“Traffic Trap” under the short video boom

In the short video industry, competition among platform companies has become fierce, and the battle for traffic grabbing has intensified. TikTok will reach 872 million monthly active users in 2020, an increase of 19% from 2018, and the average monthly user time spent by users is as high as 42.6 hours. Kuaishou, the second largest platform, has also achieved a daily activity of 265 million, with an average daily usage time of more than 80 minutes. In order to maintain this “war” without gunpowder, there is a huge “military expenditure” behind it. Taking Kuaishou as an example, its sales and marketing expenses will reach 26.6 billion yuan in 2020, a year-on-year increase of 169.8%.

Traffic is the “life” of the second-class e-commerce. E-commerce platforms are mainly divided into two categories: platforms such as Taobao and JD. Because consumers directly consume on this platform, they belong to one type of e-commerce. Douyin and Kuaishou belong to the second category of e-commerce. They obtain traffic through short video content, etc., and then establish cooperation with platforms such as Taobao to attract traffic, and guide consumers to consume on the first-class e-commerce platform.

In fact, it can be seen from the annual report of the short video “Second Master” Kuaishou that online marketing service revenue and live broadcast accounted for the majority of its total revenue. Among them, online marketing service revenue is particularly growing rapidly, with the proportion increasing from 19% in 2019 37.2% by 2020, and these can be broadly classified as advertising revenue. If the first type of e-commerce can rely on the platform’s high-quality merchants, reliable product quality, and perfect after-sales service to attract users, and obtain revenue based on the transaction volume, then the second type of e-commerce can only rely on the ability to obtain traffic Go to start advertising cooperation with more first-class e-commerce and enterprises. It can be said that the amount of traffic represents the value of the short video platform in the eyes of enterprises and first-class e-commerce.

So, why are companies and first-class e-commerce associations paying more and more attention to cooperation with short video platforms?

From an economic point of view, the consumer product market is a typical monopolistic competition market because there are more similar manufacturers, and it has the characteristics of abundant product supply but not much difference between similar products. Merchants need to adopt non-price competition methods, such as advertising and other marketing methods to enhance product influence. Currently, short videos account for an increasing proportion of consumers’ daily entertainment time, so manufacturers are willing to focus on advertising in the field of short videos to attract consumers.

Moreover, advertising is divided into two types: persuasive advertising and informational advertising. Short videos can provide manufacturers with better persuasive advertising, which is also one of the reasons why they are favored by manufacturers. In a single short video time, through the diversification of content, the product content can be output without the consumer’s defense, complete the guiding purpose, and can effectively isolate the influence of other products, and accurately guide the product flow.

However, in the “traffic trap” behind the short video boom, it is consumers and society that pay for it. Indeed, the increase in traffic is an inevitable trend in the continuous development of e-commerce and has promoted cooperation between industries. However, it is not all good. The reason why I call it a “trap” is mainly due to the following two reasons.

From the consumer’s perspective, is the high volume of traffic bought by bloggers a guarantee of the quality of their products?

In fact, the value-added traffic has brought about the increasing cost of the short video platform itself to obtain traffic. The advertising costs of a type of e-commerce and enterprises on the short video platform have also risen, and these costs will eventually be imposed on consumers. on. Moreover, due to cost constraints, the increase in product marketing costs will bring about slack in product quality, and behind the buying traffic is shoddy and deceiving consumers, these may constitute an infringement on the legitimate rights and interests of consumers.

From the perspective of overall social welfare, behind the flow prosperity is the loss of social efficiency. Short video platform companies will pay more attention to whether their content can attract attention, rather than the depth and connotation of their content. A type of e-commerce and companies are also more inclined to adopt non-price competition methods instead of their own products and services. Finding a breakthrough point and superimposing persuasive advertisements did not effectively alleviate the reality of information asymmetry between consumers and products. The final result is lower product quality, higher non-production costs, and loss of social welfare.

That being the case, how can we use the power of traffic to achieve true e-commerce prosperity? The author believes that there are mainly the following two points. The first is to improve the authenticity of traffic, and many members put forward relevant proposals at the two sessions that just ended. Solving the problem of traffic fraud is the first step for the short video industry to get rid of the falsification and authenticity. Only in this way can the seemingly prosperous bubble be eliminated, the competitive behavior of market players can be regulated, and the quality of content can be improved. The second is to guide and encourage informational advertising. The biggest difference between informational advertising and persuasive advertising is that it can provide more product information without depriving consumers of the right to choose in disguise. It helps to alleviate information asymmetry, form legitimate traffic monetization channels, and improve market efficiency.