In September at Content Marketing World, Robert Rose and I will launch our (combined) sixth book called Killing Marketing. The core principle is that we’ve been misusing the marketing function for years. Marketing, in its truest form, was actually meant to be a profit center.
While Robert and I were doing our research for the book, we looked into both successful new media companies as well as enterprises who have seen benefits from a content marketing approach.
What we found, to our pleasant surprise, is that the revenue model for both media companies and product brands is EXACTLY the same. Now, we may perceive the New York Times and Cisco Systems as completely different companies, but the content-first business models behind them are actually more alike than different.
The fruits of this research produced (among other things) what you see below, tentatively called the Media Marketing Revenue Model. Basically, any organization that builds an audience from their content can generate revenue (and profits) in 10 different ways…
There are five different methods by which companies can directly generate revenues from an audience group: advertising/sponsorship, conferences and events, premium content offerings, donations and subscriptions.
The most popular method of driving direct revenues is through advertising and sponsorship programs: companies willing to pay you for direct access to your audience.
The Popular DVD delivery service (that sits outside physical retail stores) offers an eNewsletter to customers focused on new movie and game releases. Each newsletter includes one or multiple sponsors (generally promoting their own games and movies) that pay Red Box to reach its audience.
Conan and his Team Coco have been producing sponsored content placements on his late night show for years now. In one situation, Conan and sidekick Andy Richter talk about their “Cyber Monday” issues, which result in a pitch for PayPal.
Content Marketing Institute (CMI):
CMI favors a sponsorship model over an advertising one for the majority of products.
- Podcast – each episode has an individual sponsor
- Research reports – each report has one sponsor
- Webinars – each webinar is sponsored by a single sponsor
ESPN’s Mike and Mike:
The popular morning radio and television show (syndicated on radio on televised live on ESPN2) has been sponsored by Progressive Insurance for years. ESPN does this with a number of their live shows, including Pardon the Interruption (PTI), which is generally sponsored by a spirits company.
Conference & Events
According to CMI/MarketingProfs research, approximately seven in 10 enterprises create and manage their own events. Some of these are small client gatherings, while others are full-scale events with exhibition halls and concurrent sessions. Revenues are driven, for the most part, through paid registration to the event or sponsorships, such as parties or exhibition space.
Minecon is the official event of Minecraft, the online multi-player building game owned by Microsoft. In 2016, the annual event attracted a sold out 12,000 attendees (at $160 per ticket, tickets sold out in minutes) as well as an exhibition hall featuring the latest Minecraft technology and merchandising (where Microsoft accepts booth fees from sponsors and partners).
Lennox is one of the largest manufacturers of heating and air conditioning equipment in the world. Every year, they attract the leading contractors and distributors from around the United States, offering education around technology, marketing and business practices. Exhibiting partners include companies such as Honeywell, Cintas and Fluke. Lennox generates revenue directly from attendee fees, as well as more than a dozen manufacturing and service partners.
Premium content packages come in a number of forms, including direct-for-sale content products, funded content purchased on demand, and syndicated content opportunities.
Digital Photography School (DPS):
Darren Rowse launched DPS as the leading source for beginning photographers and how they can get the most out of their picture-taking skills. DPS generates millions per year by developing premium eBooks and specialty reports for direct sale. DPS’s premium content sales have become core to the company’s monetization strategy.
Buzzfeed’s time-lapsed cooking videos have been viewed by over 40 billion (billion with a b) times in the past two years. One of the ways Buzzfeed monetizes that success is through customized cookbooks. In 2016, Buzzfeed launched Tasty: The Cookbook, a hard-copy book that can be customized by the buyer depending on their recipe tastes. In just a few weeks, the Tasty sold over 100,000 copies of the cookbook.
Red Bull’s “Content Pool” contains thousands of videos, photography and music that media companies and content producers can purchase rights to directly from Red Bull.
Generally, donations to subsidize the publishing of an organization work best for not-for-profit and cause organizations.
America’s Test Kitchen:
Both America’s Test Kitchen and Cook’s County are television programs on public broadcasting, and both shows have sponsor underwriters to almost cover the entire cost of production.
Pro Publica is a nonprofit organization that uses its funding to develop investigative journalism that it deems is important for the public to hear. Founded by Paul Steiger, former managing editor of the Wall Street Journal, Pro Publica employs over 50 journalists and received its major funding from the Sandler Corporation, which committed funding for multiple years upon Pro Publica’s launch in June 2008. Pro Publica also accepts ongoing donations from anyone that believes in the organization’s cause.
Subscriptions differ from premium content in that subscriptions, paid for by the consumer, promise to deliver content ongoing, over a period of time (generally a year).
The New York Times:
A major part of the turnaround at The New York Times (from diminishing print advertising) is their growth in digital subscribers to the magazine. According to Quartz, the NY Times has added approximately one million digital subscribers over the past two years, with 276,000 in additions (their biggest growth since launching the subscriber program) after the election of President Donald Trump.
While direct revenue options have been traditionally thought of as part of the media company model, indirect revenues fall under the approach known as content marketing, or creating content and building relationships with audiences to fund organizational business goals.
Win revenue includes the creation and distribution of content with the goal of selling specific products or services.
Sony’s Alpha Universe:
Sony’s Alpha Universe is a content platform dedicated to photography professionals, but focuses, not on Sony products, but on educational and helpful information. After starting with a blog, they’ve diversified into a podcast and training university. The site’s purpose is to drive product sales for Sony’s Alpha line of cameras.
The Wirecutter, the gadget and deal listing site, was purchased by The New York Times in 2016 for $30 million. The site makes a little bit of money every time they sell a product recommended on the site. And these deals add up… in 2015, they generated over $150 million dollars from affiliate revenues.
Matthew Patrick created the idea of Game Theory while watching an online program on learning through gaming. Game Theory became a weekly YouTube video series that combined Matthew’s passion for gaming and video games with his skill set of math and analytics.
After 56 episodes over a one-year time frame, Matthew had an audience of 500,000 YouTube subscribers interested in his take on how math works in gaming. For example, his episode “How PewDiePie [an online video celebrity] Conquered YouTube” generated more than 5 million views. His episode “Why the Official Zelda Timeline Is Wrong” saw more than 4 million downloads.
Today, the Game Theory brand, has well over eight million subscribers. From this success, Matthew launched Theorists Inc., a specialty consulting firm that works with large brands who want to be successful on YouTube. Theorists Inc. has been hired directly by some of the biggest YouTube stars on the planet to help them attract more viewers, as well as a number of Fortune 500 companies. Even the mighty YouTube itself hired Theorists to consult directly to help YouTube retain and grow its audience numbers.
Of all the revenue drivers of this approach, Keep revenue, or loyalty, is the oldest of them all, and is still extremely important today. Organizations of all sizes originally launched print magazines to keep the loyalty of their customers over time.
LEGO Club Magazine:
In the 1980s and 1990s, LEGO faced a tremendous threat from competing construction toys, and the company knew it needed to build a powerhouse brand and integrated marketing approach to go up against these building-block imitators.
Among its incredible branding and content marketing initiatives is the LEGO Club Magazine, which is customized for subscribers by local market and age. The magazine allows kids of any age to receive targeted content that’s relevant to them in a fun, portable format. As an extension of its LEGO Club offering (one of the biggest and most popular children’s member clubs in the world), LEGO worked hard to improve its magazine product in 2011 with more cartoon stories of the LEGO bricks in action, better integration of customer photos and some awesome in-store programs at LEGO store outlets and its new Master Builder Academy.
LEGO Club magazine was originally launched as Brick Kicks in 1987 (I was a subscriber).
Once a customer is acquired, innovative companies leverage that customer data to deliver targeted, consistent publications to, in essence, create better customers over time.
thinkMoney from TD Ameritrade:
While you may think investing services equals conservative and buttoned-down (especially in complex derivatives markets), thinkMoney follows a different approach. It takes the subject of investing seriously, but it doesn’t take itself with the grim seriousness of many Wall Street firms. Instead, thinkMoney embraces a “sophisticated simplicity” approach that’s edgy without being flippant, and witty without being irreverent.
thinkMoney reaches more than 200,000 active trade customers, and according to surveys, the average customer engages with the magazine for 45 minutes or more per sitting. More than 80 percent of readers take some meaningful action after reading and those subscribers who engage in the publication trade five times more than those who do not.
Trish Witkowski, CEO of Fold Factory, has become a celebrity in the direct mailing industry through her regular video show, The 60-Second Super Cool Fold of the Week, where she details amazing examples of print direct mail. According to author and speaker Andrew Davis, “Her 250-plus videos have yielded over a million views and more than 5,000 subscribers. In addition, Trish has become a spokesperson for a number of brands, tours the world as a speaker, and conducts workshops.” The Fold Factory videos have been directly responsible for over $500,000 in additional revenue.
The most successful organizations in the future will leverage not one, but multiple parts of the media marketing model. Just as an investor diversifies their portfolio with multiple stocks and/or mutual funds, so do companies need to diversify the revenue streams generated from their marketing.
Joe Pulizzi is the founder of Content Marketing Institute, the leading education and training organization around the practice of content marketing. His new book with Robert Rose, Killing Marketing, will be released at Content Marketing World September 5-8th in Cleveland, Ohio.