July 13, 2021

Most B2C Media Companies Will Never Tackle B2B

As B2B media companies gain more awareness in the market, there might be a natural desire by some larger consumer media companies to take a step into that arena. For a multitude of reasons, I don’t see that ever being a reality.

Sam Baker over at Flashes & Flames wrote a piece discussing how B2C brands could lean into the B2B side of their industry to try and grow new lines of business. In it, he argued:

Does it mean, though, there’s a B2B opportunity for yet more general B2C brands to pivot into recruitment, conferences, trend forecasting, consulting and more?

Might Hearst’s Elle Decoration have a trend forecasting arm in its future? Looking at the careers of past editors and now tastemakers and trendsetters Ilse Crawford and Michele Ogundehin, you would certainly think so. Or is this a logical extension for the venerable Good Housekeeping Institute (Hearst too) – already a well respected resource for consumers and marketers? Yes and yes again. The same goes for Allure – well-respected in the beauty world, although perhaps without the necessary global reach – and Wired (Condé Nast again) which has long had a consultancy business and might seem like the natural home for a competitor to Jessica Lessin’s tech industry newsletter upstart, The Information (that the Financial Times has tried to acquire).

His general thesis is that Vogue, a consumer product, decided to expand with its business product, Vogue Business, after seeing the Business of Fashion take off and do so well. The thesis is right that Vogue Business is a response to BoF, but his argument that there is an extension opportunity for more B2C brands to pivot is wrong.

Ultimately, it boils down to a couple of critical issues.

It is not complicated to write about a topic. Much of my early career as a freelance writer was spent writing about a variety of topics, many entirely unrelated to the other. However, to cover a topic well—and to cover it for people that work in that industry—is very different.

I think about my time at CoinDesk. There are millions of people that might own crypto and the CNBCs of the world write stories for them. But there are so many examples of mainstream (consumer) media brands trying to cover the intricacies of the topic and failing miserably.

B2B publishers are expected to be able to delve deeper into a topic than consumer publications can. It also has to do with the type of reporting. Business journalists cover stories differently than consumer journalists, even if they are both covering the same topic. I’ve, unfortunately, met journalists who cannot tell you the difference between revenue and profit.

I don’t really blame them, though. Journalism schools don’t do a good enough job teaching about the opportunity in business reporting. For some reason, it’s looked down upon by many reporters. This need for specialty will make it more difficult to really build a sufficient B2B media operation.

The other issue is that the businesses are fundamentally different from the types of ads that are run to the subscription business. For B2B brands, you’re typically talking about high priced subscriptions with low volume and down funnel advertising for leads. For B2C brands, it’s high volume, low priced subscriptions and top of funnel brand advertising.

Consider this… Vogue Business costs $220 per year or $63 per quarter without taking into consideration its advanced membership, which is $1,575. A subscription to the traditional Vogue is $12 for the first year and then $24.99 every year after. It’s nearly 10 times cheaper to get a print subscription to Vogue than get access to Vogue Business.

And that makes sense. The products are fundamentally different. The type of reporting is different. This goes back to expertise, but you can only charge $200+ per year if you’re delivering a certain level of value.

When you’re chasing high volume subscribers, the types of offers you make are different than when you’re chasing high quality, expensive subscribers. I would be surprised if Vogue Business ever discounts whereas Vogue is in perpetual discount.

This boils down to DNA. Most consumer media brands chase scale. If they have hundreds of thousands of visits, they want millions. If they have millions, they want tens of millions. B2B brands, on the other hand, don’t think about scale through the lens of total number of visits, but rather, who those visits are. It’s not that one is better than the other; it’s simply a different way of running the business.

B2B media scales by going deeper; consumer media scales by going larger.

The only way to make this work is to treat it like an entirely separate business. It needs a separate management team and independent journalists that are not trying to split their time between the consumer and business sides. You may find that the sales, marketing, and design teams are also different.

Can you take the strong name of a consumer brand and plop it onto a B2B business? More often than not, the answer will be no.

MEL brought back to life

According to Axios, Recurrent Ventures is acquiring MEL Magazine from Dollar Shave Club.

The acquisition will bring MEL Magazine back to life. The outlet had been backed by Dollar Shave Club since it was started six years ago, but the financial relationship ended in March, leaving MEL’s staffers without jobs and forcing the publication to go dormant for a few months.

MEL plans to explore a new business model now that it will be owned by a private equity firm that specializes in helping brands monetize. The publication has already received interest from big brand advertisers.

The company will look “virtually the same,” Schollmeyer said. The key difference is that it will now be monetized.

That last sentence is really important. For six years, MEL Magazine operated as a monetization-free publication because Dollar Shave Club, for some reason, thought there could be a link. But with a staff of nearly two dozen, it’s likely that this was costing the e-commerce brand seven figures a year in costs.

Now it has the chance to tell the same stories it has always done, but this time, generate its own profits so that it can be self sufficient. There are two interesting stories here.

First, Recurrent has built a nice portfolio of properties. With brands like Popular Science, domino (brand is lowercased), Outdoor Life, Popular Photography, and now MEL, it’s clear that they operate in very niche areas of focus. These communities, although smaller than general mass scale publications, can give advertisers more focused targeting.

On the surface, these don’t look related and to some, it might be confusing. But it’s a classic example of a house of brands. Recurrent can power everything behind the scenes and then have independent editorial teams to run across each property.

Second, there’s the story about product companies shutting down media companies. There’s been a lot of ink spilled about how product companies should acquire, build, and operate media companies. But what happens when that doesn’t work like the above scenario?

The right way to do these sorts of deals is to treat the media company independently. Allow it to generate revenue—create a list of barred advertisers so no competitors are promoted—and get it to sustainability. The benefit of this is that you’ll have an entire marketing arm that pays for itself.

The secret of negative CACs is that you actually earn money while promoting your product rather than paying to promote said product. Therefore, it’s a fine balance between wanting to push your product front and center and also trying to generate revenue from the media product.

It’s too easy to overrun the media property with house ads. At some point, the house ads promoting your own product stop working. And then you’re stuck owning an expensive media property.

I believe product companies should acquire media assets. It’s a great way to have a direct line of communication with your target audience. But the secret sauce is when those sites can pay for themselves while also promoting your products. That’s the best of both worlds.