Tongji Healthcare Group Inc (OTCMKTS:TONJ) is as interesting a story on the OTC right as one might hope to find. The social media influencer space is the future of marketing and branding, a fact made very clear by the recent story of Kylie Cosmetics, a cosmetics brand started by Kylie Jenner, one of the most successful social media influencers on the planet.
Kylie Cosmetics was valued at nearly $1.2 billion when it sold a controlling stake to Coty, Inc. last November. That value was built by first cultivating a broad influencer following.
The traditional model generally has revolved around trying to come up with a successful product and then figuring out how to market it effectively. But the new model emerging in recent years reverses the process: establish a huge reach with an interested audience, and then come up with products to sell them.
Following its acquisition of The Clubhouse, TONJ is perfectly positioned to take advantage of that emerging model.
The Story
Tongji Healthcare Group Inc (OTCMKTS:TONJ) just announced the closing of the acquisition of West of Hudson Group Inc., the sole owner of “The Clubhouse,” a collection of scenic mansions in Southern California that house some of the most prominent and widely followed social media influencers, together carrying an estimated follower base in excess of 90 million. The acquisition closed on Nov. 12, 2020.
According to the release, on Nov. 2, 2020, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada to amend the Company’s Articles of Incorporation to change the Company’s name from “Tongji Healthcare Group, Inc.” to “Clubhouse Media Group, Inc.,” subject to FINRA’s approval.
“We believe The Clubhouse has significant proprietary value that can be tapped in service of either deals with outside brands or the popularization and expansion of our own in-house branding projects,” commented Amir Ben-Yohanan, Tongji’s CEO.
As noted in the company’s PR, The Clubhouse is an established network of three social media content creation houses (“Clubhouse BH,” “Clubhouse Europe,” and “Not a Content House”) that has already received organic media coverage from the New York Times, Business Insider and Forbes. As a result of the acquisition, the Company also acquired West of Hudson Group Inc.’s two operating subsidiaries: WOH Brands, LLC, a content-creation studio, social media marketing company, technology developer, and brand incubator; and Doiyen, LLC, a talent management company that provides representation to Clubhouse influencers.
Why It Matters
The big point here is that Tongji Healthcare Group Inc (OTCMKTS:TONJ) is already on the ground and running with over 90 million followers. That represents a massive channel for go-to-market brand development. The products are an afterthought.
And given its multi-segment structure, the company is in position to develop brands, develop new influencers, and make deals with outside brands on a contract basis, granting TONJ the potential to quickly ramp up the topline.
The company has also already been gaining widespread “earned” media coverage, which is another very good sign. TONJ was recently covered in-depth in both the New York Times and The Atlantic, two of the most popular major media channels on the planet.
According to the company’s recent communications, the model is set to be expanded as well, suggesting that 90 million followers is the floor, not the ceiling. There will apparently be more luxury mansions with more top influencers, and more followers, brands, contracts, and deals.
At this point, TONJ shares have shown some momentum out of a strong base. But the surface of the upside potential here may not have even been scratched yet if the model we see in place now is executed well in the months and quarters ahead.
As noted in the company’s release, global social media ad spend is expected to jump 20% in 2020 to reach an estimated $84 billion. According to Zenith’s data, social media advertising will account for 13% of total global ad spend and rank as the third-largest advertising channel, behind TV and paid search. Social media ad spending surpassed print media ad spend last year for the first time ever, according to Zenith. That trend is almost universally expected to continue and even accelerate over coming years.
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