Sohu IT, 6/29/11
Feng Xiaohai, CEO of Chinese group buy site Manzuo.com, said that the site expects sales revenue on the site to reach RMB 2 bln this year. Feng also predicts that Manzuo.com will become profitable sometime in 2012. He revealed that in a market in which many competitors are unable to reach a gross profit margin of 5%, Manzuo, admittedly along with a number of much smaller group buy sites, nonetheless continues to maintain a gross profit margin of more than 10%. "The larger the group buy site is," Feng said, "the lower the profit margin, given that it needs to build its own market."
While Feng said that marketing currently accounts for between 30-40% of all costs for the company, he declined to quote a specific figure. Manzuo.com's marketing strategy is split between online and offline efforts. The focus of online promotions leans toward investment in online directories and aggregation sites, followed by search engines Baidu (Nasdaq: BIDU) and Google and, lastly, portal websites. Regarding offline spending, Feng revealed that the company runs a small number of advertisements inside subway trains and stations and on the sides of buses. Manzuo.com announced yesterday that it recently spent more than RMB 10 mln to obtain rights to use Japanese anime character and earless robotic cat Doraemon as the company's brand spokesperson.
"Prices for Baidu's online directory site Hao123 have more than tripled," Feng said, adding that, "The price for a listing on Qihoo 360's group buy directory platform, 360 Tuangou (tuan.360.cn), recently went up by 40% in a single month." He said that although the cost-effectiveness of directory sites is acceptable at the moment, the ROI is now falling quite quickly. "In just a matter of months," Feng said, "ROI on ads on 360 Tuangou's directory platform has dropped from over a thousand percent to approximately 600-700%."
Feng said that when Manzuo.com was still running advertising on Google's AdSense platform, the ROI was particularly low. "Google needs to raise AdSense's ROI," he said.