Can Keep’s medal business “keep” its prosperity?

Keep has become completely popular. A co-branded medal has attracted many new users. However, under the surface of popularity, Keep medals have also exposed many problems, such as the "variation" problem on the demand side and Keep's operation. In response to these problems, this article believes that digging deep into the medal economy, expanding consumption space and value levels, meeting consumer needs in a timely manner, and maintaining a good medal ecosystem will be the key issues that Keep needs to focus on in the future. Welcome to read this article if you are interested in brand co-branding and medal economy.

Keep medals have become a big hit. On various social media platforms, Keep medals have become one of the most popular traffic codes, and posts related to Keep medals have attracted a lot of attention and interaction.

Image source: Keep official Weibo

According to statistics, there are more than 50,000 notes related to the Keep medal on Xiaohongshu. On Weibo, the reading volume of topics related to the Keep medal reached 160 million, and the number of discussions reached 211,000. One of the secrets of the Keep medal is the IP co-branding, and this generation of young people seems to have been "captured" by the co-branding. Under the attraction of IP, the "medal" has not only become a driving force to stimulate users to exercise , but also a strong social currency on social platforms such as Douyin and Weibo.

1. The popular joint medals made Keep earn "500 million"

Recently, a netizen said on Weibo that "Keep made 500 million yuan by selling medals." Although Keep officials quickly refuted the rumor, the news still revealed to the public how well the medal business is doing.

In fact, the sports medal game was not created by Keep. As early as 2015, Yuepaoquan launched an online marathon event and charged medals at a price of 19.9 yuan. By 2017, Yuepaoquan had achieved an annual revenue of 20 million yuan from this business.

In 2017, Gudong Sports further enriched the design of medals and launched medals with different themes, such as the constellation series and the Chinese style series. It also began to move well-known IPs such as superheroes onto medals.

Image source: Keep official Weibo

Since 2020, classic IP images such as "Empresses in the Palace", "Conan", "Crayon Shin-chan", and "Sanrio" have appeared on Keep's medals, attracting countless fans. As a latecomer, Keep has iteratively upgraded the gameplay of sports prizes in a co-branded way, and the medals also pay more attention to appearance and design.

It was also from Keep that the trend of sports medals was pushed to its climax. The most popular Keep medals are the Cinnamon Dog series. According to Keep officials, the Big Ear Dog online jogging event has attracted more than 400,000 paying users. This series of medals has also achieved a phenomenal effect in attracting new users, successfully attracting more than 200,000 new users.

The Keep medal shows us how much young people today pursue the "sense of ritual" in sports. They can no longer live without running apps. According to QuestMobile, nearly 90% of runners use running apps. In the past two years, about 20% of runners have participated in online running events.

Through a medal, Keep has expanded the connotation of sports to a richer level, successfully covering circles with different hobbies, and reaching people in the sports circle, collection circle, notebook circle, and three pit circle. According to Keep's latest prospectus, in 2020 and 2021, Keep's average monthly active users were 29.7 million and 34.4 million, respectively. By the second quarter of 2022, Keep's average monthly active users had increased to 41.08 million. With nearly half a billion monthly active users, Keep has undoubtedly become a giant in sports applications.

Virtual sports events have also effectively improved user stickiness. In 2020, 2021 and the six months ending June 30, 2022, the platform's average monthly active users were 29.7 million, 34.4 million and 37.7 million, respectively, and the average monthly exercise times of monthly active users and subscription members increased in the first half of 2022.

Image source: keep flagship store

The popularity of medals naturally boosted Keep's performance. The person in charge of Keep revealed that the first phase of running events from March to May 2022 attracted more than 700,000 paid visitors, and the total transaction volume of goods exceeded RMB 40 million.

However, Keep's popularity is inseparable from the "fueling" of platform marketing. The prospectus shows that Keep's sales and marketing expenses account for the bulk of its costs, and half of the costs are basically spent on marketing. From 2019 to the first quarter of 2022, Keep's sales and marketing expenses were 295 million yuan, 302 million yuan, 956 million yuan and 147 million yuan, respectively, accounting for 44.6%, 27.3%, 59% and 35% of total revenue, respectively.

Although marketing has made Keep a giant in the industry, it has also become an unbearable pain for Keep. According to Keep's prospectus, from 2019 to 2021, Keep's operating income was 663 million yuan, 1.107 billion yuan, and 1.619 billion yuan, respectively; the losses were 735 million yuan, 2.2 billion yuan, and 2.9 billion yuan, respectively, with a total loss of 5.8 billion yuan.

However, the rapid growth of online events still gives Keep hope of turning losses into profits. Keep, which has sold courses, fitness equipment, and even light meals, finally realized easy cash through virtual events and medals. It can be seen that only true insight can achieve the conversion of "real money".

2. Insight first, realize the entertainment of mass sports

The success of the Keep medal is essentially due to its keen insight into young users. Keep meticulously hits the pain points of users at different levels and condenses the solution into a medal. The modern lifestyle brings heavy pressure to young people. Compared with serious propositions, "nipple fun" is obviously more attractive to the public. Therefore, good-looking, fun, and simple things are often more likely to capture people's hearts.

Image source: Keep official Weibo

The popularity of Keep medals can also be broken down into different levels according to its insight into demand. On the surface, well-known IPs already have their own traffic. Relying on joint ventures, Keep has transformed traditional medals into fashionable products with unique IP elements, thus attracting a large number of young people to chase after them.

Looking further, for young people, medals act as a concrete incentive mechanism. A considerable number of runners not only believe that running is a way to exercise the body, but also believe that running helps to hone their will. The emergence of medals can visualize sports as an interesting task, providing runners with a sense of honor and achievement, thereby providing users with a relaxing and interesting spiritual experience. Some users said that medals have become one of the important sources of motivation for running. "I have never been willing to run, let alone a marathon, but I'm willing to give it a try for the 'Cinnamon Dog Medal'."

At the same time, humans are social animals and collective animals. When a large number of users participate in virtual events, they will have an impact and influence on other users in the community. Through the atmosphere provided by the group, running becomes less difficult. Through the simple act of showing off medals, users can also strengthen their sense of belonging in the group and complete an interaction between self-cognition and group cognition.

Based on this insight, the Keep medal not only caters to the trend of the value economy among contemporary young people, but also gives the medal the role of "social currency". The Keep medal captures the pursuit of a sense of ritual by contemporary young people, and uses medals as a medium to provide a form that can easily satisfy the desire to share. Many users began to collect Keep medals and post them on social media. Many young people pin their self-image on one Keep medal after another, using medals to highlight and shape their self-image. With the initial release of the Keep medal, a large number of users began to participate spontaneously, forming a wave of voices that circulated back and forth.

In fact, many phenomenal social crazes have similar mechanisms and principles. It can be said that the public's needs are always similar, but they are expressed in different ways. In the past, Little Raccoon Crisp Noodles was actually a practice similar to the Keep medal. Little Raccoon Crisp Noodles provides users with a task mechanism and reward mechanism in the form of a series of small cards, and also provides common topics and social currency for primary and secondary school students.

In the past two years, a large number of primary school students who are addicted to "Guka" have appeared on social platforms such as Xiaohongshu. In this group, cards and stickers have a "universal" positioning and value like currency. This "medium" can be spread through people's communication and participation, and quickly infect other users.

However, attention is the most scarce resource. People are no longer crazy about Little Raccoon Noodles, and one day, Keep medals may also lose followers.

3. With bad reviews coming, is Keep starting to take advantage of the situation?

Beneath the surface enthusiasm, the Keep medal exposed many problems.

After all, exercise goes against human nature. Nowadays, lying down has become a refuge for many people to escape the pressure of reality. After a busy work day, many young people find it difficult to spare time and energy for physical exercise.

In this case, some consumers' demand for medals spills over and is met in a market economy manner.

Where there is demand, there is supply. As the Keep medals became popular, some people set their sights on this "business". On Xianyu, someone posted a Keep running post, saying that they could help complete the running. It is reported that some people use illegal means such as step-counting apps to complete virtual events. In addition, gray industries such as medal reselling and trading have gradually developed. On public platforms such as Weibo, many users have posted related posts and conducted transactions in an open or covert manner.

At the same time, some people regard the Keep medal as a tool to attract attention, and they are willing to spend a lot of money to buy the medal and show it off on social platforms. After the Keep medal became popular, various uncontrollable incidents occurred, and the medal is no longer as pure as it was in the past.

Image source: Keep official Weibo

In addition to the "variation" on the demand side, Keep's operations have also exposed many problems. On the Black Cat complaint platform, complaints related to Keep's virtual events are everywhere, almost close to 20,000. The reasons for user dissatisfaction are mainly related to the event rules and refund rules. Some users believe that Keep has not clearly communicated the rule that no refunds can be made, and some users complain that "no medals will be issued if the race is not completed and no refunds will be made."

In addition, some consumers believe that Keep seems to have deviated from its original intention, launching new medals too frequently, and gradually increasing the price of medals, but has ignored the sports business that should be the protagonist. The ecosystem of Keep medals has gradually become turbid, and some consumers have even begun to stay away from Keep medals.

Keep should realize that although many consumers are not averse to the means of consumerism, they are very disgusted by the capital's blatant "cutting leeks" and "collecting IQ tax". When Keep turns medals into a completely utilitarian business, some people will inevitably part ways with the original intention.

Consumers are fickle and picky. Countless brands are born and die, and there is no way to maintain permanent appeal. Keep itself is not the source of attraction. Over-reliance on IP co-branding is not a healthy way of development, and it cannot establish a competitive barrier. Therefore, Keep should maintain a sense of crisis and strive to catch up with consumers, rather than being overly obsessed with the single means of medals.

4. Difficult and anti-human business

The online fitness business seems to be booming, but in fact it does not make money as quickly as some consumer sectors.

Objectively speaking, the overall environment of China's fitness market is improving over the long term, and the market potential is huge. According to CSI Consulting, the scale of my country's fitness market continues to increase. In 2021, the scale of China's fitness market was 786.6 billion yuan, and it will grow at a compound annual growth rate of 13.5% to 1479.3 billion yuan from 2021 to 2026.

As per capita disposable income continues to rise and consumers develop the habit of paying, my country's fitness penetration rate will reach 29.3% by 2026. In addition, the online fitness market will become an increasingly important component. It is expected that in 2026, the market share of the fitness market will increase to 61%.

Many investors have actively entered the market to help push the online fitness industry to a new peak. Since 2021, Keep has received a $360 million Series F financing led by SoftBank Vision Fund, and companies such as Leke Sports and YESOUL have also received over 100 million yuan in financing support.

Image source: Keep Food Flagship Store

However, it is worth noting that unlike the consumption of food, drink and entertainment, sports and fitness are still against human nature in nature and have certain threshold requirements for consumers. Some consumers are "addicted" to sports for a while, but soon give up sports. Overall, many people's fitness activities are scattered and irregular. There are also quite a few users who have not established the consumption habit of paying for sports apps.

In addition, the competitive landscape of sports apps has been initially established, and several sports app giants are in a situation where they are big but not strong. Keep, despite having a large user base, is still lingering in huge losses. The data in the prospectus shows that the gross profit margin of Keep's own-brand sports products is only 15.1%. This shows that although the market is large, it is not a place for quick money.

In contrast, medals have become a lifesaver. Compared with simply urging users to exercise, medals are very relaxing and interesting, which relieves some of the pressure brought by exercise, satisfies users' exercise needs, and helps users develop exercise habits. Following human nature is definitely better than going against human nature.

From a longer-term perspective, Keep should invent more "medals" to stimulate demand in the most effortless way.

How to tap into the medal economy, expand consumption space and value levels, meet consumer needs in a timely manner, and maintain a good medal ecosystem will be the issues that Keep needs to focus on in the future.

[1] "Keep Medal, a more advanced version of Pop Mart", Blue Whale Finance, February 14, 2023

[2] “Keep medals go viral, paying for running becomes a new trend among young people”, Shenzhen News Network, February 12, 2023

【3】“Behind the Keep medal business: constant complaints!”, China Youth Network, February 10, 2023

[4] “Medals” earn 500 million yuan, Keep wakes up from its dream”, New Entropy, February 10, 2023

[5] "Relying on "medals" to attract attention, what is left of the core of Keep's sports spirit?", Qicaijing, February 16, 2023

【6】“Keep suddenly becomes profitable”, Shijie Observation, February 15, 2023

【7】Keep gets rich by winning medals?, Ran Finance, February 16, 2023

[8] “Fake running is prevalent, can running for others make you rich?”, Acorn Business Review, September 14, 2022

[9] “The first step of the 2023 self-discipline list: run for a Keep medal”, Entertainment Capital Theory, February 1, 2023

[10] "A sticker that costs 50 cents, a post-00s generation earns a million a month, what exactly is the Guka that primary school students are playing?", Tianxia Online Business, February 19, 2023

[11] "How did the "Guka" package, which sells millions of yuan a month, become the social currency of the post-2010 generation?", New List, February 14, 2023

[12] “Marketing Observation: Keep has created a new business by capturing the post-2000s with a 39-yuan medal”, Dou Xuan, February 16, 2023

Author: fong; Editor: yu; Reviewer: Single, ZZ

WeChat public account: New Consumption Think Tank (ID: cychuangye)