The social media advertising market in China segment accounted for 67% of revenue in 2021.

The rapid development of the new short-video + live e-commerce industry has brought about a huge demand for talent, which has not only created a huge gap in terms of quantity, but also exposed the current shortage of practitioners in terms of professional ability and quality, while some enterprises have emerged with new problems and demands in the employment model in the short-video + live e-commerce field.

The survey results show that the penetration rate of short-form video marketing is expected to reach 90% in 2022, and the penetration rate of live-streaming marketing will reach 79%. The first half-year financial data released by some of the long-form video platforms show a significant year-on-year decline in advertising revenue, with traditional TV stations experiencing even more significant declines in advertising revenue generation over the years.

In 2021, Bytedance companies represented by Douyin short video will have annual revenues of more than 360 billion yuan, of which about 250 billion yuan will be generated from advertising commercialization and about 60 to 70 billion yuan from live streaming; the industry’s second largest player, Kuaishou, will also have annual revenues of more than 80 billion yuan.

Short video advertising in China has developed since 2019 and is now the largest, most efficient and fastest-growing part of all internet advertising formats in terms of average conversion efficiency and budget. In 2021, the annual advertising revenue of ByteDance and Kuaishou reached RMB 250 billion and 43 billion respectively, maintaining a growth rate much higher than that of the industry. The rapid growth of short video advertising is due to 3 parts:

1. the use of algorithmic recommendations for both content and advertising: through big data capture of user behaviour and high-frequency content algorithmic recommendations, short-form video can collect sufficiently accurate user profiles and behavioural preferences. By combining these characteristics with the recommendation algorithm of advertising, the targeting accuracy of short-form video advertising can reach a very high level, resulting in a much higher conversion efficiency than other forms of Internet advertising.

2. Vertical short-form video ads are more expressive: In terms of visual impact, audio-visual multimedia performance and user interaction experience, vertical short-form video ads are far more expressive than traditional graphic infomercials or patch ads, which naturally meet the communication characteristics of short duration, high focus and deep impression of advertising content.

3. The maximum ad load rate is extremely high: we believe that the measure of the advertising potential of content platforms is the theoretical maximum ad load rate, i.e. the theoretical maximum ad duration/total duration. As short-form video content is switched so frequently that it can be interspersed with an ad every few pieces of content, the theoretical ad load rate can be capped at 20-25% (4-5 pieces of content interspersed with an ad of the same length); whereas medium- and long-form video platforms have a much lower ad load rate cap than short-form video platforms due to the low frequency of content switching and the fact that users spend more time watching content than watching ads (e.g. The upper limit of ad load rate is much lower than that of short-form video platforms (e.g. a 45min TV series can only accept about 1min of patch ads, and any more than that will seriously affect the user experience). The extremely high ad load rate cap allows short-form video platforms, which have a large number of users and hours, to fully realise their traffic resources through advertising on a large scale.

Internet social media advertising has become the largest and most important segment of the advertising industry, with the market size of China’s Internet advertising industry at around $934 billion in 2021, or +21.9% year -over-year; the overall growth rate is highly correlated with the macroeconomic boom. Based on the economic environment, we expect the growth of the internet advertising industry to face greater challenges in 2022. However, in the medium to long term, the Internet advertising industry will continue to grow in line with the development of the overall economic scale.