Real Distribution Allows for Creative Monetization

Since reading Ben Smith’s new book, Traffic, I’ve been thinking a lot about the quest for more traffic that many of the largest media companies had last decade. Even now, there’s still discussion about how to get more scale to compete with the platforms.

Where these media companies went wrong is they were myopically focused on the wrong metrics when it came to distribution. As we now know, the goal should be to reach scale distribution for a well defined audience. For AMO, that’s media operators, publishers, executives, etc. For Dotdash Meredith’s Brides, it’s couples getting married—and more specifically, the brides.

At the end of the day, the most important thing we can do is to get as many people within a specifically defined audience to consume our content as possible. And not only consume it, but love it. It has to be a deep connection. It has to be a world where if the content didn’t exist, the audience would miss it.

There is an argument to be made that if you have strong enough distribution, you’ll figure everything else out. Figuring out how to monetize an audience becomes much easier when that audience is deeply engaged.

Here’s a good example…

Back in May 2012, Facebook went public at a valuation of $104 billion. But by August, it had lost 47%. The biggest reason was a major fear from investors that it would not be able to monetize users on mobile. According to a Reuters article in October 2012:

Mobile advertising has been among the key investor concerns hanging over Facebook, helping slash more than $40 billion off its market value since its May IPO. As its users increasingly access the social network with their smartphones, Facebook has struggled to transition its business to mobile devices.

The mobile ads helped reignite Facebook’s overall advertising business during the third quarter, following several consecutive quarters of slowing revenue growth that raised questions about Facebook’s long-term prospects.

A year and a half after the IPO, Facebook’s stock was up 45% from its initial price. And it figured out how to monetize mobile unbelievably well. The important thing for Facebook was that it had the distribution. Without that, it would have been unable to do anything. The world’s greatest mobile ads would have been irrelevant without the audience coming back.

The same is true for media. Once you have the audience coming to consume your content, the rest becomes much easier. But there’s a nuance to this.

The mistake BuzzFeed, Vice, and many of these other media companies made is they thought that so long as people were consuming the content, it was good enough. There was no conversation about whether the content was turning readers into brand loyalists. Healthy distribution comes with an audience that is engaging with you directly. That’s why Facebook could figure out its monetization; people were coming to its app directly. That’s also why newsletters are so easily monetized; people are opting into receiving them.

The real reason distribution is the name of the game, though, is because once you have the reader, you can start to get creative with how you monetize.

This is the entire concept behind content to commerce. By building a dedicated audience with your content, you can then figure out how to push them down to more specific products. And while content to commerce is often used to describe consumer media, it’s not only that. Ultimately, figuring out distribution is the precursor to any sort of product sell.

Here are a bunch of examples.

The easiest and most straightforward is Food52. This is a consumer media company that has built a loyal audience around food. It then started to create products that it could sell (I’ve long raved about their dish towels). Because it had a deep connection with its readers, it had more confidence about what the audience would buy. Food52 was then able to go out and buy other companies—Dansk and Schoolhouse—with the confidence that the audience would convert.

FreightWaves is the exact same model but for b2b. It built a loyal freight audience with its content and then introduced Sonar, its SaaS data product. It uses data from the platform to create content on the site, which acts as marketing for the product. Because its audience is so loyal, it can build the proper funnels to move the correct audience to sign up.

CB Insights is also content to commerce. It has created a great newsletter that goes out to over 700,000 people every single day. It publishes different pieces of data that it gathered from the platform and distributes it for free. The reason they do this is because it acts as the biggest driver of leads for the sales team at CB Insights.

Going back to consumer media, there’s Flying Magazine, which I have written about a lot. It has acquired a number of publications that are related to aircraft. By accumulating this distribution, it can then figure out what products to create. For example, it now has a marketplace that people can buy used airplanes. But any product related to flying or aircraft can turn into a business line because it knows so much about its audience.

Golf Magazine is also trying this. 8am Golf owns this plus a number of other golf-related businesses. For example, it owns Miura Golf, which are hand-forged irons and wedges. It owns Fairway Jockey, which also makes custom clubs. Additionally, it owns actual golf courses. Because 8am Golf has a dedicated audience through the media brand, it can then push that audience to different products in its ecosystem.

Distribution is the most important thing for all of these brands. It’s not about flyby traffic or any of that; instead, it’s about a deep relationship with the reader so that they can get those people to make purchases or sign long-term licenses (like CBI and FreightWaves).

The reality is, for the vast majority of niche media companies, there’s an opportunity to do this. For example, could my friends over at Aging Media do it with their Senior Housing News publication? Could it aggregate the average price per bed across the country and sell that as a database? If someone’s looking to build a new senior center in Iowa, for example, that operator could pay for access to figure out the numbers.

What about any other magazine? Go to Barnes & Noble (or wherever you buy magazines) and look at the hundreds of titles. There are so many opportunities at the newsstand to create content to commerce so long as they have great distribution. The mistake most magazines make is they inflate subscriber numbers because they’re myopically focused on subscriptions. But for those that take seriously the quality of the subscriber, it becomes the bedrock for a solid business.

But it won’t work with all media brands. BuzzFeed, for example, could never build a true content to commerce brand on its core property. Sure, it has traffic and sure, it might be able to do affiliate marketing. But it’s all flyby traffic. It doesn’t have the deep enough relationship with the reader required to make it work.

Niche is the way this works. Quaity distribution is the way this works. And once operators realize this is the case, we’re going to see a lot of interesting acquisitions and growth take place.

Thanks for reading. Do you run a company with a content to commerce model either on the consumer or b2b side? I’d love to hear. Join the AMO Slack and tell us about it. Have a great weekend!