The end of the dividend era for mobile Internet users, the battle for BAT is about to kick off.
With the announcement of BAT's financial report, Tencent’s market value was US$247 billion, leapfrogging Ali to become the largest technology company in China! The once BAT has now become TAB. According to the financial report, TAB's revenue totaled 86.1 billion yuan in April-June this year. From the revenue point of view, all the three giants achieved year-on-year growth, and the increase was more than 10%, of which Tencent’s revenue was the largest, reaching 35.691 billion yuan, followed by Alibaba, the fastest-growing revenue, reaching 32.154 billion yuan. Again, Baidu was 18.264 billion yuan; but from a net profit point of view, only Tencent achieved year-on-year growth, and Alibaba and Baidu saw a 77% and 34% decline, respectively. Obviously, Tencent's growth benefited from the strong liquidity of mobile WeChat and mobile games, but after the giants awakened, the end of the mobile dividend for mobile Internet users, BAT’s next round of profit, revenue, and market value growth. The engine will shift from grabbing user dividends to improving the commercialization of mobile Internet traffic.
According to data from Ereli, Yibang and others, the first round of the mobile Internet: the era of grabbing the “user dividend†has ended, and the natural growth of users in the domestic mobile market has come to an end. In the past few years, over 30% of users’ rapid growth no longer exists. At present, basically entering the era of single-digit percentage growth, competition has become even more intense. The next round of battles will be a battle of liquidation. The competition is how to obtain higher profits and revenues from existing users. Higher profits and revenue will push the market value of TAB to the next peak.
Obviously, all the giants have clearly defined the direction and started to focus on the layout. The core of the next step is to rely on mobile advertising to realize cash. Take Tencent as an example. In the second quarter and mid-term 2016 results, performance advertising revenue from the WeChat public number and the circle of friends increased by 80%, which significantly exceeded the brand display advertising. Tencent disclosed that the number of Weixin monthly active accounts reached 806 million, an increase of 34% year-on-year. Most of the company's traffic and about 80% of its revenue were generated from mobile platforms. At the same time, Tencent recently restructured its mobile advertising business to focus on the third-party mobile advertising platform market. In particular, Tencent’s Advertising Alliance Division was established, and Michael Huang was appointed as the general manager of the business unit and Lin Shu, the vice president of Tencent Group. Reporting, focusing on third-party mobile Internet traffic growth and advertising cash. Alibaba and Baidu have also organized organizational adjustments and other actions in preparation for the launch of the mobile advertising platform business.
Therefore, if the mobile internet advertising company is evaluated in the first stage of the traditional mobile Internet valuation model, it may be misunderstood. The fact that Internet companies gather users is actually for the next 3-5 years or more of commercialization. According to the mobile advertising platform and developer's 3:7 revenue sharing model in the current industry, third-party mobile advertising platforms can actually be integrated into a tower. Steady acquisition of 30% of user traffic revenue means that it is far more profitable than accumulating users on Internet business!
According to the following figure, the competitive landscape of current domestic mobile advertising is interpreted. The head super application occupies 70% of the market share, and the mobile advertising platform accounts for approximately 20% of the market share. The remaining Affiliate and other CPA channels account for approximately 5% of the market share. With the rise of the efficiency of cash flow in central China and the shift of users to APP, the market share occupied by head media will shrink to around 50%, and the remaining 45% will be divided by mobile advertising platforms. At present, there are only 4 main players in the domestic mobile advertising platform industry, which divides the market share of the third-party advertising cash market by 65%. Soon, the remaining 35% of small and medium-sized mobile advertising platforms will continue to be eliminated, leaving BAT+InMobi. The four companies occupy 50% of the third-party advertising market in the mobile advertising market. Among them, according to the current competition situation, Tencent will occupy 35% of the market share, InMobi will occupy 30% of the market share, Alibaba and Baidu will occupy 20% and 15% of the market share respectively. Interestingly, InMobi, a company specializing in the mobile advertising platform business, will become a powerful leverage leveraging the competitive landscape of the three giants of BAT in the mobile advertising platform. If any of the three companies and InMobi have a strategic partnership, they will become No. 1 in the industry, at least occupy or far more than 45% of the market share, and then pass the scale advantage to kill the entire market, to obtain higher advertising profits and income.
In addition, although China's mobile Internet market is already very large, the pattern is already relatively stable. For BAT, if we want to continue to expand business at a high speed, the world is undoubtedly a platform for greater display opportunities. From Alibaba's recent investment in the Indian market, Tencent’s acquisition of Supercell, and previous Wechat’s strong promotion abroad, we can see that the Big Three in the country have long been contemplating the “sea†of this broader development.
However, although Baidu, Alibaba, and Tencent have already achieved remarkable success in the Chinese market with a large population base, they still face enormous challenges for them to replicate such success on a global scale. Whenever domestic Internet companies want to expand their successful business overseas, they often face obstacles, including Tencent's WeChat. In China, WeChat integrates e-commerce and O2O services with instant messaging on mobile phones, becoming a super entry for China’s mobile Internet world. At the same time, European and American companies are also pursuing this path. WeChat has about 700 million users, most of whom are Chinese users or users who need to communicate with the Chinese. In 2012, Tencent promoted WeChat to overseas markets with a sufficient budget of several hundred million US dollars. In India, for example, huge amounts of money were spent on TV ads on Bollywood festivals, and even the world-famous football star Lionel Messi was the spokesperson for local advertising. However, in the end, all these efforts have gone unnoticed. Wechat's local user base and activity are far behind the What's APP and local rival Hike Messenger. The biggest problem is that when you go abroad, the local market conditions faced by WeChat are different from the local conditions. As an “foreign†company, foreign-owned internet companies such as Google will face similar localization problems in China. Localization needs Time is precisely the most important competitive factor for Internet companies. In China, Wechat is almost omnipotent and can be used to chat, share photos, pay, taxi, and even make appointments for clinics. The realization of all these functions requires the support of localized services, which in turn restricts WeChat. Go abroad to achieve success in all parts of the world. As a result, WeChat is nothing more than an ordinary social app for overseas users, chat and photo sharing, and Facebook's Whatsapp and Facebook Messenger are no different. Baidu and Alibaba are also in the same situation. In China, there are super apps that can be compared with WeChat by users. However, after being promoted overseas, these apps lose their advantages in China. As a result, BAT’s three giants gradually focused their attention on the strategic investment, acquisition, and cooperation of local mobile internet companies and expanded their global business with localized teams familiar with local market conditions. For example, recently, Tencent has invested in Indian mobile technology companies such as Hike Messenger, Practo, and Alibaba has also invested in Snapdeal and mobile wallet company PayTM.
At the same time, this industry has shown a new trend of large numbers of Chinese investors competing to invest in overseas mobile advertising companies. For example, recently, Meteor Communication Technology Co., Ltd. of Beijing has obtained a share from NativeX, Smaato, Opera Software and the recent Media.net company. In addition, there are rumors that Chinese companies are already basically completing a business negotiation for $1.5 billion to acquire App Lovin, the US mobile advertising platform. The reason why advertising technology companies can maintain a high profit return on investment and strategic cooperation must be attributed to their huge global influence and healthy gross margins, not to mention its powerful advertising technology, able to cater for games, news, entertainment, travel As well as diversified customer bases in various fields such as e-commerce, investors can quickly tap the diversified revenue sources of the mobile internet industry.
From the perspective of going to sea, InMobi, the mobile Internet company that India started to take root in the world, is also attracting the attention of a large number of Chinese investors. As early as 2011, this Indian star mobile internet company attracted Softbank 2 The billion dollar investment was the largest financing in the global mobile Internet industry. InMobi is one of the three major mobile advertising networks in the world. In the mobile advertising industry, it has a similar profit model to Google AdMob and Facebook FAN. It has become a hot spot in the world with these two giants in the field of mobile advertising. At present, the company has local companies and teams in 17 countries and regions in the world. It has 1.6 billion monthly active users worldwide and is backed by top VC firms such as Softbank, KPCB and Sherpalo Ventures. Thanks to its product innovation and the scale of globalization, InMobi's revenues are distributed in many countries around the world, and it ranks first in the US, China, India and Southeast Asia markets. Unlike Google and Facebook, InMobi is the only global Internet company that has successfully entered the Chinese market and has become China's largest iOS mobile advertising network. At the same time, InMobi is also an industry leader in the mobile internet advertising market in Asia. For example, developing countries such as India and Southeast Asia represent the fastest growing mobile Internet economies in the world. Unlike most advertising technology companies that focus on niche markets or superior technology, InMobi has a full range of mobile advertising technologies that combine native advertising, video advertising, remarketing, procedural, and location technologies. Not only that, but compared to other PC advertising startup companies, InMobi only focused on mobile advertising, which also made the company an undisputed leader in mobile advertising technology. With such strong capabilities, it is no wonder that Google and Microsoft have been rumored to be rushing to acquire InMobi. However, taking advantage of the company’s accumulated advantages in China’s mobile Internet advertising and its localization team and experience that can help BAT expand its global market, BAT’s acquisition of the company’s value is far greater than that of Google and Microsoft.
After the end of the mobile broadband user's dividend era, where is the profitability of the mobile Internet? The future has come. Although many people are saying this, it is not accurate. Because in most industries, although the future may have come, but many people do not know where it is, after all, not everyone has such a keen sense of smell. Perhaps the fiery mobile advertising market can give you the answer, let us look forward to China's second round of BAT mobile Internet battle situation and results.
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