Guess Who's Going to Buy You? That's Right...Your Advertiser
Barstool Sports launched as a print publication in 2003. Since then, they’ve become a multi-million dollar diversified sports and pop culture media company. Barstool recently sold to one of their advertisers, Penn National Gaming (owner of the Tropicana), for $450 million.
A few years ago something like this would be considered an anomaly. Today, odds are steadily increasing that the company most interested in buying and paying market price for your media company is one of your advertisers.
Don’t believe me? You wouldn’t be alone.
I’ve been involved in media M&A for almost 20 years. Not one time, in any discussion, did a media executive consider sending an advertiser (or non-media company) an acquisition memorandum. Not doing so in today’s environment is unforgivable. The examples are right in front of us.
In 2009, photography supplies store Adorama put a buying group together when JPG magazine was going out of business. The group received access not only to JPG’s platform and content, but also to JPG’s 300,000 subscribers (which just happen to be Adorama’s prospects and customers).
In 2010, L’Oréal, the global makeup conglomerate, purchased Makeup.com from Live Current Media for over $1 million. Since then, L’Oréal has transformed the site into a multi-million dollar tutorial and product site.
In 2013, marketing automation company HubSpot wanted to add an agency blog to match its marketing and sales blogs, so it approached Agency Post and acquired the blog instead of starting fresh.
In 2015, the SurfStitch Group, a leading online retailer in Australia, purchased two small media companies in the surfing industry, further positioning SurfStitch as the clear content leader in the category.
In 2016, Fortune 200 electronics-distribution company, Arrow Electronics, purchased UBM’s (now Informa) entire division of electronics print and media websites. Today, Arrow Electronics owns more than 50 media brands in the electronics space, and boasts being the largest media company in the industry. That’s correct: The largest media company in the B2B electronics space is not primarily a media company.
In 2017, Whirlpool, the home appliance maker, acquired recipe search engine Yummly.
In 2019, computer hardware manufacturer Raspberry Pi purchased two magazine brands from U.K. publisher Dennis Publishing. Through organic growth and acquisition, Raspberry Pi’s Press division includes four trade magazines (and one customer magazine) covering a wide range of technology solutions.
It’s Only Just Begun
According to Content Marketing Institute research, approximately 90% of enterprise brands employ a content marketing strategy. This means they are hiring journalists, audio and video producers, and other content creators to help build relationships with audiences as part of their overall marketing strategy. Initially, the majority of these projects were custom magazines. Today, brands consistently communicate through blogs, podcasts, video series, online magazines, and events that position the brand as a leading expert in a particular media niche.
But, enterprises are impatient. They often don’t want to spend the time growing and nurturing the audience, and would rather skip the early pain of building a media brand. At the same time, these brands are flush with cash. According to CNBC, Microsoft, Berkshire Hathaway, Alphabet, and Apple are sitting on more than $100 billion in cash. Facebook, Amazon, Ford, Oracle, Cisco, and Bristol-Myers all have more than $30 billion.
Buying a media company for these companies, from a monetary standpoint, is a rounding error. And after years of chief marketing officers (CMOs) not considering purchasing media assets, it’s becoming more and more a part of their responsibilities to build audiences quickly and efficiently.
In addition, the recent changes in online privacy laws, such as the California Consumer Privacy Act and pending laws in dozens of other states, as well as Google’s decision to kill third-party cookies on the Chrome browser, are stifling brand access to third-party data. This means that first-party data is more important than ever. Buying a media company is, perhaps, the best strategy to getting access to that data.
Prediction? There could be a run on media companies in the very near future.
All Brands Are Media Brands
Today, you can look at any enterprise brand and see that they are employing both a product/service business model and a media business model. At best, most brands are in the experimentation and pilot phase of the media model, seeing what works and what doesn’t. This is temporary.
In the very near future, the largest product and service companies on the planet will also be the largest media brands. What is Amazon? Are they a product brand or a media brand? The answer is both.
How about Disney? They’ve been employing both business models for nearly 100 years. Apple is now in the media business.
Take the time to look at your advertisers. How many of them have created their own blogs, videos, and podcasts to reach your audience? Most likely the majority. Are they as good at the media model as you are? Not yet, but they are catching up…especially with the amount of cash they are investing.
Thinking about selling your media company? Your future buyer most likely just purchased one of your ad spots.