2021 Private Traffic Trends in China. What is it? Does your company need it?

Private traffic" (私域流量) was a buzzword in China's digital marketing sector in 2019. It has become even more popular in 2020 and 2021 as an increasing number of brands and live streamers have begun implementing this tactic. The reality is that private traffic always existed.


"Private traffic - said Lu Yishu, vice president of Dongbai Commercial - is not a new topic. Ten years ago, private traffic was done through SMS and phone calls, but the method, at that time was relatively simple".

Later, when the entire Internet technology became available, more and more channels could be used to identify and reach members. Let's start with something simple: What is private traffic? According to the definition of ParkLu


“The term “private traffic” refers to the ability to reach customers and drive sales via closed channels, private forums where brands otherwise might not be able to reach the consumer”.


Today, the number of Chinese Internet users has exceeded 1 billion, which is approaching the total population of China. That is to say, the public traffic on the Internet is saturated, but the number of competing companies is still increasing, and the cost of traffic acquisition is rising. In 2020, according to public data, there are 5.5 million companies using WeChat enterprise as private traffic, the number of users after deduplication is 400 million, and companies' private domain revenue GMV accounts for 10%-15%. There are also a large number of small and medium-sized enterprises using personal WeChat for this purpose. There are far more than 5.5 million in this pool.


But…

In 2019, when many companies converted users to private traffic pools, the pass rate was around 20-30%. By 2020, it has dropped to 6-7%. According to different strategists, the pass rate of private traffic users will continue to drop in 2021 to 2-3%. But the private traffic strategy has a time bonus, the earlier you enter, the bigger the benefit. Do you need to use this strategy? Yes, and the sooner the better.


To do a good job in the operation of private traffic, we must think about how to benefit the target users from the beginning, to achieve the purposes of attracting them, gain loyalty, and build trust. In the 2020 Q2 financial report, Tencent defines private traffic as long-term relationships with loyal users. Private traffic is not a method, but a combination generated by multiple linking methods. Are we abandoning the public traffic? No, we are just making a combination of networks. Today the channels for consumers to obtain information are more fragmented, and the choices of different age groups are very different. Taking Gen Z as an example, more than 60% of consumers choose 7 or more channels during the entire process of beauty consumption, and the proportion of people who prefer KOL platforms is also 2–5 times that of people in other generations.



How to grow the private traffic strategy?




According to “Tencent x Bain: Smart Retail white paper on private traffic 2021” the private traffic “water wheel” growth model includes five steps:


Multi-channel attraction of the users.

Understand your target customers and their “social attributes” and realize conversion based on trust. Brands can use different channels such as mini-programs, official accounts, offline stores, etc.


Creation of a good impression

Brands should advocate the “customer first” philosophy, rely on high-quality products and first-class services to increase the number of users, and cultivate long-term loyalty and trust. A good sample for private traffic strategy is the beauty cross-border e-commerce platform美刻生活 (Meike). At the moment, each community has at least two group owners, one for the professional part and the other for the “good feeling” part.


Stimulation of users’ “conversation”

Through communication and sharing, social evaluation, and other channels, relying on “human power” to create word-of-mouth, thereby stimulating consumer demand.


Increase interactions

Interaction (through different forms such as one-on-one consultations) leads to purchases.


Deepening customer loyalty

It is important that brands give relevant users the label and rights of regular customers or loyal fans to expand the clients' demand cycle and extend the customers' lifetime value.

Also, brands should develop and implement different strategies when using the “private domain growth water wheel” model, for example, categories with lower purchase frequency (such as luxury goods, mid-to-high-end men’s clothing) should focus on attraction, while higher-frequency categories (traditional supermarkets, food, and beverages, skin care, mother and baby) should pay more attention to strengthening good impression, improving conversion, deepen loyalty.




What’s new in 2021?


  1. Traditional private traffic channels include QQ, WeChat, and Taobao groups, private accounts, etc. In 2021 WeChat Enterprise will become the primary tool for private traffic operations. Also, Douyin has begun to encourage “group building”. The Douyin fan group function was launched as early as 2019, but it has always been relatively hidden until now. At present, the functions of the Douyin fan group mainly include sending notifications to fans quickly, customizing the method to join the group (for example, some groups require fans to follow the group owner for more than 2 months), group announcements, support for sending red envelopes, emoticons, etc. within the group.

  2. According to Youzan CEO Assistant Xiao Jun “business is paying more attention to customers. The focus of growth is shifting from sales to relationships with users.

  3. WeChat channels (微信视频号) will help merchants to better operate private traffic.

  4. Private traffic will become the core force driving growth in the retail industry. Industries with heavy offline assets will face resistance when undergoing digital transformation.

  5. The life service industry will rebuild the private traffic operation logic of the retail industry.

  6. The concept of private traffic for companies is constantly changing, from a traffic logic to a retention logic. In 2021, companies must learn to finely operate customers.



If you want to enrich your marketing strategy with private traffic contact us.



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Sources: 见实2021私域运营趋势白皮书, ParkLu, 腾讯 x 贝恩:智慧零售私域白皮书2021, 私域流量白皮书:2021 私域运营趋势

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