The 10 Days Douyin's Ads Vanished, and the Advertisers Who Turned Cautious

The 10-day suspension is still being felt, and Toutiao isn't the only one feeling it

After 10 days off, Douyin's ads came back at midnight on July 11.

On July 1, after an ad that "insulted and mocked revolutionary martyrs", Douyin, Sogou and three other companies announced they would clean up their act and suspend their ad businesses on their own initiative, with no date set for a return.

A little over an hour before the ads went back up, Douyin's ad salespeople got word of the restart — much earlier than the middle or end of the month they had been told to expect.

Some of them immediately posted a coded message to Moments to tip off clients: "We stepped away so we could come back better." For the salespeople it also meant the end of an idle stretch. The overtime was starting again.

The ads that just returned to Douyin are not entirely "stable" yet. Open the app on the evening of July 12 and the ad that used to sit in the fourth slot of the feed after the first refresh now comes and goes. The splash ad, with a rate-card price of 2.8 million yuan a day, was running Watch the 12th National Dance Exhibition on Douyin, presented by China's Ministry of Culture and Tourism and the Yunnan provincial government.

"Splash ads all have to be preloaded five days ahead. Every client reacts differently, and execution on our side takes time too," a Douyin ad salesperson told QDaily.

During the gap, salespeople who normally spend their days hawking ad slots spent them negotiating compensation with clients and ad agencies. Compensation usually meant cash, or an equal value of traffic or media space on Toutiao's other products.

But brand clients usually run a campaign on several platforms at once, so money alone doesn't fix much. And Toutiao's other products hold less appeal for brands. After Douyin's ads went dark, some direct-sales teams covering particular brand categories were booking less than 10,000 yuan a day.

Douyin had become Toutiao's one distinctive ad channel, and an important source of its revenue.

Citing people familiar with the matter, Caijing reported in June that Toutiao was aiming for 40 billion yuan in revenue in 2018, with Douyin carrying 10 billion of it. By that math, the 10 days cost Douyin more than 200 million yuan in ad sales.

An employee at a Shanghai media agency who handles the Douyin account said he heard the news a week before the official shutdown. "Some clients will think about switching platforms; others won't switch and will take equivalent traffic on other Toutiao apps instead. A lot of the work is already done — some template videos are shot vertical, and if you move them to Weibo or Weishi, which are horizontal, it's hard to get the numbers up."

"If it lands on clients who are in the middle of building awareness, the damage is worse, because all their display inventory is simply gone."

Douyin declines to comment on any of this, and the Douyin salespeople, brand managers and agency staff QDaily spoke with were all guarded, calling this stretch of unknown length a "sensitive period."

The shutdown came at the fastest moment of Douyin's push to make money.

In March, backed by Toutiao's own large sales force, Douyin opened its auction-based ad platform.

Figures Toutiao shared at a May briefing showed that in the first quarter of this year, ad spending by the gaming industry on Douyin had nearly caught up with spending on Toutiao itself. In early April, Douyin held its annual marketing summit for big brands, and so many uninvited brand representatives showed up that they were turned away at the door. People called it the hottest marketing summit in the business.

The shorthand for running brand advertising shifted from "the two Weis" — Weibo and WeChat — to "the two Weis and a Dou." Marketers envied the brands that Douyin users had made famous on their own; one Douyin campaign with good numbers was enough to earn a person authority in the field and a few invitations to speak about it. The platform's own guide for brands put it encouragingly: "That dance studio you've never heard of might be the biggest Blue V account on Douyin!"

Douyin's ad prices climbed to an extremely high level in very little time, and advertisers still queued up.

"Prices have been on the expensive side ever since Chinese New Year. They shouldn't cost this much; that's just what they charge," the media agency employee said. "Meipai has more formats to play with and you can do well there too, but plenty of people still pick Douyin."

Data from the measurement firm QuestMobile showed Douyin's daily active users at 62 million after Chinese New Year, up 30 million from before the holiday. Behind that was the 2-billion-yuan marketing budget Douyin had set before the holiday, spent buying traffic and promotion across every major channel — the Qiu Shaoyun promotion was one of those buys.

By getting young people to sit through endless 15-second comedy bits, slices of daily life and maddeningly catchy dance clips, Douyin quickly became a new gathering point for traffic. What drew brand advertisers even more than the volume was the age of the audience — more than 40% of the core users are 24 to 30 — and the fact that the medium is video. Toutiao had neither.

In our report on Toutiao last year we asked why video sites, the medium closest to television, had never produced an ad vehicle that could replace CCTV. The main reason was that Chinese video sites run mostly dramas and variety shows, and no one knows which will catch on, so no video hub with dependable traffic ever emerged. Advertisers saw that possibility in Douyin.

To brands and agencies, the traffic Douyin supplies is scarce. Over the past 10 days, many brands negotiating compensation were unhappy with equal-value offers. "Huoshan Video isn't small either, it's fairly big, but it isn't a good substitute," said an employee at the agency for a fast-moving consumer goods brand. "That's when the media company has to bargain — if you want more, it's because what you lost on Douyin doesn't match what Toutiao is handing back."

Another point in Douyin's favor is its own native ad format, the challenge. Much like a hashtag campaign on Twitter, this in-app event is launched by the "Douyin Assistant" account, by an influencer or by a brand: a Douyin star demonstrates a way of shooting that carries the brand's message, and users copy it. Marketers regard the videos users upload as real engagement, unlike other ad formats, where tens of millions of clicks may come from bots.

Almost every brand you know tried something in this rush of traffic before the ads went offline. BMW bought splash and feed ads on Douyin for the June launch of the new BMW X3. Pepsi hired the Douyin star Xue Laoshi to shoot a camera-work-heavy branded video. Disney, Nike, Lay's, adidas NEO — brands aimed at young consumers were all testing whether Douyin could really become a stable, long-term channel the way Weibo and WeChat had.

"It isn't stable right now, it keeps swinging — the prices swing and the policy swings," the Shanghai media agency employee said.

Toutiao, and every other digital platform, already knows the weight of regulation. On the last day of last year, Toutiao took down its popular Society channel and put up "New Era" in its place. On March 31, Kuaishou began a cleanup after videos about pregnant teenage girls appeared on the platform, and most of those videos were pulled. On April 4, Toutiao's Huoshan Video began its own cleanup, combing through its entire library and halting new uploads. On April 9, the Toutiao app was pulled from the major app stores for three weeks; news aggregators from Tencent, Phoenix and others came down around the same time, for varying periods. On April 10, Toutiao's Neihan Duanzi was shut down for good.

Toutiao then tightened its own censorship. On April 11, founder and CEO Zhang Yiming published an apology saying that "technology must be guided by core socialist values, spread positive energy, meet the demands of the era and respect public order and good morals," and announced that the review team would grow from 6,000 people to 10,000.

Douyin, not yet in the crosshairs, moved as well. On March 19 it held a rebranding event, changing its slogan from "Let worship begin here" to "Record the good life," and set up a Douyin "social responsibility" group. On April 2 that group added risk warnings telling users not to attempt dangerous challenges and stunts. On April 10 it launched an anti-addiction system.

The day after Neihan Duanzi was shut down, Douyin turned off livestreaming and comments on its own (comments came back quickly; livestreaming returned only recently).

Douyin president Zhang Nan, interviewed by TMTPost at an event around the same time, said the current round of industry regulation was "a very good thing." If Douyin's top-level design had to rank "mainstream values," "user experience" and "commercial value," she said, she would put mainstream values first. She also said that after the anti-addiction system went live, time spent on Douyin fell 10%.

Some content simply disappeared: at the end of April, Douyin banned every "Peppa Pig" video on the platform. In May alone it banned more than 20,000 accounts.

"They're becoming a place that's a bit edgy, that allows for self-expression, and that's sensitive," Ben Cavender, a senior analyst at China Market Research Group, told The Wall Street Journal about the suspension of Douyin's ad business. "It's very easy to cross a line, which is why the government is watching them closely."

What has been added since looks much alike. On June 12, Douyin released platform figures for the first time: besides daily active users passing 150 million, there was the number of government bodies and news outlets that had opened accounts, "more than 500" of them, including People's Daily Online, the Communist Youth League, police units at every level such as "Beijing SWAT," and local outfits like "Youthful Yichang" and the "Luoyang Tourism Development Committee."

All of Douyin's reviews cover what the platform itself shows. The ads it buys elsewhere fall outside that system. In early June, a text ad Douyin ran on Sogou's search engine — "Jokes about Qiu Shaoyun being burned alive; all the good-looking, interesting stars are here" — was reported to the authorities.

Search ads for video apps usually use the content itself as the pitch, to get the click. To squeeze out results, buyers run thousands of keyword ads at once and adjust based on which keywords bring downloads.

Douyin's defense was that Sogou had supplied a keyword package that touched on revolutionary martyrs, and that a Toutiao employee in charge of media buying passed the package straight to the ad agency without reviewing it. Li Liang, a vice president at ByteDance, the parent of Douyin and Toutiao, called it a "process loophole."

In the past this would have been just another clickbait ad fishing for downloads. But with the Law of the People's Republic of China on the Protection of Heroes and Martyrs in force since May 1, it became a dangerous offense. An earlier casualty of the same law was Baozou Manhua, banned across the internet by Youku, iQiyi, Kuaishou and others.

After the ad system came back on July 11, the branded challenge that launched that day was "#DontSweatIt-MyFurnaceCity" from the "Midea Air Conditioner Guy" account. It drew 90,000 participants in 24 hours.

But the 10 days are still being felt. They scared off clients outright.

"We happened to be running a campaign for a brand at the time, and it suited a Douyin challenge well. We had booked August, and just as we were signing off on the budget, it got shut down," a former business director at an ad agency, now working with luxury clients, told QDaily. The ban has been lifted, but Douyin is no longer on the brand's list. "I wanted to reach young people there. Unfortunately, luxury marketing can't touch anything that carries risk, even if they compensate us."

According to figures from Douyin's ad salespeople, a challenge cost 2.4 million yuan at first, later 4 million. Big brands also have to buy other media to support it, so the floor is usually 6 million yuan per campaign, and the priciest package now sells for 10 million.

Clients started worrying back when Toutiao's other products first got into trouble. The agency for a bottled-water brand told us it had considered advertising on Douyin in March, then dropped the idea after the string of cleanups in April.

Douyin is a closed platform, and the blockades put up by WeChat and Weibo mean its clips are often barred from being shared on those networks. For anyone spending money on Douyin, that means creating as much noise as possible inside the walls. Ten days was a direct hit.

Mounting "risk" is the unavoidable other side of an era run on content marketing. In the United States, brand-safety trouble usually comes one incident at a time: a YouTube star posts something politically incorrect, and an advertiser drops him.

In China's digital ad market, every stage of a campaign can go wrong.

Entertainment platforms themselves already treat ever-finer regulation as a business risk.

"The General Administration of Press and Publication, the State Administration of Radio, Film and Television or the National Radio and Television Administration will from time to time issue content lists, and we need to monitor content uploaded to iQiyi and delete anything that falls within those lists," iQiyi wrote in the prospectus it filed in February this year, listing vague and unpredictable regulation among its disclosed risks. "China's legal system retains retroactive effect for certain government policies and internal rules that were not published in a timely manner, or not published at all."

Advertisers, too, have grown more careful.

One overseas entertainment giant, buying ads in the spring, specifically asked Douyin to publish the content through an influencer's account rather than the company's own brand account. It worried about accidents during the shoot, and worried more about what might happen to the influencer's reputation later.

Su Xin, co-founder of Erka Media, an influencer incubator already signed with Douyin, said that before signing anyone they "check whether the KOL has any improper history," and that the content the influencer makes is reviewed as well.

We did hear a more cheerful view in our reporting: "If Douyin's gone, it's gone. It's not a big deal for brand clients — the social budget was never going to be that large. It's not like a variety show being pulled. That would be a big deal."

The latest news: on July 10 the National Radio and Television Administration issued what people are calling the strictest talent-show order yet, the Notice on Doing a Good Job of Broadcasting Online Audiovisual Programs During the Summer Vacation. Word spread that Tencent Video's variety show The Coming One might be taken off the air; its sponsor, China Resources Snow Beer's Brave the World, had paid more than 200 million yuan in naming fees as part of its summer beer push. The Rap of China, which had announced deals with 13 brands, was rumored to face a delay. iQiyi did not deny it, saying only that it was "looking into the situation."

Cover image from: Unsplash