August 28, 2019

Why Don’t B2C Media Companies Do B2B?

It’s not news anymore, but the Financial Times reported on August 15th that it had taken a stake in the Business of Fashion, a true to form B2B publication focused on the fashion and luxury sector.

This isn’t new for the Financial Times. Nikkei, which owns FT, has been acquiring other B2B brands for quite some time now. Back in April, it picked up DealStreetAsia, which is a true B2B publication focused on Asian deal-making.

Digiday recently did an interview with Financial Times CEO John Ridding and Business of Fashion CEO Imran Amed to talk about the deal. It’s worth reading, but one part really jumped out to me.

We have a strong presence in luxury and fashion through “How to Spend it,” but that’s more business-to-consumer facing. The business-to-business dimension of BoF is attractive as it has strong business potential.

Unlike many media brands, Financial Times fully recognizes that the B2B aspect of BoF is what makes it so strong. And yet, so few media companies are looking at investing in B2B. When the news was announced, I happened upon a couple tweets that talked about this.

Much focus in the press has been on B2C brands—especially those big brands that have raised hundreds of millions of dollars and believe that they should command a valuation greater The New York Times.

So, why don’t more US media brands do B2B? The tweet I didn’t share in that thread that I believe answers that question was mine.

Consider B2C brands, such as Vice and Buzzfeed. Their model is chasing as many pageviews as humanly possible. It’s true that both have investigative reporters who are digging into a particular issue. But when that issue is over, they move on. It’s about scale.

If you go to their sites, the monetization clearly shows that scale is the name of the game. They needs tens of millions of people to consume their content to generate sufficient revenue. It’s not bad because they’re chasing scale, but it’s dangerous because you get addicted to it.

Scale is a drug. And when you’ve got investors plowing tens of millions into your business, scale gets even more addictive.

Now let’s look at a B2B media company. Before I give the name, here are the five brands they operate:

  • Senior Housing News
  • Skilled Nursing News
  • Home Health Care News
  • Reverse Mortgage Daily
  • Hospice News

Their target audience (stolen right from their website) is “industry professionals and decision-makers in each senior care setting, from housing to home health and more.”

The company’s name is Aging Media. I love what they’re doing. They recognize that their business is not in scale. It’s a depth business. Instead of covering everything, they cover one thing. And they do it really well.

Naturally, you can imagine the readers are the people who are working in senior housing. And the advertisers are the businesses trying to serve people who work in senior housing.

If you go to Senior Housing News, there are four ads that are all targeting financing or real estate in the senior housing market. That makes sense considering an executive at a senior housing company might be looking to expand and would likely want to work with one of these financing companies.

This is entirely a context game rather than a programmatic play. The advertisers give Aging Media their money because Aging Media invests heavily in business journalists who cover the industry for people who the advertisers want to do business with. It’s a perfect circle.

But the business is not just an advertising play because clearly Aging Media read my column on diversification (sarcasm over). While I would wager that advertising makes up at least 50% of their revenue, they still have other streams.

They have a research and event component to the business. On the research front, they are selling bespoke reports with titles like “The Primary Care Opportunity In Senior Living” and “The New Active Adult Housing.” And then they host a yearly event called the SHN Summit, which is a one-day event. They charge $300 for an operator, $400 for a non-operator, and then $2,500 for a 3-ticket sponsorship.

While I’ll never buy one of those reports or attend one of their events (I work for crypto media after all), operators at senior living facilities will. By focusing their efforts and going deep on a specific niche, they’re able to bring in the target audience for their various streams of revenue. Again, it’s the perfect circle.

There is one thing I would change with their model. Selling one-off reports and convincing attendees to come back year-after-year requires getting yes over and over again. If they could create a membership product that comes with all the research and a ticket to the event for one flat price, it might provide more predictable revenue.

Coming up with the price for said membership is harder. An easy option would be to determine the average revenue per user from an events and research perspective and then add a premium to it. So, if your average operator comes to one event a year and buys two reports, that means they’re spending $700 (reports are $199 each) in total. At $1,000 a year, with the option of a ticket to the event and unlimited reports, would that be enough to get them to convert?

It’s very easy for me to suggest this on the sidelines and the numbers are purely hypothetical, but the model makes sense. I do think a membership makes sense for every B2B media companies out there. And it’ll be far stickier than B2C media companies.

At what point is Vice going to try and roll out a paywall? In their struggles to make money, they’re going to grasp. The question is whether what they’re doing is unique enough to warrant a subscription versus having one for the Washington Post and The New York Times. At some point, consumer focused companies are going to become overly saturated with paywalls.

I don’t think B2B media companies are going to have the same problem. The key reasons? Corporate cards and niches. I have a subscription to Digiday. It auto-renews and I don’t hesitate to expense it. It helps me stay informed and do better at my job. So, my corporate card gets charged yearly and Digiday will likely keep me as a subscriber for as long as I work in media.

That’s sticky. They have that stickiness because the audience is targeted. Digiday is media and advertising professionals. Aging Media, in my opinion, could probably create a sticky product too that just gets renewed every single year. It’s much easier to predict budgets for the upcoming year when you know how much revenue is guaranteed to come in.

All of this is possible because B2B media companies sacrifice scale for depth. They would rather have 100,000 incredibly well served readers in a specific niche than a million random readers in random topics.

And yet, B2B media is often an afterthought to so many media people. There are a few reasons for that:

  1. Scale. People like the idea of scale. People feel uncomfortable with the idea that they might only have a few hundred thousand people in their total addressable market
  2. Journalists. Many journalists that graduate from college dream about being Bernstein and Woodward. And don’t get me wrong, that’s great. But journalism schools don’t educate their students on the opportunities in B2B media nor provide the tools to report on it correctly.
  3. The topics tend to be rather dry. The team over at Industry Dive covers industries like construction and waste. I assure you that I’ll never read those. Yet, there are people who work in those industries that need the information Industry Dive provides.

If people can get over these problems, there really are tremendous opportunities in the B2B media space. There are legacy brands that could be acquired and revitalized. Or, there are entirely new brands—like Aging Media and Industry Dive—that are building some fresh and exciting.

B2B can be exciting. And because you’re not addicted to the scale drug, you’re able to build a responsible business that takes profits and reinvests them intelligently. As operators, that’s all we want.

Thanks for reading this issue. I am traveling to China and Japan for the next week and a half, so that’s part of why this issue a few hours late. I’ll still send out issues while traveling, so stay tuned! If you have any thoughts or questions on this issue, hit reply. All responses go right to my inbox. Please share with your colleagues, tweet it out, and hit that little heart. Thanks and see you on Friday!