2019-2022$ $Focus Media (SZ002027)$ Building media revenue, rent payments, and point statistics are as follows:
Note 1 : According to the reporting caliber, the annual revenue of ladder media should actually add value-added tax. If it is higher, the sales of a single point will actually be higher.
Note 2 : The number of points in 2021 will increase significantly compared to 2020. Among them, the self-operated points of Focus Media will not change much, mainly due to the increase of 230,000 posters for joining TV and equity participation.
Note 3 : Starting from 2021, according to the new accounting standards, the rental expenses of elevator media will be included in the cash flow statement – other cash payments related to financing activities.
According to the above table, the average income and average rent of a single point in each year can be obtained, and the average gross profit can be calculated, as shown in the following table:
From 2019 to 2021, the gross profit of each point of Focus has increased from 2,701 yuan to 3,996 yuan, an increase of 1,295 yuan (due to COVID-19 in the first half of 2022, the revenue data has been distorted, so it will not be used for the time being).
Among the 1,295 yuan of gross profit increase, the rental cost decreased by 309 yuan, and the revenue increase contributed 986 yuan.
1. The absolute advantage of Focus on the supply side .
In 2018, in order to fight back against the trendy expansion, Focus Media began to fight back with all its strength. The two frantically expanded their points, and the result of the competition was that the rental price of buildings was significantly increased.
Focus’s single-site revenue is as high as 5,000 yuan (2021). Just imagine, if Xinchao wants to compete for some “fat” spots in Focus, it can only find a property and offer a price that exceeds Focus, but Xinchao can afford it Is this the price?
In 2019, Xinchao’s revenue was 1 billion yuan, with a loss of 1.07 billion yuan.
In 2021, it is said that the revenue will be 2 billion, and it will be profitable.
Assume that Xinchao’s 2022 performance will be flat in 2021 (which is already remarkable).
According to the data released by Xinchao itself: by the end of 2022, there will be 660,000 self-operated buildings and 1.536 million self-operated framed posters, totaling 2.196 million points.
Count it down. In 2022, the revenue generated by Xinchao single point will only be 910 yuan .
Even if Xinchao uses all of its revenue to pay rent, its highest payment level is still lower than Focus’s 1094 yuan, with a price difference of 184 yuan .
I heard that Xinchao announced that it will be profitable in 2021, so the average payment may be about 600 yuan.
If you were a property company, one would give you 1094 yuan, and the other could only give you 600 yuan, who would you choose to cooperate with?
From 2020 to 2022, the number of Focus self-operated points will basically not change much, but the rent payment will decrease year by year. The reason why Focus can keep lowering the rent is because its previous rent payment level is much higher than competitors such as Xinchao.
In the competition for building spots, even if individual spots of Focus are attacked by Xinchao, it is not difficult to get them back, because Focus is much richer than Xinchao.
In the point competition, the dangerous one is the trendy ones. For some good points of the trendy ones, if Focus has taken a fancy to them and wants to take them down, they can pry them out one by one like pulling out nails at any cost. , This is also the practice of Focus from 2018 to 2019, but after fighting and fighting, Focus found that doing so was “killing one thousand enemies and harming oneself by eight hundred”, so it gradually stopped fighting.
But after the First World War in 2018, Focus Media found that it was not cost-effective to do so, and then began to reduce costs and open up overseas markets. This is a more realistic choice after weighing the pros and cons.
On the contrary, Xinchao has continued to expand in the past few years, engaged in data marketing, his total number of points has reached 1.6 million, and his revenue is only 2 billion (not as much as Focus’s profit). He cannot cause fatal damage to Focus However, Focus has the ability to fatally harm Xinchao, and only needs to significantly increase the operating costs of Xinchao.
2. The competitive situation on the demand side .
A few days ago, my wife bought two boxes of Yili QQ Star milk in Li Jiaqi’s live broadcast room. On the way home, a group of children in the community saw it. They came over and asked, “Is this Yili QQ Star?” Surprised, how did they know? The children said they saw it from a variety show called “The Most Powerful Brain”.
My wife lamented that the advertisers are really smart. We didn’t know anything about this brand of milk before, but the children almost knew that Yili’s brand advertisements were placed so accurately.
Some large consumer product companies spend an astonishingly high amount of advertising each year. For example, Yili’s advertising expenses in 2021 will be as high as 12 billion. With such a large amount of money, they will definitely calculate very professionally and strictly how to spend it.
The following content is excerpted from the official website of Xinchao Media:
According to the research report of Caitong Securities, the CPM (cost per thousand impressions) of domestic mainstream Internet apps is in the range of 100-300 yuan, while the CPM of ladder media is only about half of the above cost.
From the perspective of advertisers, the current CMP prices for short and long videos are much higher than ladder media represented by Focus Media, which is a significant price depression.
Within the ladder media industry, the quotation of a single point of Focus is definitely much higher than that of Xinchao (1.6 million points of Xinchao only bring in revenue of 2 billion, while Focus is as high as 13.6 billion).
Although the single-point quotation of Focus is definitely much higher than that of Xinchao, the big B-side advertisers are not fools. They will definitely accurately calculate the average price that needs to be paid in order to reach their target customer groups. Focus’s current CMP cost per thousand impressions is only 40. – 50 yuan, this price should be basically the same as Xinchao and other peers.
What is the best strategy for a client who wants to advertise a building?
The bulk of the budget is given to Focus, which basically covers most of the crowd and ensures the delivery effect.
The budget of the small head is invested in media such as Xinchao, covering a small group of people (for example: the elderly who do not go to work, children, people who do not work in office buildings),
This approach ensures that customers will cover the main target group of products . In fact, there are deeper reasons. By cultivating Focus’s opponents—Xinchao and other ladder media, Focus’s price increase motivation can be greatly restrained .
These shrewd advertisers know that although Xinchao’s offer is low and they are well aware that its coverage is insufficient, they still have to allocate part of their budget to Xinchao. By supporting Xinchao, advertisers can suppress Focus’s interest at the negotiating table with Focus. Quoting, seeking a situation that is beneficial to oneself, Xinchao has become a favorable tool and main pawn for advertisers to protect their own interests.
Of course, Xinchao is also happy to be such a role, and has repeatedly publicized that it will lower the price of ladder media to benefit customers.
I guess, due to the restraint of trendy trends in recent years, Focus has been severely restricted in raising prices, which may also be the reason why Focus’s CMP is less than half of Internet companies.
From this point of view, the existence of Xinchao has indeed brought a lot of losses to Focus. In the past, Focus has increased its publication price every year, but the actual transaction price has basically stagnated.
Xinchao’s crazy expansion and customer’s check and balance strategy have obviously lowered Focus’s revenue growth and profits, which has also caused Xinchao’s continuous blood loss. So far, it needs a lot of financing to survive, which has become a typical “lose-lose situation ”. Who will benefit?
Those who benefit are those B-end corporate customers who are willing to invest in ladder media. The advertising costs saved by these companies are the revenue that Focus and Xinchao should have realized in the process of competition.
Although this trendy competition has brought great losses to Focus, through quantitative analysis, conclusions can be drawn.
On the supply side of building points, Xinchao is unable to grab the points of Focus.
On the demand side, the actual calculation of its low quotation is not competitive, and it can only be used as a reference tool to supplement and suppress Focus.
Then, in this industry where technological innovation cannot be subverted and operating efficiency is not important, Focus, as an incumbent enterprise, has an unshakable advantage .
I can affirm that even if Xinchao has 10 million points in the future, as long as these points are not suddenly filled with crowds, it will not be able to shake the dominance of Focus, and cannot pose a fatal threat to Focus.
It is worth mentioning the Vietnam market. When Focus was expanding its market overseas, it found that a local company had already dominated the ladder media market in Vietnam. , It is bound to be like Xinchao’s attack on Focus, and there will be a lose-lose situation, so they give up the Vietnamese market. This is a rational performance, and it is also a typical case of taking the lead in the ladder media field.
3. The impact of trendy competition on Focus
Focus lived too comfortably before 2018. For more than ten consecutive years, the annualized revenue has increased by 20%, and the ROE has reached 60%. Jiang Nanchun once deviated from the original intention and tossed around. After returning to the A-share market, he raised the price every year. Such a big piece of fat naturally aroused the covetousness of capital, so there was a trendy appearance.
After more than 5 years of suffering from Xinchao, the catfish, and the downturn of the economic cycle, Focus lost a lot of blood. However, after these years of hard work, Focus has shown gratifying changes.
(1) The dawn of overseas expansion . At present, it has covered more than 50 cities in Hong Kong and Southeast Asia. In 2021, the profit of the Korean subsidiary will be 50.64 million, and the profit of the Singapore subsidiary will be 46.71 million.
The profit of the above two subsidiaries may be higher than that of Xinchao. Xinchao’s points are as high as 1.6 million, but Focus Korea’s subsidiary only has 100,000 points.
This once again proves that the key to the profitability of elevator media is the densely populated elevator network, not the number of elevator points. In the ladder media industry, quality is much more important than quantity.
Focus also plans to recreate a focus in Southeast Asia, Japan, India and other Asia and Southeast Asia with high population density, continue to watch.
(2) The number of employees is reduced by 50% . In 2019, Focus has 11,005 employees, and in 2021 it has dropped to 5,871, a drop of as much as 50%. With fewer employees, 400 million less salaries were paid, which turned into profits for the company, and the bloated organization was slimmed down.
(3) Focus back on expanding industry needs . Jiang Nanchun once dreamed of being a poet and was a typical idealist. In an interview, he said that he hoped that his tombstone would be engraved with a sentence, “This is an entrepreneur who worked hard for the rise of Chinese brands.”
Jiang Nanchun’s level of diligence is very rare among entrepreneurs. He gave speeches all over the country to promote the advantages of ladder media, and all the advertisements posted on Weibo were samples of customers. He said that besides work, he has no hobbies, and he doesn’t like golf, nor does he drink tea or play chess.
I have always been highly vigilant and prejudiced against the natural person companies that Dong Gaojian shouldered. Such a corporate governance structure terrifies me, but I have never seen such an ideal, ambitious, diligent and persistent manager like Jiang Nanchun. the second. Therefore, I appreciate Focus’s management very much.
But can Jiangnanchun’s continuous efforts increase customers’ demand for ladder media?
I don’t know, I can only wait.
(4) Rediscover self-confidence . At the beginning of the competition with the trendy trend, Focus was flustered, but after fierce battles and calm assessments, Focus should have re-realized that it is very safe, and there is no need to worry or over-react, and start to focus on developing market demand. .
Starting from 2020, Focus has distributed almost all of its net profits to investors. This is also a manifestation of self-confidence. We have money, so what are we afraid of?
4. After the trendy, there is no new trend
Xinchao is like a catfish, which has muddied the water in the ladder media industry, but looking at some information about Xinchao, I think this company may have made some fatal mistakes.
(1) Mocking opponents everywhere, the stupid image is ridiculous
After Focus Group went overseas in 18 years, it has had a good development situation in the past 5 years, but I don’t know what kind of mentality Xinchao has. What wins? “(2022/12/29) excerpts are as follows:
Regrettably, due to the differences in culture, policies, and market trends in various countries, the expansion of the territory has not brought the expected profit growth to Focus. For this reason, Focus has also once bet on the cooperation with cinema screen media and terminal store media. The “performance anxiety” behind its rapid expansion is self-evident.
In contrast, since Xinchao Media has no short-term profit pressure, it is more focused on bringing long-term value by relying on “endogenous growth” such as “technical efficiency” and “sharing profits for a win-win situation”.
Looking to the future, whether it is a community or an office building, the total area of elevators in China is limited after all. The number of screens and poster frames will not bring unlimited growth to elevator media. If you want to obtain deterministic incremental space, based on existing materials On the “fine and detailed” is an unavoidable direction.
From this point of view, there is actually no strategic difference between Xinchao and Focus. On the evolutionary road around offline traffic, the former will go through the road, and the latter will eventually have to go through it again.
In this article, Xinchao satirizes Focus, “Focus has to walk the road I have traveled again.” When I saw this passage, I couldn’t help laughing. There is a golden sentence in “Three-Body”:
Weakness and ignorance are not obstacles to survival, arrogance is .
Weakness does not prevent survival, but arrogance can bring death. In all the public meetings of Focus, the word “new wave” never appeared. The only exception was that Jiang Nanchun was forced to say that “certain enterprises cannot rely on touch porcelain for marketing”, and never mentioned it again. .
(2) False publicity to deceive customers
Xinchao has surpassed Focus in promoting itself, and is the number one social media. Can these words fool those savvy B-end customers? How many people can there be with so many points? Does it overlap with the target customers of the company?
After investigation and research, savvy B-end customers don’t understand?
Xinchao’s behaviors of deceiving customers are manifestations of “irresponsibility” and “dishonesty”. How long will such a corporate culture last?
(3) Will not compromise art, insist on high-profile confrontation, and maximize your own losses .
Chapter 11 of “Competitive Advantage” (by Bruce Greenwald) introduces the type of entry/preemption game. In a closed market, new entrants want to attack the incumbents. The two different strategic choices and the interaction process, there are 4 possible outcomes in the tree development diagram of the entry/preemption game.
After Xinchao launches an offensive and Focus chooses to counterattack forcefully, if Xinchao rationally compromises and no longer desperately expands its offensive, both Xinchao and Focus will suffer losses, but they will not lose too much.
But unfortunately, Xinchao did not choose to compromise after being counterattacked by Focus, but continued to insist on confrontation. Xinchao’s attitude and choice led the game between the two sides to lead to the worst outcome of the four possible outcomes – the loss of a lose-lose situation Maximize, that is, the losses of both parties are maximized.
For Focus, this kind of loss is a reduction in revenue and profits. For Xinchao, it has been bleeding continuously, and it is still receiving external blood transfusions to continue its life. If Xinchao is still unable to make blood to support itself in the future, once a major internal and external crisis arises, it may lead to disaster.
Xinchao’s ten-year offensive in ladder media has provided a very good case blueprint for other capital coveting ladder media profits. If it raises tens of billions and has been engaged in it for more than ten years, it still cannot break through the “moat” of Focus Media, and Focus Media has been certified, then there may be no new trend after the trend.
2023.1.11 Shandong Weifang
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