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The offline advertising industry, long forgotten by the internet, welcomed a boom in the second half of 2018.
The three giants of the internet have all entered the outdoor advertising industry. Alibaba invested 15 billion yuan to acquire about 10% of shares in Focus Media, becoming its second-largest shareholder; Baidu invested 2.1 billion yuan in a strategic investment in New Wave Media; JD.com acquired the outdoor advertising platform KuaiFaYun.
The primary reason why top-tier internet capital is optimistic about offline advertising is the layout of offline traffic entry points. The ceiling of online traffic is becoming increasingly evident, and the customer acquisition cost for the internet is continuously rising. For the Chinese internet, the demographic dividend is rapidly disappearing. According to a report released by the China Academy of Information and Communications Technology, the total shipment of mobile phones in the domestic market in 2018 was 414 million units, a year-on-year decrease of 15.6%. Although the mobile internet market remains vast, the incremental market is shrinking, and the competition for traffic in the existing market has become a red ocean. Therefore, the consensus in the industry is that the data maintenance (buying traffic) market for internet traffic is almost established. In the face of numerous challenges in online traffic, offline electronic screens, after technological transformation, have become the entry point for internet traffic in the second half of the game.
The entry of Alibaba, Baidu, and JD.com into offline advertising is directly related to the rise of new retail, which aims to “connect online and offline.” Like offline advertising, the retail industry has regained vitality after years of dormancy, led by Jack Ma and Alibaba. With the rise of new retail, statistics show that in the second half of 2018, there were 23 financing events in the community group buying sector, amounting to nearly 2 billion yuan, with 26 institutions participating. Giants like JD.com, Yonghui, and Suning have also entered the fray. New retail or community group buying requires the support of offline advertising. To connect online and offline, precise data is essential. In contrast, the data provided by internet advertising can only be considered “traditional.” By relying on offline advertising, more accurate data and user profiles can be obtained. New retail needs new traffic to support it.
The combination of the internet and offline advertising has also brought revolutionary changes to this traditional industry. The entry points for offline traffic are vast but far from being intelligent or digitalized. If they cannot be transformed into data, then offline advertising cannot connect with the internet and cannot be called a “revolution in offline advertising.” Therefore, a “digital revolution” is underway in the offline advertising industry. Huang Zhiyong, former vice president of Haijing Media, believes that the Chinese advertising industry will enter the next round of industry revolution with the development of advertising technology and the progress of digital media.
In recent years, many companies engaged in programmatic offline advertising have emerged, with Yishou Technology being one of the earliest. For this advertising digital revolution, Yishou Technology has chosen a strategy of “programmatic advertising.” If the internet industry is transforming offline advertising due to demand, then Yishou’s programmatic offline advertising is focused on the digital future of offline advertising, transforming the entire offline advertising landscape. Programmatic offline advertising involves establishing a standard advertising placement process on the platform, using technologies such as LBS, big data, and artificial intelligence to determine the timing and location of outdoor advertising placements.
Chen Shuo, COO of Yishou Technology, stated, “During last year’s Double 11 shopping festival, JD.com used Yishou Technology’s Screen Effect Treasure to place ads on electronic screens at bus stops in multiple cities across the country, influencing consumers multiple times. JD.com only placed ads during high-density and high-activity periods, monitoring actual ad consumption while placing a massive number of ads. If a screen is broken, out of power, or turned off, it will not consume the budget. Charging based on actual CPM playback counts effectively prevents ad waste and significantly reduces advertising costs. To a large extent, Yishou supports advertisers in achieving a dual victory in brand and market.”
Chen Jianhao, a senior executive at Google China, believes that “the programmatic advertising placement method based on technology and data insights allows brand advertisers to deliver the right information to the right audience at the right time. The programmatic advertising placement method can serve all parties: the brand itself, the brand owner, and the user. No matter what your goal is, thinking with a programmatic mindset means that brand marketing can become simple, direct, and effective.”
Yicheng Neng, CEO of Yishou Technology, has nine years of experience in advertising placement products. Two years ago, he keenly sensed the opportunity in offline programmatic advertising and decisively left Tencent to establish Yishou Technology, bringing along a team of technical experts from Tencent and JD.com to develop the information release software “Yixinfa” and the programmatic advertising platform “Screen Effect Treasure.” Yishou Technology installs Yixinfa on offline electronic screens, directly importing screen device resources into Screen Effect Treasure, allowing advertisers to autonomously select the desired placement region, business circle, scene, and time, down to specific points.
With the construction of modern smart cities, outdoor LED programmatic advertising has been given new transformative vitality by IoT technology. Offline commercial display screens not only showcase the commercial vitality of cities but also enable city operators to realize traffic monetization.
According to executives, during the search for partners, Yicheng Neng met Chen Shuo, an advertising professional with similar entrepreneurial ideas. Chen Shuo has ten years of experience in the advertising industry, managing a billion-level advertising market from Renren to Tencent. Yicheng Neng needed to find an operations and marketing team, while Chen Shuo was looking for a technology and product team. After meeting, the two hit it off, and after determining the general direction of cooperation, they began to frequently meet, communicate, and persuade each other to join their respective teams. Eventually, Chen Shuo joined Yishou as COO to start the venture. Similarly, the addition of CTO Liu Jichao was due to his recognition of the development potential of the offline advertising industry. Liu Jichao has over ten years of experience at Alibaba and Tencent, is a big data expert, and specializes in data processing and analysis, focusing on platform SaaS and scenario data construction at Yishou.
A professionally mature entrepreneurial team, optimistic about the future of the industry, has attracted capital’s favor. In August 2018, Yishou received tens of millions in Pre-A financing from Dingxin Capital. This round of financing is mainly used to strengthen product and R&D investment, build sales channels, and recruit talent.
Yishou continues to enrich its products on its own platform. Currently, Yishou Technology’s main products are Yixinfa and Screen Effect Treasure, which connect resource providers and brand owners. By upgrading and transforming traditional outdoor electronic screens, they become IoT advertising points, utilizing big data, LBS, and artificial intelligence to achieve programmatic outdoor advertising placement. The other product is software aimed at advertisers, with Yishou’s strategy being to quantify and visualize the effectiveness of outdoor advertising placements.
According to data provided by Yishou, within two years, Yishou has completed the transformation of 1 million screen media across 29 provinces nationwide.
In terms of development, the key lies in acquiring more screens. Yishou will focus on collaborating with screen manufacturers, as the threshold for existing outdoor media to access Yishou’s system is not high, which is conducive to capturing the incremental market and forming a larger scale of offline screen numbers in the future. Additionally, they will increase the development of advertising interaction-related features, focusing more on advertising effectiveness and conversion beyond just exposure.
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