We need to talk about the sizzling specialist media sector

Specialist media verticals is a sizzling sector offering perhaps the best opportunity for established media businesses to perform, launch new products and land new revenue streams.

There are opportunities in B2B niches, consumer niches and cross-over niches (e.g., Vogue Business). Plus:

It is where we see many new-ish media making inroads. Cox Enterprises acquired Axios, The New York Times acquired The Athletic, and Axel Springer-owned Insider acquired a majority stake in Morning Brew.
Verticals are perfect for creator-led media, for example, Brian Morrissey with his The Rebooting, and for several years now, Ben Thompson with Stratechery.
It is also where a platform such as Substack offers not only the distribution mechanism but also monetisation for specialist media creators. Simultaneously, we are witness to specialist podcasts exploding across multiple platforms.

In the run-up to Media Makers Meet (Mx3 Berlin) on 19 & 20 October, an event dedicated to specialist media, we asked some speakers to list some of the opportunities and challenges for specialist media. More about the event at mediamakersmeet.com.

Opportunities identified include:

Leveraging specialist community relationships;
The rise of specialist newsletters and podcasts;
Data, diversified revenues and subscriptions;
New products and services that tap into societal changes;
Tech innovation; and
Kicking “boring” into touch.

Challenges include:

People and culture;
Tough economy & competition;
Building valuable conversations; and
As always, the money question.

We will discuss these and other topics in more depth at the Mx3 Berlin, but for now, have a read below.

OPPORTUNITIES

Communities and the flywheel effect

Specialist media are well positioned to benefit from the growth flywheel effect, where small, incremental wins build over time to create almost unstoppable momentum. “Community” is a critical word here.

The basics:

Get the specialist media model right, says Lucy Küng, media researcher, author, advisor, non-executive director and speaker, and “the potential for the kind of positive feedback loop, or growth flywheel as Bezos would call it, are significant.

“The basic model is this:

Find a subject area that really matters to a community;
Produce high-value content for that community that reflects and anticipates their needs;
Get consistently closer to that community through a range of content formats (events, communities, podcasts, interactions, and so on); and
Use learning from those interactions to further enhance the value of your offer.”

When it’s working, “your value increases, as does the audience’s loyalty, as does your attractiveness to commercial partners, and so on. And this is a beautifully replicable, ‘productisable‘ model.”

Daniel Pitchford, CEO of Collingwood Advisory, agrees, referring to how many specialist media have not yet mastered the total value of digital. “It’s a little obvious, but many great brands are still to capitalise on digital, and not just transforming print into online, but thinking about the ancillary services you can offer audiences and clients… Communities are an aspect which can be accelerated through digital formats and present media companies with a route to developing a strong flywheel effect.”

Helping communities learn and transform:

Learning is one of the areas in which transformation plays out, says Katie Palisoul, Global Brand Director of Infopro Digital. “There is a real demand to learn, understand and consume information. All we need to do is listen to our customers and add value. This can only benefit our market as the provider of these elements.”

Matthias Bauer, CEO of Vogel Communications, points towards specialist media’s strength as content providers “for the expert” communities in markets “where we have the perfect channels and content formats. Specialist media have an opportunity to support development: providing the right information and communication to help them transform business.”

Jobs-to-be-done:

Alexander Drößler, Leader: Digital Products at Landwirtschaftsverlag, pointed to the value of well-defined and well-known communities. Compared to more generalist consumer media, it is easier for B2B media to adopt the concept of “jobs-to-be-done” and develop audience-focused digital products. The “better we help customers to ‘get a job done, the higher the probability of making money with them.”

Trust as a USP:

Specialist media, says Lev Kaye, CEO of CredSpark, is “well positioned to mean more to their audience than anyone else. They can be a trusted and ongoing source of knowledge and guidance to individuals while at the same time having the best available audience first-party data and insights for advertisers and sponsors.” Generalist brands and platforms cannot compete with specialist media that:

Ask questions of their audiences on an ongoing basis to deliver more relevant and helpful content and experiences;
Put peoples’ trust, privacy, and consent to the fore while getting the right marketing messages in front of the right individuals;
Develop smart, interactive content that can serve as a “guide on the side” to individuals seeking to advance their careers, craft or business.
Create interactive, compelling experiences across content, events, advertising, and more to deepen audience relationships.

NEWSLETTERS & PODCASTS:

“The key with newsletters and podcasts”, says Brian Morrissey, Founder of The Rebooting and former Editor-in-Chief of Digiday, “is the direct connection to the audience.” At Mx3 Berlin, Brian will dive deeper into this topic, but he juxtaposes this against website-first publishers.

“At a time when every website-centric publisher is dealing with massive unknown audiences in the face of the demise of the third-party cookie, this direct tie is more valuable than ever.

“Direct connections are not only more valuable for advertising but also for subscriptions. And both e-mail and podcasts are push media, so they’re ideal for habits and, ultimately, loyalty, whereas a lot of web traffic is won and done from search or social platforms.”

Data and monetisation

Along with communities, several speakers highlighted data’s continued untapped potential, including boosting revenue.

Data:

Daniel Pitchford pointed out that “data has long been talked about as the big opportunity, and for B2B media sitting on or with the tools to capture first-party data, there is a vast untapped resource, with multiple revenue streams.”

Martha Williams, CEO of World Newsmedia Network, said, “with a critical mass of first-party data, B2B and special interest verticals will be able to:

Drive better engagement and loyalty with their valued customers;
Build new products to further engage and expand the audience; and
Anticipate customers’ needs before they are expressed.”

Ultimately, it all leads to the question of monetising that knowledge, which Martha will discuss in more detail in Berlin.

Follow the budget:

Matthias Bauer highlights dramatic changes in how businesses communicate internally and externally. “Companies must improve their external AND internal business communication to build their future in a digitalised post-covid world.” At Vogel, it means following their customers’ communication budgets to where it’s spent, “not only [focusing] on declining media budgets.”

Subscriptions:

Allan Hunter, Co-founder of HBM Advisory and former Head of Digital at The Times and Sunday Times, says audience’s willingness to pay for content that they find helpful and which addresses their passions is “fantastic news for specialist media, which meet those definitions perfectly. The key is ensuring that potential readers understand that, that the distribution is done right and that pricing set at the correct level.”

New products and services:

Nick Vinocur, Editor of POLITICO Pro, points out that vast and ongoing societal shifts consistently create new opportunities for specialist media. Companies need to keep their finger on the pulse. “Shifts toward green energy and [continuing shifts] to digital technology create an almost limitless need for news and analysis. Companies need any advantage they can get to stay ahead of the changes. And as technology gallops forward, policymakers and regulators are rowing ever-harder to keep up.”

Tech innovation:

Arvind Iyer, Director of Technology – AI, says he sees a broad range of opportunities, but from a purely technical perspective, they are: “Industry 4.0, Neuro-linguistic programming, Natural language understanding, Natural language generation, Question Answering, Reinforcement Learning, Transfer Learning, and all the many other general use cases (forecasting, classification, prediction, and so on) we have around Artificial Intelligence and Machine Learning.

No more boring:

In his newsletter a while ago, Brian Morrissey, Founder of The Rebooting, wrote about how he was an anomaly among his journalism school classmates when he gravitated toward business writing. “Over time, I realised the ability to go narrow and deep, a necessity in trade publishing, is not just a career asset but also rewarding.”

The B2B side “always had its knocks. They typically revolved around the boring content, the tendency to cheerlead rather than ask hard questions, and the poorly designed and often low-quality products, not to mention the reality that actual journalism was often treated as a second-order priority since the money was made in database marketing and events. That’s changed with the sector’s overall modernisation as well as a newer crop of digitally native business publications that are taking different approaches.”

Brian will speak in more detail at Mx3 Berlin about the newsletter- and podcast-first approach to specialist media.

CHALLENGES:

People and Culture:

A refrain through all media is the challenge of finding and retaining talent and moulding a culture of innovation fitting today’s fast-paced world.

Culture:

Alan Hunter believes once you have crystalised your value proposition to the audience, the next challenge is ensuring “that your whole organisation and everything it does is directed towards providing customers with that service. Be clear on that, and questions about products, content strategy, new platforms, tech giants etc., become much easier.”

Alexander Drößler says nascent publishers must learn how to disrupt. They must focus on their audiences’ “jobs to be done”, not on the platform first. This brings the people and culture question into view. “Our job is helping our audiences to succeed, regardless of the distribution medium. This requires a cultural change: We must learn new skills to explore, not only exploit, our cash cows. What does it mean to be genuinely user-centric? How can we break up silos to collaborate? How do we become agile and fast learners? How do we focus on a shared goal that can be worked towards in many small steps? Answering questions like these is critical.”

The new church-and-state:

Apart from “standing out in a crowded field” (more below) and, associated with that, continuous product development, Nick Vinocur also mentions a people-related challenge: New church-and-state battlelines, which is “balancing exclusivity for subscribers and visibility for journalists”. (One might add tension between teams driving subscriptions and those advertising – ed).

Data and people:

First-party data is hot, but making it work has a people component attached to it. Martha Williams says specialist media need to get their data house in order. This means: (1) technology, talent, teamwork, training and strategy; (2) driving as much first-party data as possible, as quickly and transparently as possible, while strictly adhering to privacy regulations, and ultimately (3) developing revenue streams off the back of that data.

Next generations:

There are also new generational audiences to explore. Chloe Combi is a generational expert from the UK. She will be at Mx3 Berlin, highlighting how trends among younger generations change at a blistering pace with industry slow to catch up. For media, it is about understanding what changes are coming and how they can tap into those as an early adopter. She says, for example, that the moment has already passed if you think TikTok is the next best thing among your younger audiences.

Tough economy & Competition:

Several speakers we talked with pointed out the challenge for specialist media to differentiate themselves sufficiently to dominate their niche. A job, some say, will be even more challenging in the demanding economic environment we now operate in.

As Daniel Pitchford puts it, “differentiating in a world of differentiation [is challenging]. Finding, growing, and engaging your niche while staying true to your core value proposition.” This will become even harder. “Engaging and retaining audiences has been challenging over the past two years. It will arguably worsen should the economic outlook worsen.”

It’s thoughts shared by Lucy Küng. Specialist media’s sizzle makes standing out even harder, says Lucy. It is an “extremely promising growth area” and “such a hot sector”, she says. It means that “the ‘pile-in’ that often happens in media is underway. That activity and noise level can obscure a clear vision of what’s happening.”

Katie Palisoul says growing and engaging audiences is not a new challenge but an “ongoing one that grows with complexity. We are in a world where people want to turn down the number of emails they receive and understand that information is a commodity. [To stand out] as information providers, we need to be sensitive and understand these needs when developing audience growth strategies and how we use that information”.

conversation:

Lev Kaye says of specialist media, “their most significant challenge lies in re-imagining themselves: They need to stop thinking of themselves as creating content and instead think of themselves as catalysing conversations. “Conversations build relationships, which in turn build understanding and trust, which in turn creates real value—specifically, conversations between their media brands and audience members, between audience members themselves, and between vendors/sponsors and individuals. B2B and special interest media need to take specific steps to become conversational and more community-focused in their audience approach.”

money:

Diversified model:

As Chief Content Officer of Ascential and MD of Cannes Lions (Content), David Davies, spends most of his time thinking about content and audiences and the role content plays in achieving overall organisational goals. He says content “usually boils down to three things; talent, rigour and innovation.” However, it is not only content that keeps him thinking. He identifies an “insufficient focus on building multiple revenue streams” as a challenge among specialist media. “Doing one thing well can be just about enough; two is profitable, three can be great. Look at Netflix [today]. Look at Future. But it’s hard because focusing on one thing is much simpler.”

Cost & revenue equation:

On the opposite side of the money-equation, there is the cost challenge. US-based M&A specialist John McGovern, CEO of Grimes, McGovern & Associates, points out that the complexity of specialist media businesses today means that it is a lot more expensive to be successful: “Systems, AdTech, lead gen, sponsored content, webinars, events,” on and on. That is “much more expensive and complicated than selling a print ad at rate card.” Once ” you have a handle on the complexion of the direct expenses for these businesses, it is all about finding new revenue streams, products and campaigns that produce the highest gross margin.”

With selected speakers and audience, Mx3 Berlin will include fireside chats, panel discussions, round tables and plenty of opportunities for conversation, networking and building professional connections. Join us at Media Makers Meet (Mx3 Berlin) on 19 and 20 October in Berlin, Germany.