Kathy McCloud

The vast majority of all online adverts go through either facebook or google. A report from eMarketer showed that in 2016 Facebook and Google collectively accounted for 57% of all mobile advertising.

Many news sites you visit still have adverts on their pages, but the value of these adverts seems to be dropping with brands preferring more targeted ways to reach their customers.

On Facebook you can target very intensely which enables brands to lower their customer acquisition costs.

There is such a large pool of users on Facebook and so much available data on each of them that brands can pick apart demographics and locations more precisely than through traditional media advertising.

This has been hitting media outlets hard, but many have approached the problem with innovative ways of redefining their value pitch.

Morrison reports on ex-Guardian editor Alan Rusbridger’s comments after stepping down in 2015:

He said it had forecast online revenues of £100m. In the end, the newspaper’s digital turnover was £81.9m – down 2.3% on 2014 “because it all went to Facebook. They are taking all the money” because “they have algorithms we don’t understand, which are a filter between what we do and how people receive it. This is going to get worse because they have a means of distribution which we simply can’t cope with and the more people switch on to these devices, the more problematic that question is going to get.”

So, what are other outlets doing for adverts?

The Outline was founded by venture capitalists and chooses to only have a small number of advertisers at any one time. It then promotes those products or brands hard with adverts which are both intrusive and non-disruptive at the same time.

Their clever use of design – providing a vibrant, colorful, yet disjointed feel – masks the presence of the tastefully composed adverts within the overall aesthetic.

Perhaps the focus on writing to a particular demographic and providing this couture advertising package to those readers will allow for ads to prove successful again as a model?

The lack of clearly scalable opportunities for this particular angle The Outline have taken makes me curious how it will move forward, but it’s one to follow.

And there is precedent for doing higher value deals with companies looking to advertise in a way which is tailored toward your outlet. After all, native advertising and partnership schemes are in a sense an extension of the traditional advertising model.

Companies like Buzzfeed have utilized native advertising as one of their revenue streams and seen themselves rocket into mainstream discourse.

Their prices are custom so it’s difficult to report on how much it costs brands, but Buzzfeed are willing to produce articles, listicles, and videos for your brand and promote them to their audience – targeting to your needs.

One advantage this has for brands is the creation of highly professional evergreen content which will continue to show and promote your brand for years to come.

Through this kind of native advertising model, publishers are able to provide a different service to Facebook – they can play on a form of value Facebook isn’t currently equipped to create.

As this model has developed, third party applications like Hexagram have begun to break into the market. Companies like these source publishers who are happy to have promotional content appear on their site and connect them with brands who want that content to promote them. Hexagram then creates the content and pushes it through to the publisher.

The revenue for publishers from third-party content creation will be lower than the in-house Buzzfeed model, but not every media outlet has the infrastructure in place to deliver a Buzzfeed style system. The Hexagram model probably adds a useful media revenue stream to small time publishers.

In conclusion: Traditional online ads are likely dead, but fresh daring approaches look to still have a future.

How do media companies make money? There are 5 overarching business models to generate revenue from content your company creates: 1) transactions, 2) subscriptions, 3) licensing, 4) content marketing, and 5) advertising. Let’s review.

Transactional business models are the simplest way to make money off content: slap a price tag on whatever you create and charge for it…just like you would when selling a pair of shoes. This works best when you have larger, clearly defined pieces of content that people are likely to want as one-time purchases separate from other content you’ve created. We’re talking about books, films, albums, games, online courses, research reports, etc.

Transactions can be for content to own or for content to get temporary access to. In the former, the customer buys a copy of the content that they can download or walk away with (i.e. they own a copy forever); in the latter, the customer buys access to content that remains hosted on the distributor’s platform.

Buy to Own/Download to Own

Historically (pre-Internet), people have bought physical copies of content: a book from Barnes & Noble, a record album from Virgin Megastore, a DVD from Best Buy, a video game from GameStop, etc. As content consumption moved online, this type of transaction went with it: in iTunes, you buy content, download it, and can send the file around to other devices. In a business context, you might buy a report from a market research firm and receive it as a PDF to download. Buying to own is still widespread online.

Pay-to-Unlock

The alternative – and the increasingly common model – is to buy temporary access to content that remains hosted elsewhere so you can’t take a copy to do whatever you want with. For example, a pay-per-view boxing match that costs $100 to see on TV or a movie available for 48-hour rental on Youtube at a price of $2.99. Renting individual movies or TV shows to watch online is referred to as TVOD (Transactional Video-On-Demand). The period of time you get access to content for could be indefinite, but without having a copy of the file itself, you don’t own the content.

From a media company perspective, the pay-to-unlock approach reduces the threat of piracy, which is common with download-to-own content since consumers can send the file to friends or upload it for free on another site. Moreover, a media company collects tons of data about how people are interacting with content they’re hosting; they don’t get data from people interacting with downloaded files.

A newer innovation is pay-as-you-go content consumption through micro-transactions. The Dutch startup Blendle, for example, created a platform for reading articles from a wide range of publishers that charges you a few cents per article you read. Each piece of content is a new transaction, but because you have pre-loaded your Blendle account, you don’t have to go through a new payment process every time. There has been talk of using blockchain technology to do micro-transactions on an even smaller scale (i.e. less than $0.01 per article) as well. This micro-transactions model hasn’t taken off in a big way though.

In media, subscriptions are based on access to content for a period of time that’s recurring (typically monthly cycles). It locks in an ongoing relationship with the customer, who has to opt-out of the recurring payments if they want to stop being a customer. Usually, the subscriber gets access to a pool of content that they can consume at will, rather than only getting access to one piece of content.

Because subscribers continue to pay on an ongoing basis, they also expect new value to be provided on an ongoing basis. You typically don’t pay a subscription to consume the same unchanging piece(s) of content again and again; you pay a subscription for ongoing access to a flow of content that’s regularly refreshed with something new. That could be daily news articles, monthly refreshing of movies on Netflix, etc.

Newspapers and magazines tend to operate on subscriptions because they are comprised of many small articles people consume a high volume of. Similarly, SVOD (Subscription Video-On-Demand) platforms – like Netflix, Amazon Prime, Hulu, VRV, fuboTV, etc. – have gained traction because people watch enough content on them that they prefer an all-you-can-watch subscription rather than having to consider each film or TV episode as a new purchase.

Because the relationship with a subscription customer is not tied to one specific piece of content but rather the broader offering available to them, the value they measure is their overall experience…the quality of content they’ve consumed, the affinity they feel for the media company’s brand, the “fear of missing out” if they unsubscribed. In this dynamic, subscribers are like members of a club…winning and retaining their business is about a relationship rather than a one-time transaction. It also means that you’ve locked in recurring revenue just by gaining one new subscriber; in a transactional model, you have to fight for every purchase you want a potential customer to make, regardless of whether they’ve shopped with you before (i.e. you have a new “Customer Acquisition Cost” or CAC for every sale).

Many creatives want to stay out of the direct-to-consumer business…they just want to create the content they want, then license the rights to another media company that handles marketing and distribution. This is the classic way Hollywood and other creative industries operated; pre-Internet, it was incredibly difficult for creative teams to also distribute their content. Much of that traditional infrastructure is still in place. There are lots of structures for licensing; sometimes it’s one upfront payment, sometimes there’s a revenue share on the sales (aka royalties).

Films follow this path: a production company sells the film to a studio that markets it and partners with exhibitors (i.e. cinemas) and online streaming platforms to distribute it. Television shows are created by production companies, bought by networks, and distributed through networks’ partnerships with cable companies. Music, books, and games are more direct-to-consumer nowadays than they once were, but the traditional distributors still remain important (i.e. record labels and streaming platforms; publishing houses and e-book platforms).

This route makes sense when you work on a small number of big productions, each of which might be unrelated to the others in terms of theme, target audience, etc. It would be inefficient to launch every new film as its own standalone media company that has to build an audience from scratch, for example.

The downside of licensing is that the fate of your content is dependent on middlemen, and you collect little-to-no data on who your audience is and how they’re consuming your content. Without that data and without direct interaction (getting their emails, etc.), it is tougher to build ongoing relationships with fans and engage them with new offerings.

Content marketing is, simply put, using content as a tool to market some other product or service from which you make money. (Content marketing is also done by individuals to market their personal brand, with the ROI coming from the benefits the notability brings to their career.)

Content marketing has exploded in recent years within the marketing departments of companies across every industry. Companies that are bad at it plug their product offerings extensively so there’s no mistake you’re reading/watching promotional material; companies that excel at it focus on creating high-quality, engaging content that develops a relationship between their brand and the audience like a media brand would. GoPro and Red Bull are the iconic examples of content marketing pioneers, but it ranges everywhere from mattress companies and airlines to investment banks and venture capital firms.

The content marketing model can also start with media, then expand into relevant products/services to sell once you’ve crafted a brand and audience. In fact, many free-to-read news outlets in the business world are – when you look at their business model – live events companies with extensive content marketing. They cover industry news through articles and videos, and they do monetize that through advertising, but the largest revenue generator is the conferences they host, which are marketed to their business audience with ticket prices ranging anywhere from $500 to $5,000.

A common content marketing model for independent media properties is using IP from the content to do e-commerce…selling merchandise for passionate members of your audience to purchase, just like bands do with their fans. Sites ranging from WaitButWhy to BuzzFeed have done this. Publications like the Wall Street Journal have curated products from other companies to sell in an e-commerce section to their audience. There’s a grey area between being a media company and a consumer brand nowadays.

(Compared to advertising-based media companies, the incentives in content marketing are better aligned with creating high-quality content. It’s about quality over quantity. Companies here are trying to build genuine relationships and affinity for their brand so audience members ultimately buy products from them…that means trust is critical.)

There are many ways to do it, but ultimately advertising is a simple concept that’s been around for a long time. You create content that draws people’s attention, then you do a bait-and-switch by also showing promotional content from brands around, above, below, in front of, in the middle of, and/or after your content so the audience sees it too. Sponsored content and product placement can be more complementary ways to integrate advertisers into content.

Most successful media companies employ more than one of these in their arsenal. Which will be most effective for any given media company depends entirely on the content they want to create, the audience they’re targeting, and ambitions they have for how the company will evolve.

Social media enables businesses to directly reach and engage with their customers and target markets. If you have the right skills, you can launch a successful social media business.

Before you start your new business, you’ll need to see what is happening in this industry. Here are 10 examples of social media businesses to give you a snapshot of this industry:

A YouTuber is also known as a YouTube personality or influencer. They have gained popularity based on the content they produce on their YouTube channel.

This is also how they make their money. Before you start recording videos, here is an example of a YouTuber you can learn some insights from:

Business Name: GaryVee

Website: https://www.youtube.com/user/GaryVaynerchuk/featured

Established Date: 2007

Gary Vaynerchuk is the chairman of VaynerX, a cutting-edge media and communication holding company. He is also the CEO of VaynerMedia, which is a full-service advertising agency servicing Fortune 100 clients.

Gary Vaynerchuk is a sought-after public speaker and New York Times bestselling author. He offers entrepreneurial insights and expertise from his industry experience and time spent assisting Fortune 100 companies. 

You can use social media platforms to sell your own products or offer your services to sell products for a business. If you have enough experience and knowledge of social media, you can use this to start your social media business idea.

Before you launch your company, here is an example you can gain some insights from:

Business Name: J&Co Jewellery

Website: https://jcojewellery.com/

Established Date: 2012

Jenny Kwang originally launched her store on Etsy making and selling jewellery. The business gradually grew through word-of-mouth and reviews from customers.

Related: A Free Business Plan Example to Launch Your South African Business 

Using Instagram they were able to increase their reach and connect with new customers, and it has become an indispensable part of their marketing strategy.

J&Co Jewellery specifically targeted women in the US from the age of 18 and above with a special interest in jewellery, apparel and accessories. 58% of their total sales were driven by Instagram transactions.

A social media influencer is someone who has used social media to gain a following and established credibility in a specific industry. They tend to be authentic and reach larger audiences because they are sharing something that matters to a receptive target audience.

Before you launch your social media business, here is an example to help you learn strategies and ensure your business is a success:

Business Name: Kayla Itsines

Website: https://www.instagram.com/kayla_itsines/?hl=en

Established Date: 2012

Kayla Itsines is a personal trainer, author and entrepreneur. Time Magazine has named her one of the 30 most influential people on the internet, because of her ability to use social media to promote her brand.

On her Instagram account, she offers motivational messages, exercise videos and before-and-after images of clients who underwent her Bikini Body Guides programme.

A social media advertising specialist helps to drive traffic to websites, promote content and develop relationships with key influencers and target audiences.

If you’re have enough experience and social media skills this could be the social media business idea for you. Here is an example of a social media business to offer you insights before you launch your business:

Business Name: Version 8 Media

Website: https://v8media.co.za/

Version 8 Media focuses on the bigger social media campaign to assist their clients increase their bottom line. They also focus on the cost-per-lead, the sale and the lifetime value of a customer.

In addition to being a social media advertising specialist, Version 8 Media offer a comprehensive digital marketing service to ensure they are a one-stop shop for their clients.

Consumers are already engaging with businesses through social media, if you can optimise this interaction for them by driving leads and sales you can make this into a business.

Related: The Ultimate 101 List Of SA Business Ideas To Get You Started

Before you launch your social media marketing business, you’ll need to see what’s happening in the industry first. Here is an example to help you learn the ins-and-outs of this industry:

Business Name: Lyfe Marketing

Website: https://www.lyfemarketing.com/

About the business:

Lyfe Marketing is an all-purpose social media marketing services company. They create and manage top performing social media campaigns for their clients. They incorporate social media strategies to help businesses grow and meet their goals.

In addition, Lyfe Marketing also offers website design services and search engine optimisation services to ensure their clients receive a comprehensive marketing service.

Are you good at managing your social media following? Do you have the right skills to do the same for a client? Before you start offering your services to businesses, you’ll first need to see what is happening in the industry.

Here is an example of a social media business that will offer you insights into the industry:

Business Name: ICUC Social

Website: https://icuc.social/

ICUC Social Focuses on online community management services, which are now vital to keep social media channels engaged with clients. Having someone constantly monitoring your social media channels gives you an edge over others who only monitor during office hours.

In addition to their community management service they will also assist their clients in building, scaling and engaging an authentic community online.

There are numerous businesses that direct their customers to their social media platforms as their customer service or support channels to engage with their clients in faster and transparent ways. This only works for a business if they have responsive social media channels. 

Related: Your Free Business Idea Evaluation SWOT Analysis Template

If you’re good at both social media and customer service this could be the social media business idea for you. Here is an example of a social media customer support rep business you can learn from:

Business Name: Influx

Website: https://influx.com/

Influx provides customer service using a comprehensive, 24/7, all year-round offering. This means no matter when their clients customers engage on social media, they will be there to respond.

Influx offers a pay as-you-go pricing model for all their clients, this enables them to support both start-ups and established businesses.

Are you good with words? Are you a talented social media user? You could sell your skills and become a social media copywriter. Before you start your business, you’ll need to see what other businesses are offering and how you can improve their services.

Here is an example of a social media business you can gain insights from:

Business Name: Hello SEO Copywriting

Website: https://helloseocopywriting.com/index.html

Hello SEO Copywriting offers engaging social media copy updates, attention grabbing images, titles and hashtags, as well as posts designed to increase retweets and shareability. They also manage client’s social media channels and pro-actively increase their number of followers.

In addition, to their social media offering, Hello SEO Copywriting offer website copywriting services, digital marketing services and blog packages.

Do you have a voice for radio? Do you love talking and sharing interesting stories? You could launch a podcast as your social media business.

Related: How To Launch a South African Podcast

Before you start recording, you’ll first need to know a little about podcasting and how to ensure you remain competitive in this creative space. Here is an example of a podcast business you can learn from:

Business Name: Dark Stuff With Christina and Suann

Website: https://darkstuff.transistor.fm/

Established Date: 2017

Dark Stuff With Christian and Suann focuses on the topic of true crime, as well as horror movies and books, and tragic accidents. This podcast is also available on numerous listening platforms to ensure they’re increasing their potential target market.

Selecting a niche topic means that they have attracted a very specific audience from around the world and stand out in the crowd of podcast options. You won’t be able to engage an audience if you’re trying to appeal to everyone.

A social media content strategist helps to capture the interest of a business’s target audience. You can help to grow your client’s business through a variety of online and social channels. Here is an example of a content strategist business you can use to gain insights into this industry before you launch your business:

Business Name: Contently

Website: https://contently.com/solution/content-strategy/

Contently provides practical, expert guidance for creating breakthrough content that will boost their clients brand perception and drive business performance.

In addition to their content strategy services they also offer anyone who visits their site online resources to assist in improving their content strategy. By doing this, it positions Contently as a thought leader in their space and gives them more credibility with current and future clients.

Related: 25 Of The Most Successful Business Ideas In South Africa