MCNs with their own brands: Leaping out of the traffic bonanza and attacking the product hinterland

In recent years, MCN organizations have been gradually developing and have now reached an important turning point in their development. They are not satisfied with their traditional roles, but are exploring new commercial boundaries and looking for more opportunities. Why do MCN organizations want to explore the creation of their own brands? What are their shortcomings?

In the past two years, MCN organizations are gradually facing an important turning point in their long-term development. Problems such as slowing development and intensified homogeneous competition need to be solved urgently. Faced with market challenges, today's MCN companies are no longer satisfied with the traditional roles of talent incubators and brand service providers, and have begun to explore new commercial boundaries in order to obtain more monetization opportunities.

In the past, the function of MCN organizations was to use their own talent resources and influence to cooperate with brands to produce content or sell goods through live streaming. However, nowadays, more and more organizations are beginning to explore the layout and development of their own brands, trying to deeply integrate products with talent resources to maximize commercial profits.

Weinian launched hot and sour noodles, Jiao Ge Pengyou created its own clothing brand "Reload", Wuyou Media cooperated with Hougu to establish "RED ON Hongyanshe"... MCN agencies' own brands have benefited from the agency's influence in marketing channels and have gained considerable platform voice, but this has also become a constraint on their development.

Some MCN agencies’ own brands are too eager for traffic in the process of development, and some are too eager for quick success, while neglecting the creation of the product itself. At the same time, some agencies lack experience and energy in expanding brand business, and have no perfect plan for word-of-mouth maintenance and long-term development. They often throw out a so-called "blockbuster" and then have no follow-up, resulting in low market share and user awareness of the brand.

In the past, some MCN organizations launched their own brands, which successfully opened up the market. Later, many brands, such as yes IC and Shuizhiao, suffered losses and died halfway. What was the difference between them? Why do MCN organizations explore the creation of their own brands?

1. Outstanding advantages and obvious disadvantages

At present, the private brands of MCN institutions are mainly divided into two models. The first is a new consumer brand created with the influencer as the label. Its advantage lies in the influencer's popularity and fan base, and it relies on the influencer's trust and endorsement to enhance brand power. The second is the MCN institution's own business expansion, a completely independently operated brand. This type of brand is often distinguished from the name of the institution or influencer, and only uses its own marketing advantages for brand promotion.

For example, the Li Ziqi snail noodle brand created by Weinian uses the influence of influencers to break the brand circle. As of September 2022, its official self-operated flagship store has sold more than 870,000 units and achieved sales of more than 47 million yuan.

The picture shows a screenshot of the Wei Nian snail noodle brand e-commerce platform

Unlike Wei Nian, Shanghai-based MCN agency Jinjia uses influencer resources and traffic as a marketing entry point to create a new brand and broaden the commercialization path. The agency has experience in helping many beauty brands with marketing and promotion, and has launched beauty brands such as Qiechu and everbab, focusing on the market with a price of around RMB 100. Jinjia's own brand has hit the consumption preferences of young users through the influence of celebrities and KOLs such as Cheng Shian and Li Xierui, and the cumulative number of fans of its Tmall store has exceeded 1.4 million.

The picture shows a screenshot of the Jinjia beauty brand e-commerce platform

Overall, the advantages of MCN agencies in establishing their own brands currently lie in three aspects: traffic IP, supply channels, and product sales.

First, MCN organizations understand the needs of user groups and can find breakthroughs for brands based on influencer interactions and consumption data. The influencer’s huge fan base has become an important private domain resource in the early stages of a brand’s establishment. Influencers can receive feedback on products from fan groups in the first place, which can reduce the brand’s trial and error risk to a certain extent. The influencer’s own product-carrying attributes provide brands with a natural marketing and sales channel, which is conducive to seeding and converting target consumer groups. Secondly, long-term live streaming product-carrying cooperation has allowed MCN organizations to accumulate certain supply chain resources, enabling them to cooperate with factories more efficiently and reduce product production costs.

However, traffic is the biggest advantage of MCN's own brand, but it is also an "amplifier" of disadvantages, making it more likely that the brand or even the agency's own reputation will fall into a passive position.

At the beginning of last year, the clothing brand Reloaded, which is owned by Jiaogepengyou, launched BK casual shoes. The "familiar" design made the brand fall into public opinion. At the same time, in the store's comment area, some consumers questioned the quality of the product. Later, Luo Yonghao personally issued a statement to clarify that the brand used a design that had expired the patent protection period and the product was "same quality, 1/3 of the price." It is true that Reloaded has gained a large number of consumer groups by relying on its super high cost-effectiveness, but various public opinions have also brought a certain degree of negative impact to the brand.

The picture is a screenshot of Weibo

MCN organizations have relatively little experience in creating products. If they develop brands with the mindset of talent operation and incubation, they will easily fall into the vortex of blindly pursuing traffic. Returning to products, leveraging advantages, and avoiding risks are the guarantees for the long-term development of brands.

2. Driven by the environment, institutions seek new breakthroughs

In recent years, most MCN agencies’ own brands are still in the exploratory stage, and relatively few have truly succeeded in breaking out of the circle. Even so, there are still many agencies that continue to move forward. In the final analysis, this is because the current MCN agencies are facing severe market challenges and are in urgent need of exploring new directions for commercialization.

The 2022 Crawley China Content Agency (MCN) Industry Development Research White Paper shows that at present, MCN agencies have problems such as weak core competitiveness, slow commercialization, and unclear standardized processes. At the same time, after the platform traffic dividend period gradually faded, the market entered the stock stage, and agencies were under pressure to obtain traffic growth.

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With the emergence of problems such as unstable monetization and low entry barriers, the capital market's attitude towards the MCN industry has gradually "cooled down", which has led some practitioners to explore new commercial tracks for institutions. In addition, with the hot development of the new consumer track, it has become reasonable for MCN institutions to establish their own brands based on their own advantages.

At the same time, the expert IP of the MCN agency is unstable and time-sensitive. The influence of the expert himself will gradually weaken over time. Choosing to create its own brand at a time when its influence is stronger can effectively extend the life cycle of the expert IP. After the brand is successful, it can also further amplify the commercial value of the IP itself and achieve sustainable monetization.

From the perspective of the platform, the development of live e-commerce has been relatively complete, and major short video platforms have gradually strengthened their own e-commerce channel construction, which provides external convenience for the sales of MCN organizations' own brands. In the past, whether it was an organization or a celebrity, if they wanted to establish a brand, they needed to use short videos and social platforms as the main battlefield for marketing and promotion, and sales had to be completed in traditional shelf e-commerce channels. During this transfer process, there would be a certain degree of loss of their own fan resources. Now, social platforms and short video platforms have the functions of e-commerce, and brands can directly reach fans to groups and improve conversion efficiency.

In addition, over-reliance on top influencers has become a common problem for most MCN agencies. Even the industry's top companies are still facing the problem of insufficient talent reserves. The departure of influencers and contract disputes have become important issues faced by MCN agencies in the past one or two years, and there is still no fundamental solution. From this point of view, establishing a private brand can provide a layer of development guarantee for the agency itself, and reduce its dependence on the influencers themselves.

Overall, the purpose of MCN organizations to build their own brands is to broaden their own monetization methods, thereby improving the sustainability and stability of monetization and bringing new business growth. However, brand management is not the main business of MCN organizations after all. Only by deepening internal strength and improving content production capabilities and supply chain integration capabilities can they strive for a place in future market competition.

3. The shift from traffic thinking to product thinking

For MCN agencies, content and traffic are the basis of development. Their operating model is driven by traffic thinking. Agencies often do not have professional product development and production knowledge, and often fall into the misunderstanding of "traffic only" in the process of building their own brands.

If the process of winning the attention of consumers through marketing can fully utilize the advantages of traffic, then product creation is the fundamental driving force for the long-term development of the brand. Most MCN private brands cooperate with OEM factories for OEM production, and their own investment in product research and development is insufficient, which leads to many private brand products not being recognized by consumers, thus consuming the trust of users of the institutions and influencers themselves. Traffic can magnify the advantages of the brand, but it can also spread negative voices quickly. Only by driving the product and using traffic as a means of reaching out can the negative impact of content marketing be fundamentally avoided.

For example, Wei Nian, mentioned above, invested in the construction of a snail noodle production factory and raw material base. It controlled the supply chain from the source and adjusted the packaging and taste according to the consumption preferences of young users. In addition to marketing, it also attached importance to product strength, making the brand stand out in the fiercely competitive snail noodle market.

At the same time, the private brands of MCN agencies are mostly focused on a fixed track, and this track is often the professional field that their influencers have deeply cultivated, which has a unique advantage in helping consumers form a brand awareness. However, private brands are generally established for a short time and have not yet established influence and popularity, so users' trust in their products is naturally weaker than that of traditional brands.

Taking the outdoor vertical category as an example, outdoor products are relatively more functional, more difficult to produce and more technically demanding, and users have higher requirements for the professionalism of outdoor products. This requires outdoor brands to popularize and cultivate the habits of most users and have professional technical support. Therefore, in the current outdoor category, traditional outdoor brands still occupy the majority of the market share, and there are few emerging brands.

For MCN organizations, it is necessary to strengthen product thinking in the process of operating brands, rather than simply relying on traffic to sell products, creating a false prosperity. On the basis of strong agency sales, operation, and negotiation capabilities, it is necessary to improve its own supply chain integration capabilities or build an independent supply chain, change the model of seeking cooperation with foundries, and transform into a "brand incubation base" to further realize the productization of the organization.

Today, the influencer economy has transitioned from "wild growth" to a stable and forward-looking stage. Some MCN organizations have innovated their business models and explored new ways to monetize content, while others have gradually transformed or even withdrawn from the MCN stage. Launching their own brands may be just an attempt in the development of MCN organizations, but organizations must still maintain their original intentions for content and respect for brands, attach importance to product creation, and strive to operate excellent brands that are recognized and supported by consumers for a long time.

Author: Dake

Source: TopKlout (ID: TopKlout), a self-media ecological observation account that combines good-looking and informative content