April 23, 2024

Be Cautious Taking Over Legacy Brands

I’ve brought on a few freelancers to help with coverage on AMO, but I’m looking for another one or two who are interested in writing at least one piece per month—but ideally a couple. If you’ve got experience covering the media industry at all, please reach out and let me know.

A few pieces in today’s AMO:

  • The latest episode of the AMO Podcast dropped yesterday morning. I interviewed Andrew Perlman, co-founder and CEO of Recurrent. Listen here.
  • On Friday, for AMO Pro members, we discussed whether diversification can actually hurt one’s M&A potential. Read here.
  • Last week, Esther Kezia Thorpe published a piece for AMO Pro members about the Baltimore Banner and its use of a mobile app for retention. Read it here.

Never miss a future AMO piece by becoming an AMO Pro member.

Time is running out to get your ticket to the Omeda Idea Exchange, which will be held on May 15-17 in Chicago. Registration closes next Friday (May 3), so you won’t want to miss this.

Some of the speakers include Adam Ryan, CEO and co-founder of Workweek, Nikki Smith, Chief Operations Officer at BNP Media, Craig Fuller, Founder and CEO of Firecrown Media and Freightwaves Media, and many others. 

I will also be there, recording interviews at the AMO/Omeda video area + meeting so many smart and exciting operators. 

If you want to attend, get your ticket now. I’ll see you in Chicago!

Not all legacy brands have value

Is it better to launch something from scratch or buy something that is already established? On one hand, starting from scratch carries no baggage. It’s a clean start. On the other hand, it takes time to build momentum. And so, one way to fast-track things is to buy a brand that is already operating and, ideally, generating revenue.

But I would argue that not all legacy brands are worth buying and that in some cases, it might make sense to ignore them. Axios has a good piece about numerous legacy brands that are being acquired.

Media companies once left for dead are getting a second chance at life with new strategic owners and management determined to revive them.

Why it matters: While the business fundamentals behind many media companies have collapsed, for many, their brand equity has remained intact.

As the piece concludes:

The more a company relies on its brand to juice profits without investing in its core products, the faster its brand equity craters.

If what you’re buying is the brand, and the previous owner has destroyed it, are you really buying anything valuable at all? A name only carries weight up until a certain point.

But how do you know if the brand has been destroyed? In other words, how do you know if what you’re buying is a property that has been preserved or one that has been stripped and is now being sold off for “brand value” even though no one really cares about the brand anymore?

There are a few things that I would pay attention to that would help inform this.

First, what is the overall site experience? If you visit the site and it is polluted with crappy ads, there’s a good chance that the team responsible for yield has been using more ads to increase total revenue per page. There’s a reason that Dotdash Meredith’s sites limit the number of ads you see per scroll. If we look at this random Food & Wine page, it’s a lot of ads on the right rail, but in any one scroll, I only saw two. And let’s marvel at the fact that there is no chum box at the end.

This is an indication that user experience matters a lot to Dotdash Meredith. It obviously needs to make money on ads, but it’s not treating a single interaction as the only chance to monetize the user. Compare that to a Forbes page, which jumps around like an overcaffeinated toddler. The user experience is less relevant to these publications, and it matters.

Second, judge the quality of the content. Publishers are starting to experiment with AI-generated content. It’s allowing them to show success in the short term, but readers won’t be interested in it over the long term. This is why Sports Illustrated was using a third-party tool to create content; it was inexpensive. A core thesis of AMO is that the future of content published on the web will need to level up and become even higher quality.

To that end, it helps to understand what kind of stories are being written. Is there anything original about them, or is everything derivative? Many strong brands have pivoted away from high-quality, original content and, instead, chase organic keywords in search. While there is nothing inherently wrong with getting traffic from search, when the game has become serving that algorithm, you start to question whether brand matters at all.

Third, judge the various sources of traffic. This builds on number two, but if the brand is, in fact, strong, a decent percentage of users should likely be coming to the site directly or via the newsletter. This is an indication that the audience has a connection to the brand. If, however, all of the traffic is coming from search or social, do people care about this brand or is it just any site that can answer their question?

This matters because if we believe that generative AI will obviate search, more people will get their answers directly on their devices. That means the only reason people will visit sites is because they either click one of the annotations in an AI response or because they explicitly seek out the site or newsletter. Not all traffic is created equal in an era when you might not get as much traffic as you once did.

Fourth, what is the quality of the newsletter subscribers? In e-commerce, many companies use a tactic to automatically sign people up for their newsletters if they visit their site. So, you land on their site, maybe explore it for a minute, and then leave. Ten minutes later, you get an email telling you about an offer for that site. You explicitly did not sign up for it.

I’ve heard of media companies doing this as well. You visit their site, don’t sign up for their newsletter, and still start receiving it. And so, while these media companies might have a lot of newsletter subscribers, are they actually valuable?

The same can be said for co-registration or what we now call the recommendation engine. If a disproportionate number of subscribers are coming from these tools, it is important to dig deeper and ensure that there is clear engagement. Not every subscriber is created equal, and the source really matters.

Brand matters, and I believe it will matter even more as time goes on. However, the brand alone is irrelevant if everything else looks horrible for the business. It is very easy to destroy a media brand, so before blindly trusting that it still holds weight, judge the things around it. Content and audience quality are both very important. Strategies may change, but when it comes to M&A, don’t buy someone’s failed strategy thinking everything is good.

Speaking of M&A… Does Diversification Hurt?

A core strategy for succeeding in media is to diversify both your revenue and audience sources. It’s imperative because you never know when either a big partner will walk away, or a platform will decide to change its algorithm and cut back on traffic.

But introducing new revenue streams, while good for the business, might actually hurt your M&A chances because it introduces operational uncertainty. If you’re an events-only business and know how to sell booths and event sponsorships, what are you going to do with an own-the-topic-powered lead generation campaign?

And we can see this thinking playing out with the recent TechTarget/Informa deal. Both parties walk away more focused on their strengths rather than trying to be great at two things.

Read the full story here, exclusively for AMO Pro members.

Why the Baltimore Banner Relies on Its App for Retention

People love to advocate for launching apps for media companies. And when they do, the outcome is that no one uses them. And so, I’ve long been opposed to creating them. There’s simply no utility for it.

Yet, according to an AMO story by Esther Kezis Thorpe, the Baltimore Banner has seen major success from its app, especially as a retention tool. She spoke with Eric Ulken, the brand’s VP of Product Management.

Of the Banner’s 44,000 paying subscribers, Ulken said that around half have downloaded the app. Although that’s an impressive figure, it’s a number they are actively trying to grow. “There is a distinct correlation between app usage and retention,” he noted. “The app users retain at a significantly higher rate than people and subscribers who have not signed into the app.”

The brand’s focus is getting more subscribers to download it because, as Ulken said, “If we can get a subscriber to download and use the app, we feel like we can serve them much more effectively there than we can on the web.”

Read the full story here, exclusively for AMO Pro members.

This week’s AMO Podcast

My guest this week is Andrew Perlman, co-founder and CEO of Recurrent. The portfolio’s brands include Bob Vila, Business of Home, Donut, Domino, and Futurism. Over the last six years, they’ve made numerous transactions to build out the portfolio.

But what comes next? And how is the team preparing for the big changes to how readers get to their site and consume their content? This, plus so much more, was discussed on this week’s episode.

Give it a listen here or wherever you get your podcasts.

Thanks so much for reading today. If you have thoughts, hit reply or become an AMO Pro member for an invitation to the members-only Slack. I hope you have a wonderful rest of your week.