The boom was chiefly driven by revenue and GMV growth as well as market expansion

On August 31, Joy Spreader Group Inc. (HKG:6988, “the Group”, “Joy Spreader”), a leading marketing technology company listed in Hong Kong, hosted a press conference to announce its interim results for 2021, during which the short-form video (SFV)-based e-commerce marketing business experienced a growth spurt. During the conference, the Group’s management elaborated on the three main drivers of the growth of the business during the reporting period: the scale of the growth, the quality of the growth and expansion into new markets.

The scale of the growth: The company’s SFV-based e-commerce marketing business experienced a boom during the first half of 2021. The segment maintained strong growth during the reporting period with revenue rising YoY to HK$129 million (approx. US$16.5 million).

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The strong growth was mainly attributable to the rapid buildup of the firm’s presence on the Douyin platform, the Chinese version of Tiktok. With Douyin accelerating its expansion in the e-commerce sector over the past few years, e-commerce merchants on the new media platform have become important players by using the interest-based recommendation algorithm. Data showed that combined gross merchandise value (GMV) of products sold by e-commerce merchants on Douyin exceeded 500 billion yuan (approx. US$75 billion) for the whole of 2020 and is expected to grow to 1 trillion yuan (approx. US$150 billion) in 2021.

Joy Spreader, one of the first marketing technology companies to expand into the SFV-based e-commerce sector, was also one of the first to monetize video content on Douyin, starting to do so in January 2019. Thanks to Douyin’s success with e-commerce overall, the Group’s e-commerce marketing business witnessed robust growth during the reporting period. On Douyin’s June 18th shopping day, Joy Spreader achieved some HK$350 million (approx. US$44.8 million) in gross merchandise value (GMV) of products sold by e-commerce retailers via SFV platform, roughly double that recorded for the whole of the first half of 2020.

The quality of the growth: The e-commerce marketing business experienced growth not only in scale but also in quality. For e-commerce platforms, the most important indicator is GMV growth. Joy Spreader achieved HK$647 million (approx. US$82.8 million) in GMV of e-commerce products during the first half of 2021, an increase YoY of 264.08 per cent. Gross profit of the e-commerce products marketing business also grew 143.31 per cent YoY to HK$65.28 million (approx. US$8.3 million).

Another indicator of quality is the number of marketing points. As of June 30, 2021, the number of Joy Spreader’s marketing points on Douyin had climbed to 657,300, up 720.23 per cent from the same period of 2020. Of the marketing points, 65,200 were active, up 215.93 per cent. Averaged GMV of products sold at the active marketing points also showed a YoY rise of 15.24 per cent to HK$9,920.44 (approx. US$1,269.8).

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Market expansion: Data showed that combined gross merchandise value (GMV) of products sold via interest-based e-commerce merchants in China is anticipated to reach 9.5 trillion yuan (approx. US$1.4 trillion) in 2023. The flourishing sector is opening up new possibilities to industry players, providing an unprecedented opportunity for Joy Spreader. With the expectation of further growth of the Douyin-based e-commerce market and the continuous enhancement of Joy Spreader’s ecosystem of marketing points on Douyin, the firm’s e-commerce marketing business is well positioned for further substantial growth. In particular, the company foresees additional business expansion by virtue of conversions of covered marketing points on Douyin into active ones and an increase in the average GMV of products sold through the marketing points. At the same time, the firm plans to provide tailor-made new media content for corporate clients by helping create new media accounts and private traffic applied content that builds traffic through strategic alliances, investments and incubation projects. The move is aimed at strengthening Joy Spreader’s leading advantages in the SFV-based e-commerce sector.

The emerging of overseas e-commerce platforms such as TikTok has given Joy Spreader an unprecedented opportunity to expand its e-commerce marketing service into international markets. The firm is planning to focus on building up its international SFV-based e-commerce marketing business through three actions that are scheduled for execution in the near term:

1) establish an e-commerce marketing platform in Hainan set for foreign markets;

2) accelerate the building of a close-loop service ecosystem tailored for international markets, with an initial focus on Southeast Asia;

3) create algorithms specifically for overseas markets by analyzing video content and user behavior data outside of China through the leveraging the firm’s capabilities and advantages to repurpose the algorithms used in the domestic market; at the same time put in place an international algorithm team in Sweden to provide data analytics and professional support for algorithms optimized for its international business.

Interest-based e-commerce is emerging as another important part of the e-commerce marketing sector in addition to traditional e-commerce platforms. All indicators point to a promising future for the segment. Given this scenario, Joy Spreader expects to maintain strong growth through better revenue and GMV performance in tandem with market expansion by virtue of its competence in technologies alongside the continued foray into the SFV-based e-commerce marketing sector.

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