September 27, 2022

A Creator/Operator Deal That Fits the Right Strategy

Although the creator economy continues to have the air sucked out of it with a contraction in ad spending, legitimate brands have still been created over the past few years. And those brands are going to be looking for ways to grow. But there’s a right way and a wrong way to do it.

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Now let’s jump in…


For reasons I cannot explain, I am incredibly interested in the financial advisor/RIA world. And so, I was paying attention to how last week’s Future Proof—the self-attributed “world’s largest wealth festival”—performed. Based on what I’ve seen, it was a significant success.

But I was particularly interested in the relationship between the two teams that put this on. On one side, you have Matt Middleton, John Swolfs, and Matt Hougan, former members of the Informa team. On the other, you have Josh Brown, Barry Ritholtz, and the entire Ritholtz Wealth Management team.

Or, said another way… On one side, you have the operators; on the other, you have the creators.

And so, when I say there is a wrong and right way to bring the two sides together, this is an example of the right way. But let me dig in and explain. In August 2021, I wrote:

That’s why I think many of the ways people are trying to support the creator economy is all wrong. Trying to be the be-all-end-all partner for a creator is trying to convince them that they should give up the responsibility for their business. And that’s the wrong way to tackle it.

Instead, good partners will fit one of two buckets, and creators need both. Niche operators that can help with the various aspects of running a business or separate partners to help me augment my business through expansion.

Back in 2021, there were a lot of companies launching to be the back office for creators. “You create; we’ll do your audience development, ad sales, invoicing, tech management, etc.” Essentially, the creators were encouraged to do what they were best at and leave the “business” to the professionals.

I hated this advice then and continue to hate it today. Maybe it’s because I am a business-side media operator, so my natural inclination is to understand the goings-on of a media company. But I believe creators are the CEOs of their businesses and must understand what’s happening.

But the bolded part is worth digging into. “Separate partners to help me augment my business through expansion.” Let me use AMO as an example, but then come back to Future Proof.

Right now, I do a newsletter and an occasional podcast. I sell subscriptions and advertising. That’s all I can handle on my own—especially with a day job. And so, if I wanted to grow AMO, I’d need to partner with someone. Let’s say I wanted to do an event. I’d likely need to bring in outside help.

And that’s, in many respects, what Future Proof is. Matt Middleton, CEO of Advisor Circle, had the idea for this massive festival. And so he partnered with the Ritholtz team to make it a success. And both sides bring to the table what they’re best at.

I spoke with Middleton, and he described the relationship as a collaboration. Advisor Circle is a full-service company that handles event logistics, sponsorships, content programming, and marketing. On the inverse, the Ritholtz team has the deepest Rolodex in the business, and because they have so many media assets to work with, they can drive the attention the event needs.

In this case, all parties involved are equity holders of Advisor Circle. And that’s the right way to do it for both participants.

Last year, I spoke with someone who was thinking about offering event services to creators, and he was only interested in taking a profit share. The mistake is that the creator builds the event to a particular scale with their partner and then opts to do the event independently. In this sort of augmented expansion, both sides need to own equity, so they’ve got a long-term stake in the growth of the product. Otherwise, somebody will cut corners.

The right way to work with creators is to augment what they bring to the table and help them expand into new businesses. Don’t try and take them out of their CEO seat; it’s not the right attitude. Instead, help them unlock new revenue that they could never get on their own. Future Proof is an example of that. I’ll be interested to see how other operators partner with creators for their unique examples.

When the going gets tough, go direct

There’s no denying that ad markets are starting to experience some shakes. And, according to a story by Digiday, publishers are pushing advertisers to go direct with more of their spending.

That seems especially true in programmatic, where publishers appear to be having success pulling more dollars into the deals they have direct control over. In the first half of the year, private marketplaces and programmatic guaranteed accounted for 35% of the total money spent globally on programmatic (including in the open exchange, according to Ebiquity. The year before that percentage was 31%. As ever, demand drives prices. The cost per thousand impressions in these curated deals was up 240% in the first half of the year compared to those prices in the open exchange. The year before that increase was 188%.

This makes a lot of sense for all parties involved but is something publishers should continue pushing on. 2020 and 2021 were unbelievable years in the ad market. Money was flowing so much, advertisers were getting very creative with their ad spending. But, candidly, there were a lot of dumb things.

But as budgets start to constrict, brands must spend much more intelligently. Even during the financial crisis, ad spending didn’t drop altogether. According to eMarketer, in 2008, total ad spending in the United States was $176.46 billion. It fell 17.5% in 2009.

Yes, 17.5% is a lot, but the budget wasn’t taken from every source equally. Instead, marketers identify which channels are not performing as well. Programmatic is excellent, but a certain level of guarantee is necessary for marketers to gauge investment return. Therefore, working with publishers more directly helps these marketers make the case to their finance teams that the spending is worth it.

As we continue to move into rougher times from an ad perspective, publishers need to know which of their ad products perform the best. Lean into those. Try and optimize your lesser-performing units. If ad spending drops by 5 or 10% in a recession—and who knows what the number will be—you want to be known as a partner that works. And ultimately, there are two levers for performance: cost and ad interaction. The more people you can get interacting with the ads, the less you need to play with the price.

There’s no denying that the ad markets will be a bit rocky for some time. But it’s what we do during these times to be good partners to our brands that will ensure our businesses get through on the other side. It’s that simple.

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