The Wu Yifan incident continues to ferment.

On the evening of July 18, Han Shu announced the termination of the contract with Wu Yifan on his official microblog, and the two sides terminated all cooperative relations. As the first brand to announce the termination of Wu Yifan, Han Shu, a domestic cosmetics brand, also ushered in its own "highlight moment".

#The termination # related topics of Han Shu and Wu Yifan were once put on the microblog hot search. As of July 21, the reading volume of related topics had exceeded 1 billion.

After Han Shu became popular on the microblog, many netizens also gathered in the Taobao Live Room of Han Shu on the same day. The number of audience soon soared from dozens to hundreds of thousands, and then soared to 1 million and 2 million. By 2 a.m. on July 19, the number of audience was close to 3.7 million. According to the data released by CASS data, in the nearly 23 hour live broadcast of Han Shu, the brand sold more than 25800 pieces, and the sales exceeded 6.8 million yuan.

Many netizens laughed and said that because they "drew a clear line" with Wu Yifan in time, this domestic cosmetics brand, which is soon forgotten by consumers, has become a big winner.

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Han Shuqi bottom:

Huge marketing expenses, the parent company has long planned to go public

Han Shu's parent company is Shanghai Shangmei Cosmetics Co., Ltd. (hereinafter referred to as "Shangmei group"), established in 2002. In February this year, CITIC Securities (600030. SH); 06030. SZ) announced that it signed a listing guidance agreement with Shanghai Shangmei on February 22 and filed it with the regulatory authorities.

In fact, Shangmei group has long had the idea of listing. As early as October 2015, LV Yixiong, founder and CEO of Shangmei group, said that he planned to complete the company's listing plan in 2018. However, there has been no news since then.

Shangmei group owns "Hanshu", "Yiye", "red elephant", "huami", "cosmotea" and other brands. Among them, Han Shu and Yiye, as the two major idea brands of Shangmei group, have become key investment projects.

Han Shu and Yiye brands are well known by consumers, which is inseparable from Shangmei group's crazy advertising; The huge advertising and marketing expenses are also obviously out of breath for the United States group.

In 2007, Han Shu began to enter the TV shopping channel and gradually became the head brand of cosmetics sales in the TV shopping channel. Han Shu, who tasted the sweetness at that time, has been sparing no expense in advertising and marketing.

In 2013, it spent 240 million yuan to name Jiangsu Satellite TV if you are the one, and in 2014, it spent 500 million yuan to renew the contract with the program, becoming the "largest domestic advertising single" in that year. In addition, it also spent 55 million yuan to name Tianjin satellite TV "it's up to you", 58 million yuan to name Oriental satellite TV "grandpa in the pattern of traveling with youth behind his back", 19.6 million yuan to broadcast Oriental satellite TV's "voice of the Chinese dream", 18 million yuan to sponsor Oriental satellite TV's "goddess's new clothes", etc. These are called "the era of traditional large screen and large exposure" by Shangmei group.

Han Shu named "if you are the one"

After 2016, Shangmei group began to focus on content marketing and implanted many out of circle film and television dramas and variety shows, such as "three lives and three generations, ten miles of peach blossom", "Mars Intelligence Agency", "tomorrow's son" and "this is street dance"; In 2020, at least six hit dramas were cast, including "settling down", "just 30" and "in the name of family".

In terms of star endorsement, Shangmei group focuses on popular traffic stars, such as signing Lu Han as a leaf spokesman in 2014; In 2015, Guo Caijie, Lu Han, Nicholas Tse, Zhao Wei and Yang Ying were signed as spokespersons; In September 2016, gulinaza was signed as the spokesman of giant Shuiguang series; In 2019, he signed Wu Yifan as spokesperson for Korean film mask. According to the data reported by several media, the endorsement fee of traffic Xiaosheng such as Wu Yifan is about eight figures, and the endorsement fee of Lu Han in the popular period has been as high as 80 million yuan.

Facing the crazy money burning war of advertising and marketing, founder LV Yixiong said in an interview in 2014: "advertising does not necessarily make a brand. Without advertising, it is difficult to make a brand."

Specifically, Han Shu disclosed to the media that in 2014 alone, the company's advertising investment reached nearly 600 million yuan, of which the investment of a sub brand leaf reached 400 million yuan. By 2016, the company's advertising scale continued to expand to 1.5 billion yuan.

The logic of "big gong and loud sound" seems right, but on the whole, Shangmei's advertising investment channels are still traditional. In today's diversified marketing investment channels, this logic may not work.

According to public data, in 2016, the payment received by Shangmei group was 4.5 billion yuan. Crazy advertising and marketing did make Hanshu, Yiye and other brands recognized by consumers, but there was an obvious fault in the later transformation of consumers' payment. Looking back, in tmall's "double 11" beauty list in recent years, it is not difficult to find that Yiye's ranking has also fallen out of the top 10 from the top, replaced by the "top" of new domestic brands such as perfect diary, huaxizi and Winona.

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From the financial report:

Cosmetics can't quit advertising "addiction"

Cosmetics is not only a famous profiteering industry, but also a high-frequency commodity. Under the fierce industry competition, advertising has become an addiction. Therefore, not only the Shangmei group, but also the major cosmetics enterprises, their marketing expenses are the main expenses of the company.

Compared with the same old cosmetics enterprises MARUMI (603983. SH) and pelaya (603605. SH), according to the company's financial report, their respective marketing expense rates are generally high.

MARUMI was listed on the Shanghai Stock Exchange in July 2019, raising a net amount of 790 million yuan, of which 258 million yuan was used for the construction of marketing network, accounting for 32.7%.

According to the financial report of MARUMI, from 2017 to 2020, MARUMI's marketing expenses accounted for 34.53%, 33.93%, 30% and 32.37% of its revenue respectively. The marketing expenses exceeded 30% of the total revenue, of which about 70% of the marketing expenses were spent on the company's advertising. In other words, MARUMI's advertising expenses account for more than 20% of the total revenue.

In this regard, sun Huaiqing, chairman of MARUMI, said: "it is too easy for us to save advertising expenses and turn them into profits, but it is not good for the long-term development of the brand."

Pelaya's sales rate has also continued to rise in recent years, 35.66% in 2017 and 39.90% in 2020; By the first quarter of 2021, the proportion of sales expenses to total revenue is as high as 41.72%, of which advertising expenses still account for about 20% of total revenue. At the same time, it is worth noting that compared with the rising sales expense rate, the R & D expense rate of pelaya decreased from 2.39% in 2019 to 1.92% in 2020.

In recent years, Cai Ruicheng, the spokesperson of Peicheng, has won the strong momentum of global marketing in 2021, and we can see that in 2021, Cai Ruicheng has been the spokesperson of peiya and fan.

Of course, the money burning war of marketing is not the trouble of traditional domestic cosmetics. For the new domestic brands that enter the Bureau later, if you want to start brand awareness, you don't dare to be soft on "throwing money".

For example, the perfect diary loved by young consumer groups in recent years, the financial report of its parent company Yixian e-commerce (YSG. US) shows that in the first quarter of 2021, Yixian e-commerce achieved a revenue of 1.44 billion yuan, but the marketing cost reached 1.04 billion yuan, accounting for 72.1% of the total revenue, an increase of 86.7% over 557 million yuan in the same period of 2020.

Crazy spending on marketing has also led to the income of Yixian e-commerce. In the first quarter of 2021, the net loss under non GAAP was RMB 234 million, an increase of 81.1% over the loss of RMB 129 million in the same period in 2020.

From the perspective of R & D investment, the R & D investment of Yixian e-commerce has not been very high. From 2018 to 2020, the R & D expense rates were 0.4%, 0.8% and 1.3% respectively. In the first quarter of 2021, its R & D expenditure rate increased, with R & D investment of about 27.7 million yuan, a year-on-year increase of 127%, accounting for 1.92% of the total revenue, but its R & D investment is still unstable and sustainable, which is lower than that of most of the same industry.

In recent years, the perfect diary has been widely seen in social media such as Xiao Hong, jitter, B station and so on through the "KOL (key opinion leaders) tiktok, celebrity endorsement, community delivery" series of marketing, behind which are all the money input of Yi Xian electric business.

Perfect diary star endorsement

The cosmetics industry is highly competitive and the concentration is not high. Both traditional and old cosmetics brands and new brands entering the market in recent years need to constantly invest in advertising to brush the sense of existence.

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Marketing fever that can't cool down

Consumers and enterprises suffer

Advertising can indeed improve product popularity and cultivate user loyalty, but the marketing investment in the beauty industry can not reduce the temperature. The bitter thing is that consumers are also the enterprise itself.

According to the State Food and drug administration, China has become the second largest cosmetics consumer market in the world. In front of the huge market scale, new and old brands want to take a share.

According to the 2020 annual statistical report on Drug Administration issued by the State Food and drug administration, by the end of 2020, there were 5447 cosmetics manufacturers in China, an increase of 387 over the previous year, a year-on-year increase of 7.65%.

Under the fierce industry competition pattern, users' attention is easy to be diverted, and brands need to constantly "fancy marketing" to win users' attention, otherwise both new and old brands are easy to become "fragile products" and be abandoned by the market.

For example, at the beginning of this year, the domestic cosmetics apinkbaby, known as "no plagiarism and less promotion", announced its closure, and the real "fire" of this domestic brand was the clearance activity when it closed down.

Back to Han Shu himself, this wave of reverse marketing has made him a "big winner". For the domestic overheated beauty market, the advertising marketing that can not reduce the temperature may also be worth pondering by consumers and brands.