March 15, 2022

BDG Parenting Bet Is the Right Move

As someone who spends most of his time thinking about b2b media, I forget that one of the largest consumer audiences is the “parent” category. According to the U.S. Census Bureau, there are 63.1 million parents with children under 18.

That’s a lot of people. And so, it is not surprising that Bustle Digital Group (BDG) is investing so much into parenting. According to Axios:

The company expects revenue from its parenting content to account for more than one-quarter of its business in 2022.

In the coming months, BDG plans to double down on Scary Mommy, as well as its other parenting brands like Romper, Fatherly, and The Dad, by launching events for parents and possibly acquiring more brands in the space to expand into newsletter and video products.

BDG now has more than 600 employees and brought in $130 million in revenue last year, up 40% from 2020.

When you’re looking at $35-$40m in revenue in 2022, it’s no wonder the company is investing as much in the category as possible. As long as this category continues to pay off for BDG, they’ll continue investing.

But what about other publishers? Should they also be looking at this as a category?

It might be hard for many in media to realize (considering how many avocado toast articles have been written), but the millennial generation is the largest generation and is also starting to get old. According to Pew Research, millennials were born between 1981 to 1996, which means that today, they are anywhere from 25 to 41.

With immigration adding more numbers to this group than any other, the Millennial population is projected to peak in 2033, at 74.9 million. Thereafter, the oldest Millennial will be at least 52 years of age and mortality is projected to outweigh net immigration. By 2050 there will be a projected 72.2 million Millennials.

Saving for retirement, buying a home, and, yes, having a child are all things that millennials are considering. But it is happening later compared to the previous generation. This story in The New York Times shows the difference in ages better than I could ever describe, but it’s evident that people are waiting longer.

Publishers should consider millennials as a prime target for this content. Besides the age and size of the potential audience, there’s the amount of money these people will spend for their children. According to the USDA:

Based on the most recent data from the Consumer Expenditures Survey, in 2015, a family will spend approximately $12,980 annually per child in a middle-income ($59,200-$107,400), two-child, married-couple family. Middle-income, married-couple parents of a child born in 2015 may expect to spend $233,610 ($284,570 if projected inflation costs are factored in*) for food, shelter, and other necessities to raise a child through age 17. This does not include the cost of a college education.

Naturally, a solid chunk of this goes to housing and food, but there are so many necessities that come with raising children. When there is this much money available to spend, advertisers will find a way to get their products in front of them. I will be shocked if brands like Dotdash and other consumer-facing media companies don’t make a big push into the parenting category.

But let’s expand the conversation.

Like I said in the headline, media needs to evolve its thinking about millennials. The word millennial is used to describe young adults, but they’re really not young anymore. Many are starting to hit key inflection points in their lives where they will increasingly have money.

Consider this… In 2019, Cerulli Associates estimated that $68 trillion across 45 million U.S. households will be left to heirs and charity over the next 25 years. 57% of that will go to Gen X (older than millennials), but the bulk of the rest will go to millennials. These are people who will have money.

This audience will need information on how to prepare for this. What are the implications of this inheritance and taxes? How do they handle aging parents? How should they be prepared for our retirements? How do they plan for their kids to have a good life?

For my career, I obviously focus less on the age of people and more on their level in professional organizations. But the informational needs of this unbelievably large generation are evolving. I can only speak for myself, but I can assure you, I care a lot less about avocado toast than I do about what I should do with my money.

BDG is wise to lean so aggressively into parenting. However, if it wants to own this category as people age, it would be smart to offer additional guidance about personal finance, retirement, etc. The money will flow to this generation, and we should all be prepared to catch it.

Substack introduces an app

On Friday, I wrote about news apps for premium members, and some readers thought I was reacting to Substack’s announcement that it had launched an app. But, I’ll be honest, Substack never entered my mind when I was writing.

That said, I do have thoughts about Substack’s app. According to the announcement:

For readers, the app brings all your Substack subscriptions together in one venue, giving you a beautiful, focused place to read your favorite writers. Discovery features make it easier to find and fall in love with new writers, and the app brings text, audio, video, and community seamlessly together for the best reading experience on the internet. 

While I remain convinced apps are a horrible investment, I understand why Substack is doing this. Ben Thompson at Stratechery sums it up nicely:

Substack was never going to grow into its valuation as long as it was allowing individual publishers to capture all of the value they generated; this shift puts the Substack brand front-and-center and sets up the app as a means of driving user growth and, potentially, a new business model.

I think that one of the strategic mistakes that Substack made early on was in being too publisher friendly, in two regards. The first one is that every individual publisher on Substack adds subscribers to their own Stripe account, instead of a centralized Substack account, and the second one is that Substack failed to gain permission in their publisher terms of service to create a Substack bundle.

He’s right. By chasing a VC scale game, it has to figure out how to start generating a more significant cut of revenue and make its platform far stickier. The app is meant to do that. But this reiterates thinking I’ve had for a long time. Substack is looking to be the brand rather than simply a creators’ tool. Therefore, it will continue to push forward with these sorts of developments.

I have two very conflicting thoughts here.

First, this is the first step for creators to become dependent on Substack for their audience. It’s one thing to use it as a publishing tool. On the other hand, it’s something entirely different to depend on a tool for your audience. When the Substack app initially launched, it defaulted app users not to receive email. It has since changed that, but will users want to receive an email if there’s an app? My guess is no, which means creators will lose direct ownership of their audience and relying on a platform for your audience is dangerous.

Second, who cares? Noah Chestnut at Buzzer had what is likely the correct answer:

We’re making a lot out of nothing. Totally agree with [what] the platform strategy could (or wants to) execute, but they won’t.

Tbh the app will struggle to grow and Substack will continue to focus on email + web. It will be a blip.

And now I return to what I said in my piece on Friday. Apps are dumb.

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