In the past few years, short videos have rapidly emerged in the Chinese market. Many marketing companies have jumped on the short video platform and achieved rapid growth in performance. Youju Interactive is one of them.
On October 15, UJU (abbreviation: UJU Interactive) submitted a prospectus to the Hong Kong Stock Exchange again and applied for listing on the Hong Kong Main Board after failing to submit the form on April 12 this year. Private capital is its exclusive sponsor.
Youju Interactive was established in 2017 and officially started operations in 2018. It currently has more than 900 advertiser customers. The company is a pioneer and market leader in China's online marketing solutions industry, providing one-stop cross-media online marketing solutions mainly through the company's media partners (including China's leading online short video platform, social media platform and search engine platform) solutions, especially online short video marketing solutions, for advertiser clients to market their products and services.
The funds raised will be mainly used to upgrade the company's excellent engine platform (intelligent online short video marketing solution delivery, optimization and management platform), research and development of AI functions and SaaS technology, expand online short video platform e-commerce business opportunities, and enhance relationships with existing media partners and expand our advertiser customer base.
The largest shareholder is the former Vice President of Marketing of Vipshop
In terms of ownership structure, Ma Xiaohui is the company's controlling shareholder. He holds a total of 90% of Youju Interactive's shares through indirect holdings of shares in Vast, , and Aura (27.00%, 50.76%, and 12.24% respectively).
It is worth noting that Mr. Ma Xiaohui, the company’s controlling shareholder, was the vice president of marketing at Vipshop before he founded Youmoment Interactive. In addition, Ma Xiaohui is not only an Internet veteran, but also a senior media person. He has worked for CCTV, Hunan Satellite TV, Xinhua News Agency, Sina, etc., and has in-depth insights in marketing. In 2015, he resolutely resigned from Vipshop. In December of the same year, he established Youju Advertising (the predecessor of Youju Interactive), determined to be a marketer who constantly iterates on himself.
The compound annual growth rate of the online short video marketing market is as high as 147.3%
With the increasing penetration rate of the Internet market and the impact of COVID-19, the development of China's online marketing market has further accelerated. In addition, the short video industry has risen rapidly in recent years and has strong development momentum. In the second half of the Internet when traffic dividends are gradually disappearing, the new traffic brought by short videos has become a new battlefield for all parties to compete and deepen, and it has also illuminated the " Entrepreneurial Transformation” path.
Driven by the rapid growth of online short video platforms and the increasing popularity of online short video content, China's online short video marketing market has experienced rapid growth in recent years. Calculated as a percentage of the market size of the online marketing market, the market share of online short video marketing has increased significantly from 0.1% in 2015 to 24.1% in 2020. According to estimates from iiMedia Research, it will reach 42.5% in 2025, nearly half of the entire online marketing market.
According to iResearch, the market size of China's online short video marketing market has increased significantly from RMB 30.2 billion in 2018 to approximately RMB 184.6 billion in 2020, based on total online short video billings, with a compound annual growth rate of 147.3% .
With a monthly output of 20,000+ short videos, ByteDance is the largest supplier
The company provides one-stop cross-media online marketing solutions through media partners to market products and services to advertiser customers. The company's choice of advertising platform mainly refers to its DAU (daily active users) and MAU (monthly active users), and uses CPC (charge based on clicks) and CPT (charge based on time) pricing models to charge advertisers and customers.
The following figure shows the business model of the company’s online marketing solutions business:
In April 2020, Youmoment Interactive launched the Youliang Engine Platform – an intelligent online short video marketing solution delivery, optimization and management platform. In addition, Youju Interactive has a content production team of 380 people, which can produce more than 20,000 online short videos every month. At the same time, online short video shooting bases were established in Beijing and Chongqing.
In addition, Youju Interactive has also reached media partnerships with companies including ByteDance, Alibaba, Tencent, Kuaishou, Sogou, 360 Search, Baidu, Bilibili, etc., and has agency qualifications for these well-known Internet media. Among them, ByteDance is its largest supplier, and the service cost paid to ByteDance is about 70% of the company's total service cost.
According to data provided by iResearch, in 2020, Youju Interactive was the second largest online marketing service provider in terms of total bills generated by online short video advertisements; in terms of total bills generated by advertisements placed on online short video platforms , the second largest online marketing service provider in China; the largest online marketing service provider in China based on the total bills generated by comprehensive e-commerce platform advertisers on online short video platforms.
Revenue increases year by year, while gross profit margin continues to decline
Prospectus data shows that Youju Interactive’s revenue from 2018 to 2020 was 1.156 billion yuan, 3.451 billion yuan, and 6.361 billion yuan respectively, showing a rapid upward trend; its net profits were 50 million yuan, 82 million yuan, and 133 million yuan respectively. .
The company's five major customers are e-commerce companies, Internet service companies, online game companies and cosmetics companies, online education companies, software development companies and travel and leisure companies. Among them, e-commerce companies are the largest direct advertiser customer base of Youju Interactive .
According to the information prompts on the largest customers in the prospectus, JD.com was its largest customer from 2018 to 2020. In 2020, the company's revenue from transactions with JD.com has reached 42.3% of total revenue.
The company's gross profit margin is declining. From 2018 to 2020, its gross profit margin was 9.2%, 6.9%, and 5.1% respectively. The company explained that the continued decline in gross profit margin is mainly related to the low gross profit margin of the all-in-one service, as well as the increase in traffic and monitoring costs, and the additional costs incurred in short video production. Regarding the cost part, Youmo Interactive’s costs are mainly used to purchase traffic from suppliers such as Douyin and Baidu. From 2018 to 2020, Youmo Interactive’s traffic acquisition and monitoring costs were 1.020 billion yuan, 317.2 billion yuan, and 5.936 billion yuan respectively. billion, accounting for 97.2%, 98.8% and 98.4% of its service costs in the same period respectively.
Compared with other industries, the reason why a business model with such low profitability can be successful is because of the rapid development of the online marketing industry, especially solutions based on short video marketing are still at the forefront, so this extensive The traffic strategy can also bring good benefits to the company. However, it is worth noting that as the industry matures into the era of refined operations and competition intensifies, it will be difficult to maintain the current high revenue growth trend of Youju Interactive. Therefore, forming its own unique competitive barriers before industry competition intensifies and industry development becomes more refined will be the key to the sustainable development of Youju Interactive.