Media, advertising, and management consulting all used to be separate businesses, but they’ve been converging for awhile. This is relevant for fintech, banking, and housing, so I’ll explore this over a few posts. As a baseline for this topic, let’s start with the 6 ways media companies make money.
Media in this post means business media, not entertainment media which includes many other revenue sources (theme parks, merchandise, etc.) not covered here.
1. Display/Programatic Advertising
Most media companies go programatic, meaning they sell their ad space automatically and buyers buy automatically. So visitors are shown ads relevant to them on sites they visit. This means media companies need scale traffic to make real money, and therefore programatic is best for mainstream players or strong trade media players. There’s no middle.
And even at scale, the amount of infrastructure and fixed cost makes profitability elusive with this revenue source alone.
Nichy B2B trade media can do well with display because in trade media, there’s a more naturally cozy relationship between media company, advertiser, and audience. Readers are there to learn about service providers so they’re often as open to ads as they are to articles and content.
This means trade media can also do a lot of direct selling at much higher margins than programatic.
2. Native/Sponsored Advertising
On this list, native advertising means sponsored content. The advertiser produces full articles, podcasts, newsletter segments, videos, etc., just like the media company would produce. They pay to run it on the media site, and agree to an FTC required sponsored disclosure on it.
Sponsored can produce reliable revenue for scale media, and especially trade media where complex B2B messages play well in long form. Same goes for boutique media, but managing sponsored customers can prove too labor-intensive for small teams.
Sponsored content was the catalyst for media companies creating in-house advertising agencies. More on this next time.
3. Customer Acquisition
On this list, acquisition means having highly specialized content to educate an audience on a specific topic. Successful scale and niche players get great at SEO and SEM to build an audience, then sell access to that audience.
For example, Nerd Wallet educates people on mortgages (and other financial products) and sells customer leads to lenders. Media orgs doing this must hold the same licenses as lenders.
So between the compliance as well as the SEO/SEM and technical writing expertise, this becomes a scale endeavor pretty fast. But there are still a handful of nichy plays the customer acquisition masters of the world run and make lots of money.
4. Subscription Model
This model roared back for mainstream media after Trump was elected in 2016. Big media added millions of subscribers who wanted to stay more informed as information chaos prevailed.
But the coolest subscription trend is specialty media. Pioneers like Ben Thompson of Stratechery have brought back destination sites from the mainstream and social media abyss. How? By writing so well on their topic — big tech strategy in Thompson’s case — that people not only come back, they will pay to get deep analysis.
Companies like Substack have made it easy for individuals to launch paid sites in minutes. Niche subscription plays remove the burden of managing advertisers and sponsored content, enabling individuals or small teams to have a play in a media landscape that was being eaten by big players and social media.
Obviously you have to be fkn great to win a paying subscriber base which — unless you’re truly special, already rich, or raising money — requires four main things:
(1) Specialize and go deep on no more than 3-4 core themes,
(2) be so damn consistent readers can set their watch by your cadence,
(3) give yourself 1-2 years to build an audience,
(4) don’t get distracted by these other 5 revenue models.
5. Research & Data
On this list, research and data mean 3 main things:
(1) Analysis a media company packages and sells.
(2) Data a media company productizes and sells (the most scalable of these 3).
(2) Commissioned research a media company will do for it’s advertisers.
In all cases, this treads over into consulting.
Commissioned research is especially consultative. Some media companies are disciplined about commissioned research remaining an a la carte service: they run the study, give client results, and do some sponsored (and maybe some bonus editorial) posts on it.
But increasingly, research is being used as a business development tool for consulting work.
And data products are straight up disrupting the management consulting industry. CB Insights is the coolest example today. Their data products are so insightful, they can replace the need for consulting in a lot of orgs.
Data products combine Research/Data and Subscription categories. Some argue data isn’t media, but I think it is because those with the best data can create the best media content.
Conference season is year-round now because events are a great revenue source for media companies.
And because people like to meet in real life. I mean, who doesn’t like to get away to a conference? You get some socialization, fresh scenery, learn something, and meet new contacts.
There’s also a digital event revenue layer, with webinars helping a lot of trade media companies grow.
And there’s a third layer for specialty media companies that do private events to educate companies. This can also morph into corporate training, which can then become more consultative.
WHO’S BEST AT EACH OF THESE 6 MEDIA REVENUE MODELS?
So those are the 6 main business media revenue models today. Some companies stay in one lane, a select few get really strong at most of these, and most just focus on a couple.
Customer acquisition tends to be a singular discipline for the reasons above: there’s already a lot you need to be good at.
Trade media is well suited to be strong at combining display, sponsored, subscriptions, and events. That’s a damn good business if you can get all 4 scaled, and it usually scales in this order.
Mainstream business media is a straight up scale game so display and subscription are their primary revenues.
As I noted, the niche subscriber model is most interesting right now, and this is the new media talent incubator. Those who build a paying audience will evolve in 3 ways:
(1) Build a great life for themselves and ride it out owning their niche,
(2) create a nice valuation given the subscription model multiple and sell to a bigger player,
(3) add their site to a future media bundle — a trend that’s already starting in this subscriber trend.
MEDIA, ADVERTISING, CONSULTING ALL MERGING
Next time, I’ll discuss the following:
– How sponsored content led to the merging of media and advertising.
– How digital disruption in all industries led to the merging of advertising and consulting.
– How social influencers led to the renaissance of niche media.
– How niche subscriber media evolve into subscription bundling.
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