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Part 7

Monetization

I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.

WARREN BUFFETT

You’ve created a relationship with a loyal audience. You’ve built the base and have diversified into multiple channel extensions. Now is the time to reap the rewards.

Chapter 21

Waiting for Revenue

Ma’am, I don’t doubt the steak was overcooked, but did you have to eat it all before you complained about it?

DAN FROM THE MOVIE WAITING …

As Brian Clark discusses in the Foreword of this book, Content Inc. models can better monetize the program when they get to their MVA, or minimum viable audience. As he explains: “An MVA is the point when your audience starts growing itself through social sharing and word-of-mouth. Even better, it’s also when you start getting the feedback that tells you what product or service your audience actually wants to buy.” Successful Content Inc. companies don’t just get to an MVA point or level-of-subscribers point and then make a decision to sell a product. All along the way, these savvy entrepreneurs are leveraging creative thinking to sustain the business model while it is being developed and is growing.

This chapter reveals how I did it upon launching our Content Inc. model.

IN SEARCH OF … MONEY

In March 2007 when I left an executive position with excellent benefits to start a new company, I launched without a sustainable income source. So while I began to build the Content Inc. approach for myself, I started consulting for media companies and associations.

One association in particular, a small nonprofit focused on mechanical engineers, needed to develop strategies for generating new revenue streams from its publishing portfolio. The advertising revenue from its magazines was slowly deteriorating. At the same time, the association had major challenges trying to increase digital revenue from sales of online banners and buttons. Adding to the challenge was the fear at the association that without increased sales, major layoffs were in the works.

After a few hours analyzing the association’s media information and conducting staff interviews with its sales and marketing teams, I found four key issues: The sales team was accustomed to and focused on selling print advertising. Selling online products was completely foreign to these sales and marketing professionals.

The association’s core advertisers were just dipping their toes into buying online advertising to promote their products and services.

There was no digital sales strategy for the association. Simply put, the salespeople were winging it.

Traffic on the website was still nascent. It was a major challenge to sell digital products because the association’s website didn’t have enough eyeballs on the content (yet).

It looked like a long road ahead. Normally this would be fine, but my contact said we simply didn’t have the time to wait for the traffic to increase. We needed new revenue now to survive.

From this desperation, we developed the limited-inventory model.

If you understand the life of a print advertising salesperson, there is always inventory. You can always add another form (more pages) to a magazine to accommodate an ad. The magazine publisher will gladly add more pages if new revenue is on the way. Sure, we have sales targets and anticipated folios (the page count of the magazine), but we can always sell more ads.

This is exactly how the salespeople were selling digital. They were selling unlimited space availability to a finite group of online readers … and no one was buying.

We developed a new limited-inventory model that looked something like this:

We didn’t call it advertising. We called it sponsorship.

We limited the number of available sponsors per month—from unlimited (in theory) to six sponsors.

The sponsors received a logo at the bottom of every page and were listed as “Association Partners.” Each sponsor split the inventory six ways, meaning that each sponsor received a digital advertisement that was promoted to one-sixth of all the site visitors.

We significantly increased the cost of the sponsorships, versus what the former display advertising cost.

We offered category exclusivity for a 50 percent increase in investment.

At first, the members of the sales team detested the idea. They believed that limiting the products they could sell would hurt their livelihoods. In addition, they didn’t like the “six-sponsor” concept because it could shut out some advertisers, and if that happened, the association could take a credibility hit for not being open to all supporters.

Fortunately (or not), we didn’t have a choice. We had less than three months to turn it around, or people were going to lose their jobs.

The next week, we sent out an e-mail simultaneously to the promo list (all possible advertisers) about the opportunity. Once the e-mail was sent, the salespeople called their best customers and talked through the opportunities, basically saying “When they’re gone, they’re gone … but I want to give you first crack at the opportunity.” Inside a week’s time we had confirmations for the next six months. Yes, we sold out of inventory. From a revenue perspective, it was already a 500 percent increase in digital revenue from the previous year.

From that moment on, all digital products were sold on a limited-inventory basis, including webinars, e-book and white paper sponsorships, and specialized directory listings.

THE BENEFACTOR MODEL

Why is this story relevant? As we’ve discussed, the Content Inc. model, the informational annuity that it is, takes time and patience to work. If you are in a situation similar to mine, you probably need a source of income until you build your audience and find your ultimate product.

And this is the position I was in just a few months after that association consulting engagement.

My wife, an accomplished social worker, left her job a few years before I started the business to stay home with our two boys, then ages three and five. We needed an income to survive. Sure, we cut our expenses down to the limit, but we still had a mortgage, a car payment, and two kids to feed. The consulting would have worked fine on its own, but since we were investing so much into our future product (a content marketing matching service), there wasn’t enough to support the family. By 2009, we were bleeding cash as an organization.

The core matching service wasn’t growing at my anticipated projections. In other words, the financial model was flawed. The more I scrutinized the model, the more negative my thoughts grew. After multiple conversations with my wife, I was very close to closing down the business and going back to find a job.

And it was then that I remembered the limited-inventory model.

MAKING THE PIVOT

After weeks of thinking about whether to double down or jump ship, I went back and analyzed the audience we had developed (see the section in Chapter 7 on listening posts).

What were the biggest pain points?

What were people asking to buy?

Was there some low-hanging fruit in revenue opportunities that we were missing?

Only a very small percentage of our audience members were interested in finding content vendors. The majority were in need of education, training, and tools to help them succeed at content marketing. It was no wonder we were seeing massive requests for consulting and speaking … their need wasn’t vendor selection; it was education and training. This insight was a game changer!

We decided to change the revenue model around sponsorship and events (more on that in the next chapter). The problem: we still needed revenue now.

Enter our limited-inventory model—the benefactor package. I immediately began calling and e-mailing our best supporters, offering them an opportunity to fund our new direction. This included opportunities for just 10 companies, where each “benefactor” received 10 percent of our site promotion and the opportunity to include content on our site (sponsored content).

Within a few weeks we were sold out. This strategy enabled us to fund our pivot and keep going. The following year, we made the Inc. 500 as one of the fastest-growing small companies in North America.

We still sell the benefactor package today, and no sponsorship slot has ever been open for more than a few hours.

GENERATING REVENUE UNTIL THE PRODUCT IS IDENTIFIED

If you are like most Content Inc. entrepreneurs, you need to identify revenue opportunities throughout the process to keep paying the bills. CMI did it through the benefactor model. Digital Photography School did it through affiliate sales. Game Theory did it through YouTube advertising. Moz did it through consulting. Copyblogger Media did it through royalties from partner product sales.

Today all these companies are multimillion-dollar enterprises growing at some of the fastest rates around.

In the next chapter, we’ll go through all the opportunities for you to build and sell products on top of the platform. Until you get to that point, think creatively about how to keep paying the bills like other successful Content Inc. entrepreneurs.

SO WHEN SHOULD I START MONETIZING THE PLATFORM?

I have the opportunity to meet with entrepreneurs on an ongoing basis. In many of these conversations, the question often arises about when they should start monetizing their products or services. My answer is always this: “Today!” For Content Inc. to work, you don’t have to go through each of the five stages and then think about revenue. You need to be thinking about making money from your platform from day one. For CMI to work, I sold the dream of what it was going to be to our benefactor sponsors. It was that revenue that enabled us to build out the platform.

Ardath Albee, author of multiple books including Digital Relevance, believes that the best place to start a content approach is with your most important relationships. The same holds true for your Content Inc. monetization model. If you’ve been working your influencer channels properly, those same people should be your first options for locating revenue opportunities.

CONTENT INC. INSIGHTS

It will take time to find the right monetization model for your business. In the meantime, begin to experiment with different ways to make money from your content asset.

You don’t need a lot of support to get started, just the right support. Focus on a few companies that are passionate about your content to help offset expenses.