Focus Media Jiang Nanchun: It is a good thing that the market is getting colder. We will continue to invest in film, television and entertainment in the second half of the year

"Technology is not a barrier, and business models are not a barrier. Leading in technology and business models only creates a window of time for you, which may be six months, but no more than a year at most." Jiang Nanchun believes,"The key is that you have adopted a saturated attack method during this time window, giving yourself a mental advantage in the hearts of consumers and becoming the spokesperson of this category."

Original title: Jiang Nanchun said that the market downturn is a good time for Focus to start an investment model

Focus Media's successful privatization and return to A-shares is an end and a new beginning.

On July 29, Focus Media, which focuses on building elevator advertising, released its first half of 2016 performance report. The report shows that the company achieved a net profit of 1.901 billion yuan in the first half of the year, and predicts that the full-year profit will exceed 4.4 billion yuan.

Such performance has also been recognized by the capital market. As of the close of A-shares on July 29, Focus Media closed at 15.57 yuan, with a market value of 136.032 billion yuan, making it the largest company by market value among cultural media stocks in China.

The main force behind such a high market value still comes from Focus's main business, building elevator advertising. After returning to A-shares, Focus also has the money and energy to expand its reach into the fields of culture, entertainment, sports and finance by establishing funds and investment companies. For example, the recently announced large-scale investment, with RMB 300 million to lead the investment in Hero Mutual Entertainment.

Jiang Nanchun, CEO of Focus Media, recently accepted an exclusive interview with a few media outlets. He reviewed the foundation of Focus's family in the past and explained the logic of starting to invest vigorously during the so-called "capital winter".

Past success is a "new trick"

Jiang Nanchun has been thinking about what he has done right in the past ten years. After thinking about it, he came up with the answer,"I have only done one thing right in the past ten years, which is to find the right environment for elevators."

When Focus Media was founded in 2003, Jiang Nanchun found a new "open space" for advertisers-elevators. Since this open space is widely found in high-end residential and office buildings, it can reach the main consumer groups in society, it quickly became the new favorite of advertisers.

In the past two years, the rapid popularization and development of the mobile Internet has not only changed the lifestyle of consumers, but also changed the pattern of the advertising market. Internet advertising has risen rapidly, and the value of advertising space provided by almost all traditional media has been greatly reduced. However, Focus's elevator advertising space is as popular as ever, and surprisingly, it is even more popular than before.

Jiang Nanchun believes that it is actually the complexity of the mobile Internet that causes the scarcity of attention, so a closed and simple environment like elevators is of higher value.

The "2015 China Advertising Market Review" released by CCTV Market Research (CTR) shows that in 2015, China's traditional media advertising revenue fell by 7.2%, but the three major sectors of cinema video advertising, Internet advertising, and building elevator video advertising showed an upward trend. Among them, the building elevator advertising sector represented by Focus increased by 17.7%. According to the analysis of the report, in the era of mobile Internet, information explosion has caused consumers to be distracted, and advertising arrival rates are poor. However, compared with other advertising space types, building elevators have achieved low information interference rates because they are mandatory, closed, and frequently used. High advertising arrival rates.

Focus's past success was summarized by Jiang Nanchun as "one trick". He said that if he had not found the right elevator environment, many things would have been different.

Referring to public data, Focus Media's elevator media currently covers 120 cities, with 1.1 million editions and 200,000 screens installed. The building TV market share has reached 95%, and the elevator poster share has also reached 70%. Judging from the first-quarter 2016 financial reports and the first-half 2016 financial reports released on April 18 and July 29 after Focus returned to the A-share market, Focus achieved profits of over 35% and nearly 20% respectively in the relevant two financial periods.

"The foundation of our traditional business is relatively solid." Jiang Nanchun said that what he needs to do now is to invest in new areas.

It's a good thing that the market is getting colder.

On April 18, 2016, Qixi Holdings, a shell company that was listed on Focus Media's A-share backdoor, issued an announcement announcing the change of the company name to "Focus Media Information Technology Co., Ltd.". As a result, Focus has truly returned to the A-share market and has funds and opportunities to invest in new fields.

In fact, during Focus's listing in the United States from 2005 to 2013, the rules of the capital game in the U.S. stock market put Focus under many restrictions on innovation and development. Ji Hairong, senior vice president of Focus Media, once said in the early stage of the delisting of Focus U.S. stocks that Focus hopes to make more strategic innovation and investment in the days to come. Now it seems that Focus has taken a step forward and is moving quickly.

On May 31, one month after the A-share listing, Focus Media announced the establishment of a US$400 million sports fund with Fangyuan Capital. On July 25, Focus issued another announcement stating that the company or its subsidiaries plan to establish investment funds with four companies, including Hangzhou Qingke Investment Management Co., Ltd., Boiling Point Asset Management (Tianjin) Co., Ltd., Shanghai Huitianfu Medical Equity Investment Management Co., Ltd., and Shenzhen Dachen Venture Capital Co., Ltd., to be mainly used for equity investment in non-listed companies in products or services involving the Internet, high-tech, consumption upgrades or service upgrades.

Choosing this time point to establish a fund is certainly due to the listing time of A-shares, but it is more related to the investment timing.

"Why didn't we do this last year? Last year (the investment market) was so high." Jiang Nanchun said,"I started studying the matter of making funds in the second quarter of this year, and I have quickly done it in the past two months because I felt the time was right."

The opportunity Jiang Nanchun is waiting for is when market investment enthusiasm cools and investment prices and company valuations can return to rational numbers. According to his investment logic,"The market is cooling down is a good thing."

Based on the advertising business, he divided Focus's investment process into three links, discovering new models, investing in incubating new models, and detonating new models through Focus's advertising platform. The third link is the core chip that Focus is willing to invest against the trend. Unlike many traditional investment institutions, which simply gamble on people, trends, and projects, Focus must use its own publicity advantages to make the companies it invests in become a star startup that can bring a rich return on investment to Focus.

"When the market is bad, it is a good time for a company to establish absolute leadership." Jiang Nanchun further explained why he was waiting for the market to cool down."When the market cools down, it is also a time when competitors are in disorder."

This also matches the "ecological investment" model that Jiang Nanchun now recognizes. Compared with investing in companies directly related to the main business, or pursuing controlling interests once invested, Jiang Nanchun prefers Focus to provide more opportunities for invested companies as a platform and portal while doing a good job in the main business. Development opportunities and finally "enjoy the dividends of the new model."

Jiang Nanchun

's focus on "culture, education, sports and health" leading companies

is in sync with the establishment of funds, and Focus's investment plans have also been launched one after another.

On May 31, while Focus announced the establishment of a sports fund with Fangyuan Capital, it also confirmed that it would lead the Series C financing of sports social platform and hardware company Gulong Sports for US$30 million. On June 13, the fund allocated another US$67.5 million to make a strategic investment in U.S. entertainment, sports and fashion company WME-ING. On July 28, Focus Media issued another announcement stating that its wholly-owned subsidiary Gongqingcheng Focus Creative Information Technology Co., Ltd. led the investment in Hero Sports, a subsidiary of Hero Entertainment, with a total of RMB 300 million to lay out the e-sports industry.

In addition, news shows that as early as the beginning of 2016, Focus, which had just completed the backdoor borrowing process, had made a strategic investment of 100 million yuan in Shuhe Technology, an Internet finance company with smart financial management as its core business.

Jiang Nanchun revealed that Focus will also make a series of investments in the film, television and entertainment field in the second half of the year.

From a strategic perspective,"Focus has three carriages. The first is the media platform, the second is the content platform, and the third is the financial platform." This series of actions can allow Focus to establish an ecosystem around its main advertising business.

Investing in the sports and entertainment industry is what Focus hopes to cut into consumers 'core entertainment from the perspective of "content". This will enable Focus to open up a new advertising communication channel relying on sports culture and entertainment content. In many cases, this can also expand the user base covered by the crowd. For example, Hero Sports, which invests in hosting multiple e-sports events, can allow Focus advertisers to reach younger consumer groups.

Investment finance companies allow Focus to directly provide consumer finance and wealth management services to hundreds of millions of advertising coverage people. Focus Investment's Digital Energy Technology now has two main products. One is the credit card repayment App "Return", which is mainly aimed at young people, and the other is the robot financial management product "Latte Finance", which is aimed at higher-age users. Through this investment, Focus not only broadens its business model, but also paves the way for the future development of other businesses that directly target consumption.

From the perspective of return on investment, Focus's investment areas are all within the scope of "culture, education, sports and health", which is in line with the trend of increasing consumer demand for spiritual entertainment consumption under the background of consumption upgrades. Moreover, part of the investment is also targeted at young people who are gradually becoming the main consumer force, which can be regarded as a market layout in advance.

On the other hand, Focus has always only voted for the "head company", that is, the leader in the segment.

"When the market is in a downturn, funds will be pooled to some high-quality companies. As long as these high-quality companies have enough capital to purchase, saturation attacks can easily create success in the minds of consumers because competitors have no voice." Jiang Nanchun said.

He gave some examples, such as Didi represents a special car, Shenzhou is equivalent to renting a car, hungry is equivalent to takeout, and so on.

Editor: Nancy