channels

The essence of online channels is to receive traffic and reach users in multiple dimensions (convenience). Hot products not only mean high traffic conversion efficiency, but also mean that hot products themselves may become a tool for attracting traffic. When hot products bring in large traffic, the channel is essentially completing the flow of traffic.

It won’t work if you only have hot products and traffic but no channel closed loop.

Whether it is Tmall, JD.com, Taobao or Pinduoduo, consumers are fragmented by channels. Traditional channels emphasize large penetration, and the same is true for online channels. The era of people looking for goods is over. The path is now for goods to find people and channels to find people.

The right people, multiple dimensions, and multiple (times) of reach, this is the unchanging foundation.

If traffic can sell goods (buying traffic is efficient), then planting is essentially a redundant action. It is precisely because the direct traffic buying and selling is disproportionate that there is the logic of planting outside the site. Imagine that if you can achieve a customer acquisition cost of 15-20 and a customer unit price of 99 in Douyin, this business should be worth doing and profitable (customer acquisition cost 20, product cost 20, customer unit price 99).

As a businessman, what would be the decision in such a situation? If nothing unexpected happens, you will keep going until you break even. So, at this time, the efficiency of funds is first on traffic and hot products, not on external promotions. If you have a lot of money, it is another matter. Therefore, if you have money, spend it on conversion rate first. This is common sense.

Therefore, after a product becomes a hit, the first thing to do is to layout online channels, so that more channels can take over the traffic brought by the product in terms of convenience and consumer channel preferences.

As for whether to promote products, of course we have to do it, but the logic of promoting products may need to be combined with more thinking. It is necessary to promote both products and brands. This is why we need KOL + KOC; the combination of top and waist; the method of ordinary people and customers posting orders.

Planting grass is a technique, which is physical. How to plant grass is a way, which is metaphysical.

For example: When Perfect Diary was first established in 2017, it did not adopt an omni-channel, multi-media approach to lay out content, but instead put all its resources into Xiaohongshu.

With the help of Xiaohongshu's traffic bonus, a pyramid-style layout is adopted: including top and mid-level influencers, as well as passers-by and amateurs for large-scale advertising (top influencers for product endorsement, mid-level influencers for large-scale promotion, and passers-by and amateurs for customer testimony). The lower the frequency of advertising, the more budget there is. Taking Double 11 and 618 as an opportunity, all artillery firepower is concentrated on attacking one city gate.

03 Finally, brand

Traffic + channels + promotion, will eventually settle on the brand. This is the brand's No. 1 position, something that should be thought of in advance and understood long ago. That is: open up channels through hot products, promote promotion outside the site to release signals, and finally achieve brand success and occupy the mind.

Otherwise, traffic will only become more and more expensive. This year's traffic is more expensive than last year's, and next year's traffic will be even more expensive. The so-called platform bonus is just a loss-making business. The sign of a mature platform is that there is no traffic bonus, and everyone competes for conversion.

Brand is something to be proud of. Everyone who makes products wants to create a brand, especially those who are the No. 1 brand. Because brand is a tool for long-term customer acquisition. Becoming a brand means becoming the spokesperson for the category and the representative of characteristics (brand = category, brand = characteristics); and then becoming the first choice of consumers.

There are two ways to create a brand: a brand that is built through crawling and a brand that is built through fighting:

One is to build a brand from the bottom up; the other is to build a brand from the top down. The first is the process described above. Start with traffic, use the product to create a hit, and use the hit to build a channel. A product that sells well and has a wide penetration in the channel will sooner or later become a brand.

The logic of selling goods remains unchanged, from selling goods by traffic, to selling goods by channels, to selling goods by traffic + channels, selling more goods, selling goods for a long time, and branding is a natural process. This kind of approach is more down-to-earth, making money every day, and there will not be so much anxiety.

The logic of goods finding people seems to have more CPS space in Douyin's traffic package, while the logic of people finding goods is difficult to implement on Tmall no matter how well it is done.

Of course, you can also use the second method of top-down promotion, which is more high-end and sounds good. For example, Xiaoguan Tea is a typical example of this method. It starts with a high-profile promotion, creates marketing potential, tells a high-end story (eight masters, Xiaoguan Tea), and then CCTV advertising continues to build brand awareness, and finally focuses on the crowd.

High-priced vacancies: According to data from the China Tea Circulation Association, China's tea production reached 2.616 million tons in 2018, and domestic sales reached 266.1 billion yuan, and continued to grow. Until 2010, the old industry leaders Tianfu Mingcha and Dayi only had 3.72% and 3.61% of the market share respectively. The low brand concentration and high industry ceiling gave Xiaoguan Tea the opportunity to seize market share.

Demand and product innovation:

Pain points: I don’t know how to choose when buying (too many categories and lack of brands), I don’t know what to choose when giving as a gift (prices are not transparent), and it is cumbersome to measure the amount when drinking.

• New group: those who have high quality requirements for tea and are not experts in purchasing
• New segmentation scenarios: high-end and business gift scenarios
• Solution: "One can, one brew", eight famous teas, weakening the category concept

Product and product line layout: In 2015, the gold can/silver can, which is positioned as a high-end business gift, was first launched on the market, including 8 types of tea; in December 2017, the limited edition black can series with a higher-end positioning was launched, including 3 types of tea; in August 2020, the business series in the form of multiple brews was launched, including 4 types of tea with specifications ranging from 40g to 100g; the top limited appreciation model was launched, including 4 types of tea.

However, the six words "A distinguished guest has arrived, serve small cans of tea" are good, but they lack a verb. If they are changed to: A distinguished guest has arrived, serve small cans of tea, the feeling will be different.

In advertising slogans, anything can be missing except verbs.

Similarly, new consumer brands also use this method, for example: top-tier influencers bring products. Of course, times have changed, and today’s top-tier influencers no longer have as much potential as they did a year ago. Therefore, the same method can achieve different results at different times.

For example: In March 2020, with the help of Wei Ya's live broadcast, Ubras' store sales increased by 398%; Hua Xizi tied up with Li Jiaqi; and Seventeen Light Years (fruit wine) is also a typical top-down approach.

This logic is the same as that of Xiaoguan Tea. The previous method was CCTV + spokesperson + channel penetration, and now it is top-tier product promotion + spokesperson + full channel penetration.

The logic of business has not changed, only the tools, channels and forms of implementation have changed. When the capital boom subsides, it is not necessarily a bad thing for new consumer brands, especially for brands that have climbed up from the bottom.

Author: Houshan Keju; Official Account: New Consumer Brand Research Society (ID: PDD6977)