The advertising pricing trend of PC end, mobile end and video service?

Summary: Check the latest quotes Beijing time November 14 Evening News, Phoenix (that is, Phoenix New Media, New York Stock Exchange code: FENG) released the third quarter of 2014 earnings. Earnings showed that as of September 30, 2014, as at September 30, 2014, Phoenix Total income to view the latest market Beijing time November 14 Evening News, Phoenix (ie, "phoenix New Media", New York Stock Exchange code: FENG) released the third quarter of 2014 earnings. Earnings showed that as of September 30, 2014, as at September 30, 2014, Phoenix total income of 432 million yuan (about 70.3 million U.S. dollars), an increase of 14%. NET advertising revenue (excluding advertising agency service fee) for 326 million yuan (about 53.1 million U.S. dollars), an increase of 45.5%. The third quarter after the adjustment of operating earnings of 87.9 million yuan (about 14.3 million U.S. dollars), an increase of 14.8% year-on-year, the third quarter after the Phoenix New media should account for the net profit of 93.3 million yuan (about 15.2 million U.S. dollars), increased 13.7% The third quarter adjusted the net profit of ads per share was 1.21 yuan (about 0.20 U.S. dollars), an increase of 13.6%.

After the earnings release, Phoenix chief Executive Officer Liu Yan, President Lyapunov and CFO He Ye attended the subsequent earnings conference call, interpreting the earnings points and answering analyst questions.

The following is the main content of analyst question and answer session

Macquarie analyst Alice Yang: Congratulations for another quarter of strong performance, especially in advertising. My first question is about the advertising business, Phoenix New media in the third quarter of the advertising revenue growth good, each advertiser average income (ARPA) to achieve growth, can reveal the last quarter of the pricing strategy; If you can, could you tell us about the advertising pricing trend of PC end, mobile end and video service separately?

Lyapunov: This year, we have carried out two price increases, at the beginning of the year, A + type of PC advertising pricing up 20%, mobile advertising pricing also increased, A + class video advertising price increase of 30%, but the second half of the overall advertising price only to fine-tune.

At present, our pricing strategy mainly consider the following aspects, the first is the advertising inventory sales rate, our PC video advertising inventory sales rate is 30%, relatively low, so we do not increase pressure in this respect, but is committed to the relatively competitive advantage of the pricing to obtain more market share. While the PC-side video advertising inventory sales rate is high, we have plans to increase the inventory of video ads before, adjust the advertising mechanism, without affecting the user browsing experience to increase the display of advertising.

Next year, we want to enhance the monetization of the mobile end, especially the realization of mobile video inventory, we in hand Phoenix and Phoenix Video Client Day active user number is about 5 million, but at present, these two parts have not materialized, we hope that 2015 can be achieved.

On the one hand, the third quarter of PC site independent visitors increased by 20%, on the other hand, our mobile end of the new strategy focused on the Phoenix News client and the recent investment of a little information, I hope that our advertising technology can be more accurate to target users, With personalized matching and better data analysis for accurate delivery to enhance the effectiveness of advertising, our pricing ability will also increase, but for the time being unable to provide specific growth figures.

Macquarie analyst Alice Yang: Your advertising business is growing more powerful, can you say about PCs, mobile, video in total advertising revenue, as well as their respective year-on-year growth data?

Lyapunov: Video advertising revenue rose 68% Year-on-year, the proportion of total advertising revenue from 16% to 19%; Mobile advertising revenue grew about 124% Year-on-year, the proportion of total advertising revenue from 9% to 14%;pc non-video advertising growth of 31%, accounting for total advertising revenue 68%.

Macquarie analyst Alice Yang: The fourth quarter is relatively conservative, the company in the fourth quarter forecast the largest year-on-year increase in advertising revenue of 28%, lower than the previous expected increase, what is the reason? Is it because of changes in the market environment or focus?

Lyapunov: Generally, the industry overall advertising market in the fourth quarter is almost the same as the third quarter, we will certainly have a quarter-on-quarter growth in the fourth quarter, but the expected year-on-year growth of more than 25% rather than our first three quarters of the 40%, because of last year's fourth quarter of advertising revenue performance is good, It is more difficult to achieve large growth on the basis of large cardinality. In addition, mobile video schemes are starting next year and one of the reasons we make this prediction.

The market environment in the future there are many uncertainties, predictability is not high, but we do not see the trend of enterprises to reduce advertising budget, they should still be in the process of making advertising plans. The overall trend of advertising in China is that internet marketing is still grabbing the market share of advertising marketing on the traditional platform, and the overall market growth rate of internet marketing will remain stable.

J.P. Morgan analyst Alex Yao: When users continue to move from PC to mobile, from a single screen to a multiple-screen situation, from The Advertiser's point of view, there are no resulting needs or opportunities, how will you grasp these opportunities?

Lyapunov: On the one hand, the time the user spends on the mobile side continues to affect the advertising spending distribution of advertisers, at the same time, I think the whole industry is developing better precision delivery technology, so small screen advertising effect is not worse than the effect of PC ads, which is one of the important reasons for our strategic investment information. Through a little information of intelligent recommendation and search matching technology, can let us put ads more suitable for users ' interests. In addition, a bit of information technology products will also provide the leading advertising solutions in this area for our own business reference.

On the other hand, with the rapid increase in the number of users and time, the overall mobile advertising inventory sales rate is still relatively low, the current mobile end of the change is mainly reflected in the mobile phone Phoenix, the client's development focused on enhancing the client's user experience and product features. I think mobile platform advertising is a long-term goal, precision delivery technology and personalized services to facilitate the realization of this goal, in addition O2O and mobile game business will also promote the mobile end of the transformation.

J.P. Morgan analyst Alex Yao: How is raw marketing going? What is the forecast for next year's growth?

Lyapunov: Big Data + Big idea is that we have announced the marketing concept, the primary marketing is built on the outstanding content ability, and to the user's insight understanding, in order to build the brand content, better satisfy the user interest demand, attracts the more attention, and promotes on other social platforms the widespread dissemination.

Our native marketing strategy has helped us gain more budget share for our brand advertisers. We now have dozens of different primary marketing customers, and some marketing cases have won awards in the recent Chinese advertising festival.

Revenue from primary marketing is about 15% per cent this year, and we expect to maintain steady growth next year. In addition, we have other methods, such as native advertising products, will be on the mobile side and the PC to provide new forms of advertising and advertising inventory, unlike traditional banner ads, we will through personalized referral and delivery technology to provide more accurate matching user interest information flow ads.

We are currently promoting the production of native ads in-house, beginning next year, we will update the PC side of the homepage design and mobile phone Phoenix design. In addition, through with a little information cooperation, the company will be able to accelerate the development of primary advertising products, a little information has a unique based on the recommendation engine and search engine technology on the basis of the interest of the engine, and based on interest matching ads will vigorously promote the development of primary advertising.

Original marketing + native advertising, representing our big Data + big idea of the marketing concept, so that we can lead the innovation of China's advertising marketing changes.

Deutsche Bank analyst Eileen Deng: I have two questions. First, the company's fourth-quarter pay service is expected to grow on a month-on-month basis. I want to ask, is this because of the potential revenue generated by mobile gaming or other business development? The second question is about what you've just mentioned about investing in "a little bit of information," and when do you think the "Little News" and the Phoenix News client will bring new growth?

He Ye: In fact, on the issue of paid services, we can see that the share of paid services in our total income is falling, from about 30% in the last quarter to 25% in the quarter. Our paid service includes four parts: one is the wireless value-added service, the other is mobile video, the third is mobile digital reading service, four is mobile games and other. Revenue declines are mainly in the traditional wireless value-added services, as traditional wireless value-added services are largely affected by operator policies, thus falling in total revenue: the same period last year accounted for 24.7% of the total, compared with 10% in the current quarter.

In the long run, volatility will have a smaller impact on our financial performance, as it is only 10% of total revenue this year and will continue to decline in the future, determined by the nature of the weakness of traditional wireless value-added services.

Lyapunov: For your second question, first of all, I'd like to say that the "little News" and the Phoenix News client application are two complementary products for different usage.

Phoenix News client application has a stronger timeliness, good at providing major events and highlights of the comprehensive in-depth reports, usually in high-end users, we plan to use our PC-side large user base and the experience and influence of major events reported to expand the Phoenix News client user coverage.

and "Little information" aims to provide a wide range of users with unique personalized news and other information content, relying on advanced data analysis technology, the rapid growth of the user community to grow into a personalized mobile end of the "interest portal", rather than a traditional wireless news portal. Two product positioning is complementary and different.

Second, we have also cooperated with a little bit of information, such as helping them to collaborate on content copyrights, and working together to develop a marketing plan to enhance their brand image. With regard to the present, this period is not the main, enhance the brand influence and expand the user base is the focus.

In addition, another important shareholder of "little Information" is a leading handset manufacturer, and will also use its resources for strategic cooperation to promote the "little information" as a new generation of mobile news clients high-speed development.

CICC analyst Natalie Wu: Can you provide a little more detailed information, such as monthly active users? What is the advantage compared to today's headline? A little information of the second largest shareholder is millet (rolling information), Millet is a bit of information services to provide a strategic support?

Liu Yan: We don't yet disclose the number of active and active users of the month, but a little bit of information has grown very robust over the past few months.

Rather than commenting on the information of competitors, we would like to discuss some of the unique advantages of information. Investors with a bit of information are strong, like the millet you mentioned, and Phoenix. We have a good understanding of consumer media behavior, and a little information can be used to learn from our experience. We have exclusive quality content in video, audio and so on, in many ways we can collaborate with each other.

At the same time, a little information team has a very deep search technology background, Dr. Founder Cheng has extensive experience in web search, with his vision and expertise in the search field, we believe that a little information will become the leading next generation mobile portal.

Lyapunov: I would add that Dr. Cheng was the leader in this field as early as ten years ago, in charge of Yahoo's personalized projects, he also led the Yahoo China Research Institute, "Little Information" another founder Ninkuyang was Baidu vice president, in addition, "a little information" there are a group of cutting-edge scientists and engineers, the team is very strong, I believe it can go far.

CICC analyst Natalie Wu: I also have a question, can you list Phoenix New Media three quarterly advertising revenue contribution to the top five of the industry? What are the respective proportions?

Lyapunov: No change in the top five industries this quarter. The car is 34%, food and beverage and alcohol 11%, E-commerce 10%, medical services 6%, financial services 5%.

Morgan analyst Amanda Chen: My first question is a little bit of information on investment projects. We try to push news and information on the client side based on the user's interest, and we always mention a little bit of information to focus on the user's interests, while the Phoenix clients focus on professional quality news and information. In the long run, how can the company use a little information client to push, for example, whether the Phoenix News client will also be interested in pushing. How will the company apply the project to enhance its competitiveness?

Liu Yan: A bit of information and Phoenix News clients are essentially different two products. In terms of user groups, the target audience is very different, before the Phoenix News client target group is mature, middle and high-end people, and a little information target crowd more of the younger generation. The Phoenix News client is the editor's recommendation oriented, and serious news reporting is our core content. A bit of information is a search engine-oriented product, is a combination of search and recommendation engine, the two have different product logic. On the other hand, Phoenix News clients focus on news facts related, more real-time. And a little bit of information is not limited to facts, but more lifestyle information, including fashion, health care, mother and child, automobiles and finance. The content of a little information provided is all-encompassing, it created the mobile state of the user in the leisure time content consumption of new demand, the two products are fundamentally different. At the same time, a bit of information personalized information recommended technology to advertisers more accurate placement opportunities. As a result, two clients are different, but at the same time complementary. We can use their technology to carry out the user's habit of advertising, and a little information can borrow our brand awareness, brand promotion experience and quality exclusive content such as resources.

Lyapunov: Let me add some synergies. First, the company has a lot of exclusive video content that we authorize to give a little bit of information to help improve the competitiveness of its news product diversification. Perhaps the key message here is that Phoenix, as China's first networked media platform in the PC era, is investing in a bit of information that demonstrates our determination to pursue a leading position in the core business world.

Liu Yan: At present, the Internet industry is moving from the PC to the mobile end, the company wants to occupy a leading media position across the screen, only one client is not enough, we have to cover different user groups, to meet the various user fragmentation time for information and media needs. So owning other products, such as a little bit of information, can help companies expand their user coverage and meet their diverse needs.

Morgan analyst Amanda Chen: My other question is about vertical platforms, such as real estate, cars, and so on. Management can talk about this data and the vertical channels of what the company plans to move, such as investment projects and so on?

Lyapunov: China's housing market has greater uncertainty, and our joint venture Phoenix property growth rate is difficult to predict. We see a lot of opportunities and challenges, in order to adapt to the current volatile market environment to meet the needs of the industry and users of new services, will consider cooperation with third parties to explore new strategies and services to respond to market changes, but there is no disclosure.

Automotive sector, the third quarter outstanding performance, the overall advertising revenue contribution rate reached 34%, on the one hand, the reason is that our primary marketing to enhance the advertising effect, enhance The advertiser's satisfaction and volume. The other reason is that the auto industry has warmed up this year since the car-restriction policy was a year ago.

At the same time we are also very concerned about the performance of competitors, the real estate and automotive industry has a separate listed companies, and we are in the media content to provide a gradual extension of transactional services. Vertical development exploration, we have several ways, one is the product, especially the mobile end of the product, on the other hand, through investment and cooperation. We have a small development in real estate and cars are the focus of the overall advertising contribution, so both of us are careful to devise strategies and hopefully there will be more progress to be shared next year.