Guazi's Ads Are Everywhere You Look. Do You Know What They Cost?

Companies buy a “position” with blanket advertising when competition has just begun and no one has pulled ahead. That is exactly where the used-car market Guazi plays in stands now.

“Guazi Used Cars Direct: individuals sell directly to individuals, no middlemen taking a cut.”

Since September 6, you may have seen this ad at the entrances and exits of 100 subway stations in Shanghai: a “big-character poster” with no picture, just two lines of text. Shanghai has 400 subway entrances and exits in all, so every time you go into or come out of the subway, you have a 50% chance of seeing it.

If you get around by bus, you can't avoid it either. In Beijing, Shanghai, Guangzhou, Shenzhen and some second-tier cities, it runs on the light boxes at bus shelters. Along the most congested stretch of Beijing's Third Ring Road, it is almost the only thing you can still make out through the smog from 30 meters away.

Once you have survived the rush hour and reached your office building, the Guazi ad is still hard to ignore. On building screens in 40 cities, it makes up one-sixth of all ads played each day. Add the framed ads in the elevators, and work out how much chance you have left of missing it.

Uxin's 60-second ad in the finale of The Voice of China, widely called “hypnotic,” grabbed plenty of eyeballs and chatter. But Guazi's own 15-second spot that night also earned it a small spike in attention. According to the Baidu Index, Guazi's search index rose 33% on October 7 (Uxin's rose nearly ninefold).

Before that, Guazi had already been running ads at high frequency in popular programs on Zhejiang TV and Hunan TV, including Running Man, Challenger Alliance, The Voice of China, Dad, Where Are We Going?, Golden Eagle Theater and Diamond Theater. It also title-sponsored a “Fast & Furious Film Season” on CCTV 6, which aired one car-themed foreign blockbuster a week for three straight months. And it bought slots on CCTV 5, both in the New Year's broadcast of the Premier League, the top football competition, and in evening prime time.

Guazi did not pass over the video platforms either. Its 15-second pre-roll ads ran on the mobile and PC versions of the three biggest, Youku Tudou, Tencent and iQiyi, and were played more than 2 billion times.

“This large-scale campaign went live everywhere at once on September 6. It runs for eight weeks, until early November,” Wang Xiaoyu, Guazi's general manager, told QDaily. The whole round of advertising cost more than 200 million yuan.

As the ad copy quoted at the start says (and that copy is, in effect, the whole ad), Guazi is an online trading platform that connects individual car owners directly with buyers. It launched last December, though back then it was not yet called Guazi. It was called “Ganji Haoche” (Ganji Good Cars).

It was billed as one of the projects incubated inside Ganji.com, and Ganji's founder Yang Haoyong took it very seriously. The “Ganji Haoche” domain name alone cost 10 million yuan, and the company has since spent heavily on promotion. The business now covers 40 cities.

On the day the ad blitz began, Ganji Haoche also formally announced that it was changing its name to “Guazi Used Cars Direct.”

Ganji has in fact run a used-car channel for seven or eight years. “That was a used-car classifieds platform, and it made money from advertising. Ganji Haoche is a completely different model, with an offline team providing inspection and transaction services. But after running it for a while, we found that users could hardly tell the used-car classifieds and Ganji Haoche apart,” said Wang Xiaoyu, who used to head Ganji's used-car channel and became general manager when Ganji Haoche (that is, Guazi) was set up. He told QDaily: “We want more users to know Guazi directly, rather than finding Guazi through Ganji. That's why we're advertising. We'd rather make it an independent brand.”

The other reason resembles a bottleneck Ganji's recruitment business once hit. Ganji claimed to be the largest online recruitment platform (thanks to its large blue-collar base), yet users found specialized vertical recruitment sites more credible.

Still, Guazi, born out of Ganji, carries on Ganji's advertising style and strategy. In fact, 58.com, which has since merged with Ganji, has always advertised the same way.

“Ganji's ads were always simple and blunt too. We have always preferred information that is clean and prominent, with no distractions. The creative isn't that strong, because we don't want it to steal the spotlight from the information. For outdoor in particular, we like the big-character-poster format,” Wang Li, the senior manager in Ganji's marketing department who runs this campaign, told QDaily. “But for something like the framed ads in elevators, where people linger longer, we add the selling points, product features, promotions, model prices and the website and phone number.”

Wang Li said that when they launched this round of ads in September, they had a single goal: when users and people in the industry think of used cars, the first name that comes to mind should be Guazi.

Guazi wants to rank first in brand association and in mentions. In the trade, that is called “occupying a position.” It usually happens when competition has just begun and no one has pulled ahead. That is exactly where the used-car market stands now.

China's used-car market has long been chaotic, because it lacks basic market mechanisms such as transparency and trust. A used car passes through 4S dealerships, auction platforms and used-car brokers before it gets from its seller to an individual buyer. In the traditional market, sellers are usually beaten down hard on price, while buyers face dealer markups and the risk that the car's true condition is hidden from them.

But starting last year, companies that seem set on solving this problem appeared all at once. In July 2014, Renrenche, which likewise connects individual owners directly with buyers, went live. This August it announced a US$85 million Series C round led by Tencent, with Lei Jun investing again. In July last year, Haoche Wuyou, with the same model, also officially launched, and at the end of the year it announced a US$20 million Series A round co-led by Matrix Partners China and Source Code Capital. Around the same time, Ganji.com announced it would put US$100 million into “Ganji Haoche.” In March this year, Uxin Used Cars announced a US$170 million Series C round led by Baidu. Uxin originally ran an auction platform, Uxin Paimai (a C2B model connecting sellers with used-car brokers); after the March round, it expanded into C2C as well.

What drives all this is the rapid growth of China's used-car market. Data from the China Automobile Dealers Association show that used-car transactions in 2014 totaled 367.565 billion yuan, up 26.03% from the year before. The number of used cars traded was 6.0529 million, up 16.33%. By comparison, China's new-car sales grew 6.9% in 2014, far below the 13.9% growth of 2013.

In mature markets, a new car typically reaches the used-car market after five years. The new cars that sold so fast in China after the 2008 financial crisis are now entering the used-car supply. China has 150 million vehicles on the road, and 75% of them left the factory within the last six years, that is, after 2009.

According to iResearch's China Used-Car E-Commerce Industry Research Report, online deals made up only 3% of all used-car transactions in 2014, or 11.027 billion yuan. The industry has barely moved online, which leaves plenty of room to grow.

But no professional used-car trading company of real scale has emerged yet. That is the position every used-car e-commerce player, Guazi included, now wants to claim.

To make sure its message lands with a bang, Guazi says most of the ad budget went to three areas: outdoor, television and online video. Outdoor took the largest share, roughly equal to television and online video combined.

Judged by ad spending, the fight between Guazi and Uxin looks the fiercest. In early July, Uxin Used Cars started spending big on ads in subways, office buildings and video pre-rolls, and signed 11 celebrity endorsers in one go. Its 30-million-yuan “hypnotic” ad in the Voice finale drew plenty of eyeballs too. Uxin also paid 180 million yuan for the exclusive title sponsorship of Running Man 3 on iQiyi.

“We weren't the first, but from the market's point of view, we don't think it's a bad thing for us to jump in and stir things up together,” Wang Li said. She recalled that Ganji once ran an ad with Yao Chen, and three months later 58 answered with an ad featuring Yang Mi; the two leaders kept heating each other up and heated up the whole industry. “Our situation with Uxin now is similar.”

Li Jian, founder of Renrenche, stressed the importance of word-of-mouth marketing again and again when he spoke to QDaily two months ago. In this interview he still said he has no plans to advertise for now, but he is already planning the right moment: “When the market has been educated enough, and used-car transaction volume and consumer awareness have reached a certain level, we'll stand up and say we're the best. And if we advertise, we'll go big, but it has to have a certain quality.”

For now, Guazi clearly cares more about awareness than conversion. “At the start we mainly look at traffic; conversion isn't the core metric for now,” Wang Li said. Brand advertising works with a delay, and conversions do not necessarily rise in step with traffic.

In an age of scattered attention, getting people to remember you often takes more effort. Zenith's recent China Media Transformation: 2015 Media Touchpoints Survey Report found that, measured by “touchpoint influence” scores, the level of brand experience a brand could reach with nine touchpoints in 2010 took 14 touchpoints in 2014.

“Five years ago, the gap between the most and least influential touchpoints was large, but that gap has narrowed sharply. As all kinds of touchpoints gain influence, each slice of the pie gets smaller,” Chris Maier, head of research and analytics for Zenith China, told QDaily.

Television is the prime example, and the survey shows it is still the most influential paid medium. That is why television still takes up a large share of Guazi's media mix this time.

Besides popular satellite channels such as Hunan and Zhejiang, Guazi also bought slots on CCTV 5 and 6. “Guazi's target users are men aged 25 to 45, which matches CCTV 5's audience very well. For a Guangzhou Evergrande semifinal or final, for example, viewership among the target demographic may be the same as for The Voice of China,” Wang Li said.

Another interesting point: Guazi gave the biggest slice of its budget to outdoor, a way of covering many touchpoints at once. In the subway, though, it chose only the entrances and exits and the in-train TV. Shentong Decaux, which holds a monopoly on advertising inside the Shanghai subway, told QDaily that Guazi had bought no ads inside the stations. The entrance and exit spaces are handled by a company called Xinzhuliu.

Price aside, many factors shape where advertisers place their ads. “For example, some people believe subway entrances and exits reach people who walk past without entering the station, while ads inside the station are thought to capture the time people spend waiting,” Chris Maier said.

For Guazi, “these 100 sites are actually Ganji's year-round resources. They used to carry Fan Bingbing's recruitment ad, and in September they were all switched to Guazi,” Wang Li told QDaily. Some of Ganji's existing slots are being used for Guazi, while venues Ganji never used, such as airports and cinemas, have to be negotiated from scratch. Since Ganji and 58 merged, all their products pay the same brand rate, set at whichever of the two was lower.

Guazi seems to have taken a more “traditional” approach this time. Chris Maier said that although digital channels will play an ever larger role, half of China's people are still not online, and traditional media such as television still carry weight. As for what an ad campaign is worth, it should be judged on reach, creative impact and return on investment.

Since the campaign began, Guazi claims its website traffic has grown more than fivefold and its transaction volume two- to threefold. The Baidu Index shows that, from September 6 on, Guazi's search index jumped from 1,500 in the Ganji Haoche days to about 32,000 now.

Almost every O2O company is burning cash on marketing to win users, and used cars will no doubt be one of the hottest fires. Ganji founder Yang Haoyong says he will spend another 1 billion yuan marketing Guazi, with the aim of eventually taking it public on its own. For now, Guazi's money comes mainly from Ganji; once the spin-off is done, it plans to bring in new investors. Its competitors, of course, will not sit and wait.

In the end, the best marketing is always a good product or service. As Wang Li sees it, “One rule of the internet is that once a brand becomes number one in its industry and users get used to it, it is hard to overtake, unless it makes a huge mistake or a rival makes a leap in innovation.” Even if that holds, it still rests on a good product or service.

Graphics: Lin Yuyao