news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Where there are users, there should be advertisements. Lin Shuiyang's experience at Sina has left a deep mark on him.

Text｜"Chinese Entrepreneurs" reporter Tao Tao

Editor: Zhang Hao

Source of header image｜Interviewee

Lin Shuiyang has a keen sense of traffic.

Under his management, a popcorn OEM factory first had its own brand, Baobaotang, and soon became the number one popcorn sales company in the cinema channel, and then transformed itself into the largest cinema screen advertising company in China. In 5 years, the screen advertising covered 21,000 screens in 3,600 cinemas across the country, and the coverage rate exceeded 25% among all 80,000 screens in the country, ranking first.

Baobaotang was originally a popcorn food OEM factory run by Lin Shuiyang's college classmate. Lin Shuiyang worked at Sina for nearly ten years and participated in the creation of Sina Weibo. Li Weiwei, who joined Baobaotang with him in 2014, is the company's co-founder and was once the sales champion of Microsoft East China.

Lin became the chairman and CEO of Bobotang. The new entrepreneurial team injected new genes of technology and channels into Bobotang. In just three years, they occupied 60% of the domestic market share of ball-shaped popcorn. After establishing its own brand, the company quickly shifted from traditional supermarket channels to what the industry considers to be "special channels" such as cinemas and amusement parks. Lin Shuiyang discoveredThe sale of popcorn is highly dependent on the scene, and the new scene he bet on is obviously more popular among young people.

The movie theater popcorn business has accumulated a vast amount of movie theater terminal resources for Bobotang, so that Lin Shuiyang later had the idea of ​​revitalizing "traffic". In 2016, when he was targeting screen advertising, offline movie theaters ushered in an explosive period, and the number of movie theaters nationwide reached 8,400, an increase of 30% over the previous year.

At that time, Lin Shuiyang took his team on a tour of domestic cinemas and realized that the way domestic screen advertisements were played was very traditional:Manual broadcast and manual monitoring are costly and difficult to implement. The concentration of screen advertising media is low, and the integrity and credibility are poor, and the service quality is poor.The low ROI (return on investment) leads to low recognition from advertisers: "The budget is the 'leftovers' of many companies. There is no clear proportion and it will only be considered when there is a surplus." Lin Shuiyang said.

But overseas, this has long been a rich mine. According to long-term follow-up research by d.fferento/ogy, a British data research institution,On average, large British brands spend 7% of their brand advertising budgets on movie screen advertising.The market is very mature. Based on the TMS (Theatre Management System) application widely deployed in Europe and the United States, theaters can automatically control content management, key management, projection and other functions without relying so much on people.

Lin Shuiyang acquired a TMS technology company at the end of 2016 and has since entered the field of intelligent digital transformation of cinemas. He first helped cinema chains realize the automation of film broadcast control. After completing a large range of infrastructure construction, he officially entered the cinema screen advertising market in 2019.

"When we first reached a cooperation with Baobaotang, it was because we considered that the orders they provided to customers were cost-effective, the company's management was standardized, the decision-making process was efficient, and the amount of resources could match customer needs." Wang Chao, the core agent of Baobaotang and general manager of the Sixth Business Group of Guangdong Advertising Group, told "China Entrepreneur" that they reached a cooperation with Baobaotang around 2020.

Bobotang "gives" TMS software and hardware services to theaters in exchange for sharing advertising revenue with theaters. This is a typical business model in the Internet industry.Before Lin Shuiyang entered the market, some cinemas would install overseas TMS, which cost 100,000 to 200,000 yuan per set, and they also had to pay an annual fee.

Baobaotang plans to expand this model to all cinemas with commercial value across the country, which will create huge media platform value. The cinemas are also happy to see this happen.The increase in the proportion of advertising revenue will balance the cyclical risks posed to theaters by box office fluctuations.

A different approach

On the display cabinet at the entrance of the Bobotang Group, half is filled with canned popcorn products: cherry blossom flavor, vanilla cream flavor, caramel flavor, spicy flavor... and the other half is stacked with hundreds of empty popcorn buckets co-branded with movies, such as "Speeding Life 2", "King of the Skies", and "Keep You Safe", almost all the hit movies in recent years can be found here.

Photography: Tao Tao

Compared with the more well-known screen advertising business, Baobaotang’s merchandise business has actually gradually covered more than 400 cities in 27 provinces across the country.

Before 2015, Lin Shuiyang had never thought that he would have anything to do with screen advertising. After graduating from Northwestern University with a degree in information management, he joined Sina in 2005. At Sina, he was assigned to open up new territories every once in a while, from Sina Blog, Interactive Community, Sina Space to Sina Weibo. In 2014, after Sina Weibo went public, the core product entered a stable period. Lin did not want to live a "stable" life anymore, so he left Sina and started a new journey.

Baobaotang initially only engaged in the OEM business of American-style popcorn.A bag of corn weighs more than 10 ounces (1 ounce = 28.350 grams), and the import price is more than 200 yuan.The profit margin is very small. In order to stop being a scapegoat for others, Lin Shuiyang and his new team immediately decided to get rid of their dependence on imports, cooperate with domestic companies, develop popcorn raw material planting technology, and create their own brand.

In December 2015, Hanyi Investment and Zhuhai Hengqin Oriental Food Management Consulting Partnership invested a total of 50 million yuan to support Baobaotang’s self-developed popcorn.

The brand name comes from the idea of ​​a young female founder of the company. In 2016, the game "Bubble Bobble" was popular, and because the posture of customers holding buckets of popcorn was "hugging", this cute name came into being.

There are two main types of popcorn products on the market, namely butterfly-shaped and ball-shaped. As the name suggests, the difference lies in the shape of the popcorn. Ball-shaped popcorn tastes crispier, but the raw materials are imported.

The core ingredients of ball-shaped popcorn include popcorn, caramel and coconut oil. In 2016, Bobotang cooperated with CJ, the largest food company in South Korea, to develop special caramel, and cooperated with domestic enterprises to plant ball-shaped popcorn, becoming the only company in China to localize the raw materials of popcorn.

It also built its own factory of 20,000 square meters and semi-automated production lines. The localization of raw materials and the production capacity of its own factory,The price of spherical popcorn was reduced to 30% of the previous level, and the gross profit margin remained at around 40%.

At the same time, Li Weiwei led his team to expand sales channels. Within a few months, 40,000 to 50,000 sales terminals were "grown" on the pedestrian streets of most prefecture-level cities across the country, covering milk tea shops and supermarkets.

However, the sales efficiency of scattered terminal channels is not high. Through the analysis of the North American popcorn market, Lin Shuiyang found that: "Popcorn relies on the product's influencer cycle in ordinary sales channels.Cinemas, theaters, and amusement parks have long occupied the minds of users and are more stable and efficient channels.”

In 2016, Bobotang made adjustments immediately. Lin Shuiyang called this year the company's "first year of cinemas". It began to shift from ordinary channels to special channels. Thanks to the price advantage of local raw materials, its average annual output value has reached 200 million yuan. In addition to more than 7,000 cinemas, its terminal channels also include amusement park brands such as Happy Valley and Fantawild.

Build roads first, then get rich

The number of cinemas that Bobotang cooperates with is growing day by day. From 2014 to 2016, the number of cinemas in China also soared, with an average annual compound growth rate of over 30%.

At that time, Lin Shuiyang had been thinking about how to fully utilize the "traffic" of cinema terminals.Where there are users, there should be advertising."This is his creed, which is also due to his experience at Sina.

However, after visiting cinemas across the country, he found that the commercialization of domestic cinemas has not increased with the increase in the number of cinemas. In 2016, there were 8,410 cinemas in China, of which only 3,000 cinemas in first- and second-tier cities had cooperated with advertising centralized delivery platforms, including Focus Media, Jingmao Media, Film Fashion and Lemu Media. The restThere are 5,000 cinemas, mainly located in third- to fifth-tier cities. They cannot receive advertising from big brands, so the operators can only negotiate with local brands themselves.

Lin Shuiyang saw the opportunity to enter the low-tier market, but the sinking market was not as easy to break into as he imagined.

In 2016, the traditional manual mode was still used in domestic cinemas. When the Bobotang team asked some advertising agencies if they would help with the implementation if the advertisements were mainly placed in 5,000 cinemas in the lower-tier markets, the answer they got was "no". These agencies told Lin Shuiyang,"The efficiency of manual execution and monitoring at the grassroots level in low-tier cities is extremely low, and there are many service quality issues in screen advertising, such as missed ads, wrong broadcasts, and difficulty in management."

The way of screen advertising in first- and second-tier cities was relatively standardized, but also relatively primitive. "At that time, the transmission tool between cinemas and advertising agencies was still QQ, or even USB flash drives. Each cinema needed 2 to 3 projectionists, and several advertising monitoring personnel to supervise the projectionists' advertising to prevent mistakes," Lin Shuiyang said.

The insufficient level of informatization in cinemas has become a barrier to the large-scale development of screen advertising.

This problem troubled Bobotang for several months. After several visits at home and abroad, Lin Shuiyang finally found a path to learn from the advertising management model of European and American cinemas - overtaking by using the cinema intelligent management system.

At that time, AMC, the largest cinema chain in the United States, had already adopted TMS to broadcast films. The system automatically screened films and did not require the management of projectionists and a large number of supervisors. The misbroadcast rate of screen advertisements decreased, costs were reduced and efficiency was increased, thus gaining an advantage in the advertising agency market.

After returning to China, Lin Shuiyang had two options: find a mature TMS company, develop an advertising module for implantation and split the revenue with each other, or operate a TMS company himself.

He chose the latter. In 2016, Bobotang acquired a local cinema TMS management system company. He also brought in his R&D partner from the Weibo era and embedded advertising functions into the TMS.As a result, Bobotang has become the only cinema advertising platform in China equipped with a digital projection system.

A successful product still needs a suitable business model to be implemented. After all, for domestic cinemas, this is a new thing and it also corresponds to purchase costs.

In 2017-2018, considering the lack of awareness of TMS in the domestic market, Bobotang launched a service that offered free TMS hardware and software and free system installation for pre-charging 60,000 yuan of popcorn. "This is to lay the foundation for the online advertising business, and the pre-charging of popcorn can ensure our continuous cash flow. The popcorn business continued by the cinema can gradually cover the cost of TMS within two years," Lin Shuiyang explained.

Non-box office revenue

After the "infrastructure" was initially scaled up, in 2019, Bobotang began to gradually promote its advertising business.

By saving the cost of manual monitoring, the companyThe pricing of screen patch advertising is set at only 1/5 to 1/3 of that of traditional advertising platforms.

In addition, in order to further segment the screen advertising market, the cooperation between Bobotang and its customers is divided into "Bobotang General Sticker" and "Bobotang Core Sticker". The former is played 3 to 5 minutes before the "Dragon Mark (Film Screening Permit)" appears, and is a non-targeted placement for advertisers; the latter is played next to the Dragon Mark (0 to 3 minutes), and is a targeted placement for advertisers targeting designated films. The prices of the two are 6 yuan/scene/15 seconds and 12 yuan/scene/15 seconds respectively. Before this, traditional film advertisers in the industry all had a unified price of 20 to 30 yuan/scene/15 seconds.

The cooperation cycle is mostly in years. Customers can place ads throughout the year or just during the schedule of a certain film. Lin Shuiyang's team will give specific plans.

This customized solution of reducing costs and increasing efficiency has great appeal to brands. However, at that time, some large enterprises had already established cooperation with other advertising platforms. Baobaotang's screen advertising business has undergone a long market education process. "The fastest can be completed within half a year, such as the Coconut Tree Group, and the slowest took a full five years." In order to win customers, Lin Shuiyang, together with his partners who have been fighting side by side since the Weibo era, visited potential customers one by one and made background demonstrations.

He had a large state-owned enterprise client. He took the sales director with him to talk to the boss of the other party for three or four rounds, from popcorn to TMS, from the core team's Internet business resume to the benefits of improving broadcasting efficiency for advertisers. In the actual operation of the machine, the client understood the working principle of the software and hardware system, and gradually established initial trust. Only then did the other party invite them to bid.

What is even more difficult is facing companies that have not invested in screen patch advertising. A few years ago, the domestic screen advertising field was more concerned by fast-moving consumer goods brands, while in mature overseas markets, high-end brands also invested a high proportion in screen advertising.

“The key is to let brand owners see the value of screen advertising.The cinema is the best carrier of expression in terms of screen size, brightness, sound effects, advertising reach, memorability, and the mood of the audience."Lin Shuiyang said.

Kantar Consulting survey data also shows that consumers' attention to cinema advertisements is as high as 64%, higher than elevator advertisements (45%), traditional TV advertisements (19%) and Internet TV advertisements (19%). Immersive viewing reduces the interference of other information on advertisements.

Source: Kantar Consulting

In addition, in Lin Shuiyang's view, the core group of moviegoers is between 15 and 45 years old, which matches the mainstream consumer group; they are fashion and trend lovers and are willing to try new brands and products; they also love to share and can generate secondary dissemination of the brand.

Lin Shuiyang spared no effort to instill similar ideas in brand owners. The effect of market education gradually emerged. Five years later, brands cooperating with Bobotang have spread across 3,600 cinemas across the country, which has exceeded half of the number of cinemas that sell popcorn products.

Annual revenue from screen advertising also surpassed popcorn sales."In the past few years, we mainly subsidized the installation of systems in theaters, which required a lot of investment. We should be able to break even this year," Lin Shuiyang estimated.

He also hopes to increase the cinema's non-ticket business revenue through screen advertising.Reduce theaters’ reliance on box office revenue and build a healthier business ecosystem for theaters.

Data from British digital media DCM (Digital Cinema Market) shows that the cinema advertising media company covers 81% of the screen advertising market in the UK. Lin Shuiyang also hopes to deploy TMS to 10,000 cinemas with commercial value out of the current 12,000 cinemas in the country.

According to his plan, in the future, he hopes that at least 8,000 of the 10,000 theaters will be able to use advertising revenue to offset the popcorn payments, and the sales will become pure profit. "There will be more advertising revenue sharing, which is also pure profit."

News hotline & submission email: [email protected]