The Potential Limitation of a House of Brands

The key difference between a branded house and a house of brands is, ultimately, which brand reigns supreme. With a branded house, you deal with a single brand (Google), and every product (Gmail, Calendar, Search) layers up to the primary brand. On the other hand, with a house of brands, each product is independent of the next. So, for example, Gillett, Bounty, Pantene, and Oral-B all have unique brands which lead, even though they’re owned by Procter & Gamble.

Typically, a house of brands has unique audiences, branding, and sales strategies. And many of the major CPG companies all have to support unique brands.

In media, it’s a little bit different. An example of a branded house is The New York Times. It’s a single brand meant to serve everyone. On the other hand, there are two house of brands approaches.

1. Condé Nast approach
2. Morning Brew B2B approach

With the Condé approach, each magazine has its unique experience. The readers are fundamentally different. Even the sales strategy might be different. And so, as a holiday company, Condé is forced to support many different experiences. That can be complicated.

Naturally, there are ways to streamline it. For example, Dotdash Meredith has unique front ends, but the backend software is uniform, making things easier to handle. But even then, each front end is unique, which does add some complication.

But then let’s look at the Morning Brew B2B approach (disclosure: I am the publisher at Morning Brew and oversee the b2b business). We are also a house of brands with unique audiences, but every site looks the same. The scaling strategy is not about each publication becoming a slam dunk. Instead, scale comes from identifying new industries and job functions to expand into. We replicate the same tech and experience from site to site. Ultimately, we can grow faster by keeping everything the same.

When I think about a house of brands that can genuinely be scalable, this is what comes to mind. However, we’re also not the only ones that do this. For example, if you look at the Aging Media sites, they share the same front end even though they serve different audiences. This allows them to invest once in a robust site architecture without needing to support five disparate brands.

There’s a reason we chose this. It can be an unbelievably high-margin business. Because the processes are uniform, we get some economies of scale. Launching a new publication doesn’t require me to do a complete branding exercise. We decide on a name—which is, itself, uniform—and we’re off to the races.

I like this model a lot. But unfortunately, this approach does present some limitations. To some extent, you cannot give each audience precisely what it needs. Since the primary goal is to streamline everything, no experience considers what that individual audience needs. Sure, the content is different because each story is uniquely reported. But even then, the editorial strategy is uniform from site to site so that everything fits an ultimate process.

Because we’re scaling through new launches, it’s not a problem.

However, what happens when one of the publications starts to press against the confines of the uniform brand? You, ultimately, have three options.

First, you can accept that it’s not going to grow anymore. A very stable publication is not a bad place to be. Growth is coming through new launches, and if your older publications are dependable, you have a solid foundation to build on.

Second, you break that publication into multiple new ones. For example, if you have a publication about energy, you could create one about oil & gas, coal, and renewables. Now you have three publications that can each grow. Industry Dive did this with its education vertical. In late 2020, it announced:

Today, we launch Higher Ed Dive and K-12 Dive — two publications covering these very different education fields and the issues their administrators face. The content of the newsletters will be the same as it always was in Education Dive, just presented in separate publications to serve you better. With this change comes two sites — highereddive.com and k12dive.com — so readers can more easily find the coverage they need.

Why have one site when you can have two? Both sites fit the same structure, so you’re still able to scale with the streamlined approach.

The third option is to declare bankruptcy on the strategy with that site and elevate it. For example, let’s say you have that fantastic energy site. Instead of splitting it into three sites, you can opt to double down on it. This breaks the process but opens you up to many exciting opportunities to serve the respective audience.

But you have to be careful with this third approach. When so much of the business is about uniformity, adding a lot of new processes, designs, and strategies can cause significant disruption. For example, if you are playing with a new front end, your design and development team now needs to support two experiences rather than one. Or, if you change the ad offerings, your sales and ad ops teams suddenly have to know how to support many more products.

This can be seriously impactful, though, if you do it right. It’s not just about slapping a new coat of paint on the experience. It might necessitate a multitude of changes. For example, every site in Morning Brew B2B operates the same business model: advertising. But what if we found that one of these publications would truly dominate as a subscription business? It’d likely make sense to pivot, especially if revenue grew faster or higher. But this might require a different editorial strategy. And that suddenly changes processes.

The way you handle this is, ultimately, with people. You may need to start building dedicated teams for this new publication. In many respects, what you are saying when you declare bankruptcy on the strategy is that you are creating a new brand within your company.

But this is actually what we did at Morning Brew. I started nearly two years ago, and every newsletter was the same as the Daily newsletter, which remains anchored by its unbelievable curation. We decided to split the B2B business with the belief that original reporting was necessary. But that meant that the editorial team putting out the Daily newsletter would have a different process than the B2B editorial team. This necessitated more bodies, but it has also worked out nicely for us.

But how do you know if you should pick this third approach over the other?

Ultimately, this approach makes the most sense when splitting the sites doesn’t let you grow as big as a unique publication. For example, let’s say you have one energy site that does $6m on its own, but it’s hitting its limits. So you take the fragmentation approach and build three sites that generate $4m in revenue each.

But what if the third approach means the site could grow to $15m in revenue? You then have to do a deeper analysis to understand the delta in costs. So long as the expenses don’t exceed the $3m delta in revenue (three sites do $12m, and the big site does $15m), it might make sense to transition because your profit is, ultimately, greater.

This is a very simple way to look at it, and it doesn’t consider the soft costs when you add variety to an otherwise uniform house of brands business. That said, doing it blindly can be disastrous. It requires deep research into how much potential there is. Can you really hit $15m in revenue, or will you only hit $13m in revenue but add a lot more costs? If you aren’t confident about this, option two of splitting one site into multiple makes the most sense.

However, if there are paths to turning that one publication into something much more impactful with more opportunities to scale, I find it hard to ignore this option. It complicates things but can also help develop a leveled-up house of brands. What if another site hits its cap? Maybe it, too, can benefit from what you learned with the first.

No matter what you do, I think the important thing is to be constantly assessing the strategy and understanding whether you are leaving significant money on the table. If you are, act.

Thanks for reading today’s newsletter. If you have thoughts, hit reply or join the AMO Slack. I hope you have a great weekend.