By Joe Pulizzi published December 2, 2015

Why Brands Need to Acquire a Media Company [Here’s How]

acquire-media-company-cover

Last month, ESPN announced that it was closing the sports-journalism destination Grantland. Upon hearing the news, I immediately thought of the opportunity missed by brands such as Nike, Under Armour, and Puma to acquire the site.

Grantland is a well-known brand with significant traffic and loyal subscribers, and considering Nike spends upwards of $3 billion a year on advertising and demand creation (according to Nike reports), the company could purchase the asset for a song (comparably speaking).

But alas, Grantland is dead. In the world of ESPN, Grantland was a tiny property, and after a rift with founder Bill Simmons who left for HBO, ESPN decided to cut its losses.

Grantland aside, a key question remains: Why don’t more enterprises consider purchasing media brands and blogger sites as a shortcut to building a content brand with some teeth? As we’ve discussed aplenty at Content Marketing Institute, building a content platform takes time, patience, and focus … all three of which aren’t in the DNA of most brands.

With large enterprises flush with cash today (Apple has over $200 billion in cash reserves and could buy The New York Times 100 times over), it seems only prudent to consider “buying versus building” as a viable option during this gold rush of content marketing.

Natural in the media world

I’ve had the opportunity to be involved in a number of mergers and acquisitions over my 16 years in publishing. When a media company targets an audience and sees a growth opportunity, the buy-versus-build scenario is ALWAYS considered.

Does it make more sense to launch a start-up media brand or are there opportunities to purchase an existing media brand and/or platform?

This evaluation comes natural to publishers, and is VERY unnatural for marketers to consider. In 99% of the occasions when we bring up this idea to marketers in larger enterprises, the marketing team’s general reaction is one of utter bewilderment. They’ve never even thought of this.

Like it or not, we are all in the media business today and we need to start acting like it.

Significant barriers

Jay Acunzo published a thoughtful reaction to my original article on Grantland. While Jay believes in the idea of brands buying media companies or blogger sites, he feels that journalists, upon hearing the news of being purchased by a non-media company, would flee for greener pastures:

“Any truly great media property with known, reputable writers would instantly lose that staff as soon as news broke that they’d been acquired by a brand. Even if that brand was as great as Nike.

“Brands lack the historical track record of upholding and protecting editorial excellence, as well as the muscle memory of thinking about the audience first. Those things create the kind of prestige necessary to attract topflight creative talent.

“And while exceptions exist (Starbucks, Red Bull, AmEx, Marriott), it’s still far from the rule that a brand creates standalone media properties where journalists can thrive. Show me one brand who thinks audience-first, and I’ll show you a thousand writers who still won’t work there. There’s a huge stigma that needs to be removed.”

In theory, Jay is right. The majority of journalists still believe that telling stories for brands is like going to the dark side. In addition, most brands do not think audience first … the brand or product generally is the hero of the story.

Regardless, we are starting to see more brands consider buying instead of building. SurfStitch, the fast-growing, surfing web-based retailer, recently purchased two media brands, Magicseaweed and Stab magazine.

Marketing automation company HubSpot had a sales blog and a marketing blog. It believed it needed an online destination just for agencies. Instead of building one from scratch, HubSpot purchased the Agency Post blog … and … presto, now HubSpot has an agency blog.

What brands need to do

Even with some of these smaller M&A examples, Jay believes that a significant “first mover” is needed to get marketers thinking that media acquisition is a viable option. When this “first mover” (let’s say this could be you) makes the decision to purchase a media site or blog, two things need to happen:

1. Create audience-first content and commit to editorial excellence

As soon as the announcement goes out, as Jay explains, the brand “needs to make a big, public stink about its editorial mission and willingness not to meddle in what’s already working.”

Jay says this best: “(The brand) would need to plainly and overtly state that their goals are to ‘maintain and preserve the editorial quality and integrity that the staff has developed.’ They need to acknowledge that it’s a unique move for a brand to acquire such a property – one that, understandably, the staff and/or readers may have mixed feelings about – and they need to let both groups know that nothing is changing when it comes to the reader experience.”

2. Give the content team the space to operate freely

One of the advantages of a brand buying a media company is that the monetization scenario will change. Instead of the need to drive advertising and paid content sales, the acquiring company will look at a variety of other ways to monetize the site (data, customer retention, customer acquisition, etc.).

This “new entity” would have much more flexibility for journalists to be creative, and this needs to be clearly communicated to the content creation team. Jay says that the brand could say something like:

We want to enable even more creative freedom. Publishers often feel friction between editorial quality and page views, in addition to inserting ads into the experience in ways that feel forced. We will face none of those problems, as our model is not to sell ads. It is now paramount that we allow this staff of creatives to do what they do best, without our goals of selling product getting in the way, while providing the resources and independence they need to continue building something the world loves.

Today, the perception of a content brand owned by Dow Jones versus American Express is different. That’s the perception. The reality is this – the models are exactly the same, except for how the money comes in. Dow Jones generates revenue from paid content and sponsorships. American Express generates revenue from selling more products and services. You may believe that the models are significantly different. The writers at those companies certainly do … but if you really look hard at the model, it’s the same except for how revenue is derived.

But we don’t treat brand acquisitions of media this way … at all. We need to have these conversations now so that in 10 years brands can recruit and retain creative talent as effectively or better than media companies can.

What you need to do

I had the privilege of meeting with the CMO for a large consumer-packaged goods company last year while I was overseas. The conversation was around acquiring media sites and blogging platforms. Our exercise was simple. It started by answering these two questions:

  • Who is the specific audience we are targeting?
  • Where does that audience hang out on the web, in print, or in-person? Include media sites, blogging sites, and association and member-driven sites.

It should be pretty simple to find five to 10 significant destinations, including online content brands, in-person conferences and events, and possibly even targeted print magazines.

Then begin the research and ask:

  • What is the quality of the content and the creative team?
  • What types of content assets does the brand have that we would deem valuable?

TIP: Most of this information can be acquired by asking for the site’s media kit.

And then it’s up to you and your brand. You need to make some decisions. As you go down the list, do you want to partner with that company in some way or look toward acquiring it (and how that could integrate into your content marketing approach) or will you decide to do nothing?

Considering the possibilities of acquiring a media site as part of your approach needs to be included in your responsibilities as a content marketing professional. If you haven’t already, begin the journey today.

Want to learn more from Joe’s expert insight? Get a copy of his latest book, Content Inc., which delves into the idea of starting a company with a content-first approach.

Cover image by Joseph Kalinowski/Content Marketing Institute

Author: Joe Pulizzi

Joe Pulizzi considers himself the poster boy for content marketing. Founder of the Content Marketing Institute , Joe evangelizes content marketing around the world through keynotes, articles, tweets and his books, including best-selling Epic Content Marketing (McGraw-Hill) and the new book, Content Inc. Check out Joe's two podcasts. If you want to get on his good side, send him something orange. For more on Joe, check out his personal site or follow him on Twitter @JoePulizzi.

Other posts by Joe Pulizzi

  • http://www.b2bmarketinginsider.com Michael Brenner

    Great article Joe. And as we’ve discussed many times, I couldn’t agree more. You’ve been predicting this first-mover brand was gonna make that move for a few years. Let’s hope 2016 is the year we finally see a big brand buy a media site. Then I agree we will see more.

    • http://contentmarketinginstitute.com/ Joe Pulizzi

      I’ll keep predicting this every year until it happens 😉

      • Gykell

        Joe

        Surely the problem is editorial freedom. A media outlet’s credibility will collapse as soon as the owner-brand (Nike or whoever) tells the journalists they can’t cover a story that is prejudicial to the brand’s interests. It will also totter if the outlet is ordered to write some obviously untrue puff in favour of the owner-brand.

        There is no such thing as a successful media outlet that is in the pocket of a particular brand. Yet you seem to be saying that’s precisely what you want – a media outlet that is effectively the puppet of a corporation. This isn’t fair to readers – and in fact it is something readers figure out pretty quickly. Notice the strongest media companies are still those that guard their independence, such as the BBC. I notice the New York Times was very quick to bite the hand of Amazon to make it clear to readers that their objectivity was intact. The NYT realised this had to happen. I am afraid the “content” industry doesn’t understand how the media works…

        • http://contentmarketinginstitute.com/ Joe Pulizzi

          Hi…thanks for the take. Well, news is challenging, but the examples we are talking about aren’t about news. John Deere’s The Furrow magazine is the largest media property in the ag industry, and it’s not run by a media company. Grantland could have worked because much of what they talk about is NOT news, it’s analysis.

          The majority of “media” out there isn’t being produced by the media, it’s being produced by brands…most people just don’t realize it. Brands just need to be transparent and authentic.

          I’m not saying this is good for media companies, I’m just saying this is what is going to happen.

          Thanks!

  • http://sorryformarketing.com Jay Acunzo

    Joe, thanks for the huge nod here! I love this topic and am all-in on content marketing largely because I see the awfulness of impression-based models and what it does to good journalism (Hi, Grantland — I miss you terribly) and believe other models could foster better environments for quality, longer-term thinking in media, and truly audience-first stuff. Media cos want all that and think that way, but they lack the right models. Brands, on the other hand, have the right models, but lack the desire and mentality in most cases. Ironic, no? Imagine if the two halves merged though! An audience-first mentality and desire to honor and foster great journalism the creative craft coupled with a model that isn’t sputtering? Man, oh man…

    • http://contentmarketinginstitute.com/ Joe Pulizzi

      Maybe 2016 is the year my friend. I feel we are getting closer. Thanks for adding to the conversation.

  • http://contentmarketinginstitute.com/ Joe Pulizzi

    Hi Greg…actually, I’ve seen many deals for small media properties (including events) and blog sites in the low five figures (affordable to pretty much any sized company). We are a very small company and have done three deals ourselves. I think the opportunity is immense but something that most businesses simply don’t think of.

  • Pascale Hayward

    Great idea but a real marketing challenge to find good copywriters, good content and keep your audience focussed and interested. Might be cheaper for Brands to sub-contract this activity.

  • Ben Kirst

    Journalists would run to greener pastures? If there were greener pastures, journalists would’ve ran there already.

    • http://contentmarketinginstitute.com/ Joe Pulizzi

      Hi Ben…not saying it’s good or bad for journalists, only that it’s happening. I don’t see any difference with someone working for Rupert Murdoch or some other brand.

  • http://www.greenandgoldrugby.com/ Matt Rowley

    Hi Joe,

    An interesting thought experiment, but help me out.

    So a brand buys a serious media company. Then what happens?

    Do they get involved with the day-to-day running the media company? Quite famously media companies don’t tend to be the pictures of financial health at the moment – it’s a pretty tough gig (see Grantland). Why can a brand do this better – are publishers idiots?

    As the reason for purchase, I assume the brand starts feeding more of their own content, (or content that leans their way) through the publisher’s channels? If so, what does the audience think about this? Content marketing within a publication needs to be in balance and audiences stay with publishers because of their voices, an important part of which is almost always some form of independence. Issues of independence are famously fraught already within publishers – imagine just one brand owner and their corporate comms and lawyers sat inside the tent. Woah!

    How would all the other brands in the category who have been funding the publisher to date feel about this new arrangement with a competitor? I’d wager they’d find someone else to give their money to pretty quickly. Wouldn’t this increase the hole in the balance sheet?

    It looks like an expensive asset could start depreciating (even more than it already is) very quickly, deleting capital.

    On the other hand if the brand stays hands-off to avoid all of the above then basically they’re just an investor – a different discussion.

    As far as I can see, if it flies, floats or publishes – rent it.
    But maybe I’m missing something?

    • http://contentmarketinginstitute.com/ Joe Pulizzi

      Thanks Matt…all important questions.

      First, there are many goals for why a brand would buy a media company (subscribers, talent, the asset itself, data…maybe all of this), so what they would do could differ.

      But after that, the brand probably wouldn’t want to change the process, or alter the content if it’s working. They would not want to insert their messaging (although they may advertise a bit more). Remember, the asset is not “really” the content…it’s the audience. There is a ton of value in a media company, THE MOST valuable is the audience.

      Let’s say that a media brand was purchased that has 50,000 subscribers. Wow, what an incredible asset? And just think of the collection of contnet assets that built that audience. Realistically, for a brand to do that grass roots, it would cost millions (easily) and take years.

      The best part is that the asset doesn’t “have” to be measured by direct revenue (advertising). We can measure from the first party data (like Kraft does), or behavioral change of subscribers (like TD Ameritrade does) or continuing loyalty (like John Deere does).

      If we believe that creating a content brand, a platform, an audience is important (and I think it’s critical), they can spend millions and wait or they can use the cash they have and just buy it. I believe this is going to happen like crazy in the next five years. Right now it seems weird, but I think it makes too much sense. We are a very small company and have done it three times with amazing success.

      So long story short – the return should be measured completely differently, but the content process should not change. They have an advantage over publishers in that they don’t have to monetize the content directly (it’s a huge advantage actually).

      Does that answer your question?

      • http://www.greenandgoldrugby.com/ Matt Rowley

        Hi Joe – not really

        I 100% agree with you on the effort it takes to build a loyal audience and therefore the value within. As a very high level notion, I see your point.

        But I also know how quickly you can lose an audience. So the detail behind what you then do with your audience – what content, by whom, for what purpose – is critical. As I outlined above there are a lot of reasons why a brand being involved in that would present serious, expensive and in many cases insurmountable problems.

        I don’t see how alternate revenue streams alters that – you still need to keep the audience.

        • http://contentmarketinginstitute.com/ Joe Pulizzi

          Sure Matt…media companies and brands can both create and lose an audience. But as a publisher you know that when you are looking at building an audience, you should always ask yourself, should I buy, should I start fresh, should I rent? Brands aren’t asking those questions right now, and they should be…regardless of whether or not they actually acquire a media company or blogger site.

    • http://contentmarketinginstitute.com/ Joe Pulizzi

      Matt…one more thing. I think too often we think of brands doing this are only in it to drive product. We forgot how important it is to understand the audience (like Babycenter and Johnson and Johnson). What’s the value of understanding your audience better than anyone else? Priceless

      • http://www.greenandgoldrugby.com/ Matt Rowley

        As a publisher we give brands the opportunity to gain those insights at a fraction of the cost that it would take to buy and then run us!

        • http://contentmarketinginstitute.com/ Joe Pulizzi

          Of course…there are pros and cons, just like there are pros and cons to buying a home versus renting one.

  • Eric Kammerzelt

    I agree with you Joe,

    Predominant thinking in media companies is that brands are becoming competition. They fear the change they all know is coming.

    Instead, I feel those that embrace the common goal of serving an audience will find themselves better aligned for the future. Those that cling to legacy ways of doing business will become self fulfilling prophecies.

  • http://useractiv.com/ Al Carmona

    Great article Joe. Love the example you gave from Stab and MSW (longtime surfer). I had the pleasure of meeting you at Conversion Conference a few years back. The discussion we had there influenced our decision to start creating content for our brand. It took years but eventually the blog gained traction.

    I think this is a great opportunity for brands to acquire content-rich properties that engage their target market. Perhaps they just don’t have the guidance to be able to properly assess what’s a good fit and whether or not it would justify the investment.

    Since we built it from scratch, we were always careful not to screw it up by driving people away with overt advertising and spammy sales messages.

    And I think that’s the biggest challenge that brands face when deciding to purchase an established media property. To not screw up a good thing. It’s exactly the same kind of thing that happens with traditional M&As.

    When you take over a company you’re acquiring assets and in the content business, the most valuable assets are the creative people. Writers, designers and editors. If you honor their vision and integrity, and honor the audience’s interests, it is very possible to incorporate your brand into the existing property and perhaps even grow the property by injecting it with more quality content. Thanks to the incoming financial resources of the new owner.

    • http://contentmarketinginstitute.com/ Joe Pulizzi

      Love the take Al. Thanks for chiming in.

  • http://geobrava.wordpress.com/ David H Deans

    Joe, the decision around buy-versus-build can be very complex, depending upon the industry. FYI, I work in the B2B technology space and have seen the challenges first-hand (I was at Cisco when we made the transition from traditional press release producer to being a pioneer of brand journalism. I’ve since worked with other tech employers and with my clients as a consultant).

    Recently, I’ve seen multinational technology companies trying to fill their content void by partnering with the mega trade media publishers (IDG, UBM, etc.) and it became clear that they really don’t have the editorial bench strength that vendors require. Besides, few of the smaller tech publishers have the editorial talent to produce meaningful and substantive stories. Truly, there’s little here that any CMO would really want to buy.

    That being said, regarding the build option, the task of re-training and mentoring a tech vendor’s internal marketing communication organization is equally problematic. Over the last decade, it became commonplace that Marcom and PR people would outsource the real work to contractors and agencies and thereby function as ‘program managers’. So, when you do a candid assessment of who could actually create content that a customer would value, the internal talent-puddle is often so tiny that the challenge seems daunting.

    My point: solving the inherent issues I’ve described is going to be a huge issue in 2016. If you’re wondering why tech industry CMOs are still squandering their budgets on the creation of trivial and inert advertising, it’s because a viable alternative isn’t apparent.

    • http://contentmarketinginstitute.com/ Joe Pulizzi

      Hi David…sounds like you are in the trenches with this. I totally see your point, but I think the value is less about the talent and more about the audience base. I’d look there first…but yes, there are many challenges…yet still an opportunity.

  • http://sorryformarketing.com Jay Acunzo

    A lot of instant reactions in here. Pretty discouraging considering all of this would be new and deserves at least a harder look, more dialogue, and perhaps some data from early movers to decide if it’s in fact good or bad. Not gonna move forward as an industry if we lambast big, bold, risky moves…but then again, I work with startups every day, and they’re unafraid of risks, so I’m probably used to that mentality a bit more. (That’s a poorly veiled challenge to brands to think more like startups and LEARN and/or TEST more, debate and decry less.)

    • http://contentmarketinginstitute.com/ Joe Pulizzi

      It only takes a few to get things rolling my friend. We don’t have to convince the world 😉