This article is reproduced from the city session, author Lin Xiaxi
Because of the iPhone signal error several times, Wang Fei, a fruit fan for many years, switched to an Android phone.
Open the weather app that comes with the phone, her index finger is ready in the upper right corner of the screen-she is used to pressing "close" when the on-screen advertisement appears.
This is one of her ways to fight Android mobile advertising.
In addition, she has turned off push notifications in her phone as much as possible, and when most apps asked whether to allow access to the phone's various rights, she chose "deny".
But she still can't get rid of all mobile phone ads.
In addition to the many apps she downloaded, she found that the mobile phone was already equipped with a lot of ads when it left the factory, distributed in those apps that couldn't be deleted, including the app store, browser, weather, calendar, etc.
These are issues that she did not consider when she used the iPhone before.
What she didn't know was that the advertisements in these apps had long become an important profit method for mobile phone manufacturers.
1 Software makes money by selling advertising?
Many people have heard that "selling mobile phones does not rely on hardware to make money", but many people do not understand how mobile phone companies make money on software.
Let's look at a set of data: In 2019, Xiaomi generated 19.842 billion yuan in revenue from its "Internet service" business. Although it accounts for a small proportion of revenue, the gross profit contributed by this part of the business reached 40%, which was as high as nearly 80% in 2015.
Wit Display analyst Lin Zhi said that the so-called "Internet service" is actually mainly game revenue and advertising revenue.
Although OPPO and vivo do not have public data, an advertising agency told the market that the two companies can generate tens of billions of revenue in 2020 by only "performance advertising".
In addition, industry insiders believe that Huawei has a larger user base and better delivery effects, and this part of the revenue is likely to be higher. However, because it has operator business and enterprise business in addition to the mobile phone business, the gross profit ratio of the mobile phone advertising business will be much lower.
In general, the advertising business of mobile phone manufacturers is roughly divided into three categories, one is the recharge of game apps, the second is pre-installed third-party apps, and the third is advertising spaces including "brand advertising" and "performance advertising".
Game App recharge credit means that after users download the game from the mobile app store, mobile phone manufacturers can get a corresponding percentage of the credit for all consumption in the game.
China's Android application market has a relatively high percentage. In August 2014, six mobile phone manufacturers, Lenovo, Huawei, OPPO, vivo, Coolpad, and Gionee, formed an application distribution platform called the "Hardcore Alliance". This hard-core alliance gave a new rule of five to five splits. Since then, the mainstream Android application market in China has also followed the rule of fifty to five splits.
In other words, if you use an Android device and spend 100 yuan to buy a skin on King Glory, then 50 yuan of it goes into the pocket of the mobile phone manufacturer, which is higher than the 30% "Apple tax". The split ratio between Apple App Store and Google Store is 30%.
Some time ago, Tencent and Huawei had a conflict. Huawei Mall removed all Tencent games from the shelves. It was reported that Tencent was dissatisfied with the high percentage of Huawei's app store.
Pre-installed apps refer to third-party apps and built-in apps that have been downloaded before the phone leaves the factory. Third-party apps need to pay mobile phone manufacturers based on installed capacity, such as Taobao and WeChat. In addition to providing basic functions for users, the built-in App of mobile phones will also become a carrier of mobile advertising in subsequent use.
The lock screen magazine of the mobile phone and the opening screen of the self-contained app are the places with the most brand advertisements; the various App rankings in the official mobile app store and the video advertisements suddenly swiped in the browser are the gathering of effect ads Ground.
The difference between the two is that when advertisers choose "brand ads", they don't pay attention to the specific effects after launch. When choosing "performance ads", they need to calculate the cost based on accurate downloads and display time.
Ordinary people may look at a mobile phone as a tool, but what an insider sees is an advertising entrance filled with money.
When developing advertising business, domestic mobile phone manufacturers generally adopt two modes: one is to directly connect with advertisers; the other is to introduce advertising agencies.
For different industries, Xiaomi will designate 9 advertising agencies, OPPO has 11 and vivo has 27. Huawei does not appoint advertising agencies, nor does it give agents "rebates." Because Huawei's sufficiently accurate algorithms are more popular with advertisers and have a stronger voice.
According to the internal quotations obtained, the user successfully downloaded and registered an App in the application store of mainstream Android phones, and the base price paid by the advertiser to the mobile phone manufacturer was 2 yuan. Different products have large price differences. For some investment products, the highest can even reach 100 yuan.
A static picture is displayed to every 1,000 people in the form of an open picture through its own browser, and the mobile phone manufacturer charges about 200 yuan.
A domestic head phone manufacturer has an average daily exposure of 85 million and can earn 17 million yuan a day.
Relatively cheap information flow video ads, displayed to every 1,000 people through their own browser App or their own information App, mobile phone manufacturers can earn about 6 yuan in revenue. Another head phone manufacturer has an average daily exposure of 350 million and a daily income of about 2.11 million yuan.
Such advertising spaces are numerous in Android phones.
Users of different brands and different mobile phone models have different perceptions of built-in advertising. Whether you feel it or not, this business has in fact become an important source of profit for mobile phone manufacturers.
2 Why are there so many ads on Android phones?
There are specific background and reasons for the formation of the mobile phone built-in advertising business model.
In 2014, China’s smartphone shipments were 389 million units, a year-on-year increase of -7.93%. In the previous year, these two figures were 422 million units and 66.02%.
At that time, the saturation of the smartphone market and the slowdown in growth had become an industry consensus.
After experiencing the price war in 2014-2015, the hardware profits of domestic mobile phones were squeezed, and Xiaomi relied on the concept of "fan economy" and "born for fever" to successfully get out of the circle-annual sales of 61.07 million units, that is Xiaomi's fastest growing year.
How to maintain their own performance growth when the sales volume and unit price of mobile phones are not ideal, has become a question that domestic mobile phones need to think about.
The development of high-end models has become one of the solutions to problems on the "bright side". At the same time, the lucrative advertising business has become a cake that mobile phone manufacturers cannot refuse.
But at this time, mobile phone manufacturers discovered that while fierce competition in the hardware market, the market for application distribution (platforms for downloading App application software) had long been carved up by Internet giants. Ali's PP Assistant and Pea Pod became the most representative distribution platform at that time. Many mobile phone users will install this kind of App software on their phones first, and then search and download more App software from them.
After awakening, mobile phone manufacturers began to make up for their shortcomings in this area-their own app store is pre-installed when the mobile phone leaves the factory, and it cannot be deleted. At the same time, the mobile phone management authority is changed to greatly increase the utilization rate of various official app stores. .
Industry insiders told the market that Xiaomi took the lead in launching the business of built-in mobile phone advertising in 2015. In the same year, Xiaomi’s annual report showed that its Internet services created revenue of 3.239 billion yuan, accounting for 4.85% of total revenue. But this part of the business contributed nearly 80% of the gross profit, and the mobile phone business has not yet begun to make money.
OPPO and vivo followed closely, followed by Huawei and Samsung.
In this way, under the pressure of price wars, the reduction of hardware profits has become an established reality, and the advertising business has begun to become a choice that mobile phone manufacturers are paying more and more attention to.
In addition, the domestic software environment of "free first, then realized" and the particularity of the "open source" of the Android system have played a certain role in promoting this result objectively.
"Chinese people don't like to spend money to buy software, so they can only make money for free first, and then make money by implanting ads." Insiders told the market that this mode of thinking was actually related to the Apple system.
The "91 Assistant", which started in 2008, formed the first iOS third-party app store in China by collecting jailbroken apps. The PP Assistant released in 2010 went one step further, grabbing application installation packages directly from the App store, and then using its own cracking tool to achieve "jailbreak", becoming the industry's number one jailbreak app store.
A series of jailbreaking software has become popular, consolidating the habit of Chinese users to use free software. And mobile phone manufacturers that have grown up in this environment have, to a certain extent, undertaken this "first shop, then cash out" thinking model.
From a system perspective, due to the closed nature of Apple's iOS system, there can only be an official application store such as the App Store in Apple's mobile phones. By controlling the channels, the 30% "Apple tax" has become a considerable part of Apple's revenue and profit source. In 2020, revenue from iTunes and services will account for 20% of Apple's total revenue.
The particularity of the "open source" of the Android system allows users not only to use the mobile phone's own application store, but also to download it through third-party application platforms or web pages. Even after a series of "restriction" actions are taken on the system, it can only increase the utilization rate of the official app store to a certain extent, rather than "exclude" completely.
Therefore, Android phone manufacturers will not be able to charge high "Android taxes" to all software based on strong channel advantages like Apple, otherwise they may force the application software to be removed from the shelves and put into the arms of other distribution platforms.
Of course, the low hardware profit, the "flow monetization" software environment, and the open source Android system are only the background and a small part of the formation of mobile phone built-in advertising. The most important reason is actually the simplest-mobile phone manufacturers want to make more Money.
Mobile phones are an important source of data, and advertising requires precision marketing and needs to be based on data. Therefore, advertising business is actually one of the values of mobile phone manufacturers.
But there are also Android phones that say no to ads. OnePlus CEO Liu Zuohu once publicly stated that OnePlus does not have ads because it does not want to burden users. I would rather sell more expensive than make money by selling mobile phone ads.
Liu Zuohu
In addition, Apple's mobile phone is also very "Buddha" in the advertising business. Industry insiders told the market that, apart from the 30% "Apple tax", Apple does not provide developers with a "buying list" service, but there are some third-party studios in the market that use a large number of Apple accounts to "swipe the list".
3 Why do I need to watch advertisements when I buy a mobile phone for thousands of dollars?
High-end has become the consensus of all Android phones in 2020. Buying an Android mobile phone with 4000+ is no longer normal. The cost of mobile phone hardware at this price has long been covered, and the argument that hardware does not make money does not hold true. Mobile phones are equipped with built-in advertising to increase profits.
Another point of view is that the price of several thousand yuan corresponds only to the mobile phone hardware itself, and does not include the many software and functions carried by the mobile phone. Therefore, it is a matter of course for users to receive advertisements while using this part of the software for free.
From a legal point of view, if the mobile phone price does not include the built-in app, then these non-deletable apps are a kind of "bundle sale"-the built-in app and its advertisements are not the result of the user's choice, but they require memory , Consumption of traffic, with certain mandatory.
This issue has been concerned and discussed by the legal profession since 2015, and it is a very controversial topic.
A legal counsel from the Credit Evaluation Center of the Internet Society of China stated that consumers usually need to flash their phones to obtain ROOT permissions before they can delete or uninstall pre-installed software. However, many mobile phone manufacturers make their own regulations. Obtaining system permissions through ROOT will no longer enjoy the manufacturer's warranty service.
This kind of clause is a typical "overlord clause." The type of mobile phone "three guarantees" law that consumers cannot enjoy the "three guarantees" service does not include this situation at all, which is an act that violates consumer rights.
Why can't the built-in App be deleted? In addition to providing functional services, these built-in software are also very important advertising carriers for mobile phone manufacturers.
Five years later, many legislations in this field are still vacant and need to be improved. The built-in apps and third-party apps that are pre-installed on mobile phones have been creating considerable profits for mobile phone manufacturers.
In addition, the behavior of advertisers buying rankings in the form of bidding in the App Store is not an advertisement in the legal sense. However, lawyer Xu Wei from Beijing Guantao Law Firm told the city circles, “a large number of investment institutions And public investors will conduct corresponding investment behaviors based on the App list."
Therefore, manipulating rankings by "buying the list" may infringe on the legitimate rights and interests of investors and consumers, and is suspected of violating relevant content in the Securities Law and the Consumer Rights Protection Law.
Since this is still a "grey area" at the legal level, can we expect some changes in this industry "spontaneously"?
At present, various mobile phone manufacturers have cultivated relatively mature high-end and mid-to-low-end brands. The high-end line means that hardware profits have increased, and it is naturally possible to reduce the number of built-in advertisements to improve user experience accordingly.
Xiaomi, which used to be flooded with ads in low-price competition, has made a series of changes in the market competition-the last development version of MIUI10 is equipped with the "one-click to close ads" function, and it will not be used at the Xiaomi 11 launch. The number of uninstalled desktop apps has dropped to nine, two fewer than Apple’s iOS, which can be regarded as the “conscience of the industry”.
But some people in the industry believe that this is just a gimmick, and advertisements are everywhere. At least the advertisements in the app store cannot be closed.
In addition to Xiaomi, OPPO, vivo, and Huawei have not yet shown a one-click shutdown function. Turning off the system's built-in advertising requires more steps. Some mobile phones also have the phenomenon that the advertising switch is turned on again after the system is automatically upgraded, which virtually raises the threshold for users to turn off advertising.
Unable to ban, users are difficult to close, but the form of advertising has undergone some changes while the market is upgrading.
Zhang Lu told the city community that after the emergence of short video platforms such as Douyin, the form of information flow advertising has undergone subtle changes. In his words, it is becoming more and more diverse and more "advanced."
Information streaming video director Dangdang said that his company was forced to upgrade because of the increasing requirements of customers and scene users. Recruiting him is one of the "costs" of this upgrade.
But whether it is a decrease in number or a change in form, it is more like a way for mobile phone manufacturers and the advertising market to find a balance. And hope to change the form of mobile phone built-in advertising, itself is a kind of helpless "passive."
Zhang Yu, who has worked in the advertising agency industry for many years, told the city circles that some people think that this is a "big and big" profession, but he feels that it is more or less "not on the stage."
The advertisements that exist in all corners of mobile phones need to give users more choices and a set of clearer and more reasonable rules to regulate.