Confidence in Media Business Is Rising for Good Reasons
If you spent time in the media business over the past 10 years, optimism and confidence are not words that you'd hear. More often than not, it was despair. Media companies were struggling, the platforms had dominated the ad markets, and reporters and content creators were losing their jobs left and right.
It seems, though, that things are starting to change. The sentiment is beginning to swing in the other direction.
But before we dig into that, a message from our sponsor, Omeda.
Publishers send a lot of emails. For some, we’re talking tens or hundreds of millions of emails every year.
In the case of Omeda, its clients sent over 6 billion emails in 2021. But how did they perform and, more importantly, how did different types of emails perform? For example, an editorial email might perform much differently than a dedicated advertising campaign.
Omeda has released its latest email engagement report, which breaks down opens, clicks, complaints, and unsubscribes by different email campaigns. By comparing your own statistics to this, you can better understand how you stack up and see where you might need to make improvements.
To learn more, download the report here.
The Reuters Institute for the Study of Journalism released its trends and predictions report for 2022. I enjoy giving this a read every year because, while heavy on the European markets, it gives interesting insights into what media professionals are thinking around the world.
And this year is no different. According to the report, 75% of respondents are confident in their company in 2022. Only 5% are not confident, which is really quite remarkable if you think about it because there has been so much public pessimism in media. The remaining 20% are neutral.
I think this year's data stands out because we are coming off a pretty monumental year for media companies. Due to the strength of the economy in 2021, media companies had significant tailwinds vis-a-vis advertising and this likely impacted their feelings.
It should come as no surprise that there's optimism. Revenue is up. 59% of publishers said that revenue was up compared to a year ago with an additional 20% saying it was about flat. And this is despite the fact traffic to many news organizations has dropped considerably since Trump left the White House.
There are two things happening here at the same time.
First, the pivot to diversified revenue streams—ads, subs, AND other tactics—is actually paying off for publishers. We're finding that it helps to monetize different users in different ways. It's almost as if being dogmatic with business models is not exactly the right strategy. According to the report, many are expecting to support 3-4 monetization strategies.
Second, maybe we're learning how to better monetize users. Despite seeing very little mention of cookies in the report, many publishers made moves to acquire more 1st-party data. Even if Google extended the deadline to get rid of 3rd-party cookies, having that owned data means publishers can sell against it. Perhaps it's having an impact on advertising rates.
The truth is, we should be more optimistic compared to a decade ago. In 2012, advertising was basically the only game in town. Remember, The New York Times' big Innovation Report that changed the trajectory of that business didn't come out until 2014. In 2012, it was still struggling to figure out digital and had sold About.com to IAC.
Fast forward to 2022 and media companies have a plethora of monetization tactics. There's obviously advertising, but this time, with better data. There's commerce like what Food52 has done beautifully. There are subscriptions, which everyone loves. We've figured out how to host somewhat enjoyable virtual events (okay, that might be subjective). We're seeing a rise in communities (even if most things that say they are communities aren't actually communities).
The reality is, things are just better than they were a decade ago. Enough media companies finally figured out how to operate in a digital world. Frankly, it took them long enough.
Does this mean that everything is wonderful? Of course not. Investor perception of media is in the gutter. Just look at BuzzFeed. Its shares closed at $4.39 on Monday. That would represent a market cap of $584.5 million. What's insane is that it is projecting $654 million in 2022 revenue (though we'll see what its updated guidance is when it reports its Q4 earnings). And then there's local news, which continues to struggle and have little to feel confident about.
But we're making better decisions. Here's a good example. Last week, The Washington Post announced that it was promoting Chief Revenue Officer Joy Robins, "expanding her role to oversee both advertising and subscription revenue."
Under the new structure, both the subscription and advertising teams will report to Robins. In addition, the subscription team will be significantly expanded.
“There is tremendous opportunity in coordinating our revenue strategy to focus on our audience and the experience of being a Washington Post subscriber,” said Robins. “When we align our business approach with the reader, we build a stronger offering that will positively impact both our subscription and advertising businesses.”
It's about time. Operating advertising and subscriptions in siloes means that both parts of the business are effectively competing with each other. The advertising team wants as many pageviews as possible to maximize ad revenue and the subscriptions team wants as few pageviews as possible to try and get the paywall to show more often.
By combining advertising and subscriptions under a single person, we can push revenue growth at the organizational level rather than maximizing any single stream.
The reality is, there is much to be optimistic and confident about. It's not perfect, obviously, but it's certainly better than it was. At some point, markets bottom. I wouldn't call today a bottom (I'd say that was a year or two ago), but perceptions take time to change.
According to Bloomberg, Emerald Holdings is buying MJBiz for $120 million + $30-50 million in earnouts.
Trade show operator Emerald Holding Inc. has acquired closely held media and events company MJBiz for $120 million in cash, according to a statement provided to Bloomberg News.
The acquisition includes MJBiz’s media publications, which the Emerald executives called the core of the deal.
“Tying in that content and insight to the event furthers the must-attend nature of the annual trade show,” Doft said.
This is the kind of deal I can get behind. In 2021, it generated $27 million in revenue, so it was a 4.4x revenue, but that obviously grows if the earnouts are achieved. Even at the max, it's a little over 6x 2021 revenue. The reality is, this is a smart move because the industry is growing so quickly and coming out of a pandemic. In last week's piece, I wrote:
Will we see dying events brands—especially those that get hit by Omicron—get acquired? Or, if they are diversified, will they look to sell their subscription products like Informa is doing with its pharmaceuticals, finance, and maritime products?
None of this is to say that MJBiz was dying, but it was certainly coming through a pandemic. According to Forbes:
The redemption song of MJBiz’s flagship event expects somewhere in between 20,000 and 30,000 attendees, with masks and social distancing in place. Before the pandemic in 2019, it reached nearly 35,000 attendees. Its CEO Chris Walsh sees a similar pace this year. “It really legitimizes the industry for people,” says Walsh. “A couple years ago, founders who came as attendees are now running bigger, more established companies.”
I don't know what the final attendee numbers were, but it's obvious that MJBiz has pulled itself out of the pandemic slump, which is the perfect time for Emerald Holding to come in and acquire it. In the next few years, with more states legalizing marijuana, this business could be doing significantly more revenue.
The last sentence in the Bloomberg quote is important. "Tying in that content and insight to the event" is exactly how more events brands should be thinking about digital. In March, I wrote:
To do this right, we can’t think of the businesses as separate. It’s not a media business and an events business. It’s one business that monetizes its users across multiple levels. Yes, the event component might generate a higher margin, but the media side gives you the ability to have negative CACs for the event.
I remain convinced this is the right way to think about it. By having a digital presence, you have an audience that is continuously reading you and you're building reader trust. When it comes time for ticket sales, it's much easier to get them to pull the trigger because you're a known entity.
I hope more events brands see the value of media assets. If they don't, I can assure you that those of us running digital-first media assets will begin moving more aggressively into events. We believe in the power of diversified revenue streams.
Thanks for reading today's newsletter. If you have thoughts, please hit reply and let me know. Or become a premium member so you can join the AMO Slack channel. Thanks for reading and have a great week!