The media business was rocked earlier this year when Buzzfeed, Vice, and others laid off more than 2,000 journalists in the span of just a couple of weeks.
If you follow any media “thought leaders” on Twitter, you saw the subsequent pontificating questioning the viability of digital publishers and even more finger-pointing at whom was to blame, from Facebook to Google and even the venture capitalists.
While all of that was happening, Digiday published a great interview with Justin B. Smith, the CEO of Bloomberg Media, about how the company had recently grown double digits and has even bigger plans to expand upon that in 2019.
Did that profitability get talked up all over Twitter or calm fears about the future of digital media? Absolutely not.
If I’ve learned anything over the last couple of weeks it’s this — unless you raise a ton of VC, chase a massive audience, and talk about your “tech platform”, most don’t seem to care.
But what they are missing is that there are plenty of companies quietly reinventing media and building real businesses, one industry or vertical at a time.
Vertical Media — Made for Entrepreneurs
My brother and I started Aging Media in 2012 with the launch of two sites covering the senior housing and reverse mortgage industries. At that time, the goal was simple — make enough money to survive.
We started with about $25k in the bank, no media or journalism experience, hired our first employee — shout out to Liz — and off to the races we went. With a couple of $50 WordPress themes and GoDaddy hosting, we started to cover the business of these industries in a deep and meaningful way.
We quickly found out a couple of things:
- Most established b2b media companies were built on old processes not designed for online and were too busy trying to maintain legacy assets that they weren’t focusing on digital.
- It’s about the quality of your audience, not the size.
- Very focused and valuable audiences command a premium in advertising.
As we started to grow slowly and gain some traction, we were tempted to go bigger and chase after a consumer audience — namely Baby Boomers and the fact that 10,000 of them would be turning 65 every single day for the next 20+ years.
However, as we started to analyze what it would take to reach over 100 million people aged 55+, the ability to write quality content and compete with large established players made it not only unrealistic — as we didn’t have the money to hire a bunch of people and buy traffic — but also an unprofitable venture.
Brands were already able to buy advertising targeting baby boomers at a $5 CPM while we were reaching an influential business audience serving these people and charging $100+ CPM — and we were selling out our inventory.
If you’re betting with your own money, the choice was obvious and we started to focus on high-quality vertical audiences in the $7.5 trillion aging services industry.
Since then, we’ve launched into several other verticals that include home health, skilled nursing, hospice and we have a couple others in mind that we will announce soon. While the audiences might seem different, they are all connected by the people they serve (seniors) and each reaches highly specialized and valuable executives.
By doing this we’ve been profitable each year, growing 20–30% annually and are about to hire our 20th full-time employee.
The Rise of Vertical Media Brands
I tell our story because amidst all the doom and gloom being reported about media companies, I truly believe there has never been a better time to build a digital media business.
The ability to target influential audiences on a regular basis doesn’t require any major tech platform stack or a massive amount of funding — it requires the ability to send an email and great people creating content that an industry or vertical needs.
While scale might be something worth chasing for certain companies, the definition of scale for vertical media is different. Rather than chase a bigger audience, scale for vertical media companies is about developing a model that you can replicate across different industries successfully.
While we are still figuring it out, we’ve learned a lot from companies like IndustryDive, Skift, Breaking Media, Digiday, Axios and others on how to spin out new verticals and create new businesses that are built off of past successes.
The beauty of this strategy is that by going vertical in different areas, you build out a truly diversified business across a range of industries. Justin Smith described Bloomberg’s diversification strategy as follows:
“Our insight and our strategy in 2018 was taking diversification to the next level: building new businesses that are given a competitive advantage due to your existing assets. It’s sort of diversification plus,” he said.
We’ve seen this strategy also being used by Digiday in launching Glossy, and Skift entering wellness as a way to take the existing audiences and use them to launch into new verticals. The Information is also rumored to be going this route by getting more into FinTech and other verticals as well, which makes a lot of sense.
The best part about building a business this way is that it doesn’t require massive amounts of funding. Instead, it requires taking calculated risks and having the determination to build a real business time and time again.
For the record, I’m not actually against taking VC money. I think one of the smartest and most dangerous vertical media companies around is Axios. The company raised $30 million, has $20 million left in the bank, and just barely missed profitability in its 2nd year of existence.
“If you approach media like a business, and you think about everything that you’re launching — can I, with a high degree of confidence, monetize this not at some point, but quickly? — if you build from that premise, you’re gonna build a good company.
“Really good companies rise, the not-so-good companies fall, some companies have to make adjustments, some companies take too much money,” he added. “But if you look, there is a band of companies doing quite well.”
The reality is that most of those are vertical media companies and it will continue to be that way, as we all can’t — nor should we aspire to — compete with The New York Times or Washington Post.
A book I read by Richard Branson a while back said that “small is beautiful.” He added that companies should restructure to be “very small, very specialized and very expensive. This is an innovation of the highest caliber.”
While I don’t think this the greatest description for all vertical media companies, I think it describes targeting niche and valuable audiences perfectly. At its core, vertical media is about attracting specialized audiences and getting paid a premium to do it.
The reason you get that premium is that it’s hard. You can’t just buy reach on Facebook or LinkedIn and earn the right to their inbox. In vertical media, you have to earn it, every single day.
That requires persistence, unique insights, and analysis you can’t find anywhere else, not lists and general news that can be found on half a dozen different websites.
So while all of the other media companies chasing massive amounts of people, we are going to be targeting the small, specialized, and expensive audiences…and building fast-growing and profitable businesses while doing it.