Episode 208
Content and community
Recurrent CEO Andrew Perlman discusses how the publishing company is focusing its niche brands increasingly on events as it retools its model from the traffic era. Affiliate revenue is now a third of what it was at its peak, while experiential has risen from "effectively zero" five years ago to 12% of overall revenue and rising.
Transcript
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Speaker:Welcome to the Rebooting Show.
Speaker:I am Brian Morrisey.
Speaker:I'm joined, by Andrew Perlman.
Speaker:Andrew is the CEO of Recurrent, which, has a collection of
Speaker:brands, in the automotive space.
Speaker:You're in military like fill in, I know.
Speaker:Business of home.
Speaker:That's a little bit of
Speaker:Yeah.
Speaker:Uh, we have home and then we have outdoor and science.
Speaker:Outdoor and science.
Speaker:so I wanna talk about, All of these properties, but like at this moment
Speaker:in time, you know, when you go back to the recurrent thesis, 'cause you were,
Speaker:you bought a lot of properties, right?
Speaker:and a lot of like funding to, to to, to roll up, maybe not roll
Speaker:up the properties, but you know, basically to roll up the properties,
Speaker:have a, a shared services model.
Speaker:Right.
Speaker:Go back to the, the, the original.
Speaker:Sort of thesis, and then I want to sort of stress test it against like
Speaker:everything that's happened since then in this crazy, insane environment.
Speaker:A hundred percent.
Speaker:So the,
Speaker:I'm giving away my bias, Andrew.
Speaker:Yeah, no, I mean, and, and please stress test it.
Speaker:The, the original thesis was the notion that we would buy great
Speaker:brands with authentic audiences.
Speaker:And you're right, that we would roll 'em up and get more scale, with distribution
Speaker:partners get better service when it came to get better service to the brands.
Speaker:When it came to selling, when it came to things like SEO, that was
Speaker:the original thesis and that we would all only focus in content verticals.
Speaker:Where there was a high convergence between content and commerce,
Speaker:because that gets you two things.
Speaker:one, endemic advertisers, which we obviously get in military and auto
Speaker:and verticals like home and outdoor.
Speaker:and two, it gets you commerce opportunities, which means
Speaker:something different than it did five or six years ago.
Speaker:Originally that meant affiliate.
Speaker:Now it means licensing and direct to consumer commerce.
Speaker:Okay.
Speaker:And.
Speaker:Now, like how has that changed?
Speaker:Because obviously SEO lot of, and look, it's, it's not, I, I heard
Speaker:from a publisher this morning whose, whose traffic is up and, it's a
Speaker:niche publisher in, in finance.
Speaker:But, for most public then, then the publisher next to them at the, at the
Speaker:breakfast is like, we're down 50%.
Speaker:you know, SEO itself, it ha is obviously challenged right now.
Speaker:I mean.
Speaker:I was talking to one major publisher, the other day.
Speaker:It was just like, you know, our programmatic business is like on its
Speaker:last legs because, you know, that that was how we were monetizing.
Speaker:SEO commerce has also become far more difficult.
Speaker:you know, in, in many ways Commerce slash affiliate was, I was always saying
Speaker:it's like when people said that they do commerce, they really meant affiliate.
Speaker:And when people said they do affiliate, they really meant SEO.
Speaker:Yeah, I, I, I think that's, I think that's correct framing so.
Speaker:There are a couple notes that I would say on that.
Speaker:SEO has always been ever changing.
Speaker:The things that have changed dramatically are the introduction of things like
Speaker:overlays and the way that the Google page is laid out and then on top
Speaker:of it, and I think there's a deep irony in this, if you had asked any.
Speaker:Anybody in the publishing space five years ago, if they would be excited
Speaker:that there was a new entrant that was gonna crack Google's monopoly,
Speaker:they would've been thrilled.
Speaker:of course we're sitting here now open AI and other platforms in the AI space are
Speaker:cracking it and publishers are complaining that the results have changed for us.
Speaker:We're actually seeing an incredibly strong start of the year.
Speaker:We're up year over year.
Speaker:there, there has unquestionably been continued pressure.
Speaker:Specifically on affiliate traffic, but not traffic overall.
Speaker:Right.
Speaker:so you are, let's talk about your, your core properties.
Speaker:I mean, you've, you have, you've got the drive, I mean, in auto, right?
Speaker:You've got the drive and you've got donut media,
Speaker:Yep.
Speaker:And then, and then, and then real mechanic stuff, which we, which we
Speaker:launched, which is a spinoff of Donut.
Speaker:Yep.
Speaker:Right.
Speaker:And then in, in military you have task and purpose.
Speaker:The war zone.
Speaker:And we, we are the mighty.
Speaker:And then we have two live events.
Speaker:We have mill spouse fest and we have military influencer conference,
Speaker:okay, great.
Speaker:And, and then you, you a popular science too,
Speaker:and we have pop uh, yeah, we have pop Popular science, we have
Speaker:Outdoor Life and we have futurism.
Speaker:Right.
Speaker:Okay.
Speaker:so you, you're in niches, right?
Speaker:And so that's a way better place to be.
Speaker:You're not in news, thank God, right?
Speaker:For you.
Speaker:Like you're not in, in general interest or you're not in news and, you know,
Speaker:niches are, you know, the place.
Speaker:I think it's like somewhat protected.
Speaker:I mean, and like B2B is probably the, the, the, the area, which is,
Speaker:it's funny for me because, you know, B2B from the beginning of my career
Speaker:was kind of treated by everyone else as like the backwater, you know?
Speaker:And now everyone's like, we're B2B, you know, time was saying
Speaker:like, we're a B2B business.
Speaker:I'm like, really?
Speaker:I was like, that's, that's new.
Speaker:and you know, part of that is just the compression that's
Speaker:happening to the overall, industry.
Speaker:So how has the.
Speaker:How has the revenue mix changed, say in the last like three years?
Speaker:It's changed dramatically in the last three years.
Speaker:So, our affiliate business used to represent almost 30% of the
Speaker:overall revenue for the company.
Speaker:Now that's probably about about 10% live events.
Speaker:Five years ago were effectively zero this year.
Speaker:My expectation is that that's gonna be about 12% of the business.
Speaker:And then things like licensing, and when I say licensing, I really mean two things
Speaker:inside of licensing content licensing.
Speaker:And we have a great example where we packaged up donut and created
Speaker:a donut fast channel for Samsung.
Speaker:So that's one form of licensing.
Speaker:But I also mean things like product and, and merchant.
Speaker:That's a revenue line that has grown and that I would also expect to be
Speaker:about 10% of the business this year.
Speaker:we are still, the majority of the business is still through things
Speaker:like advertising and sponsorship, and that actually has grown as a piece
Speaker:of the pie as affiliate has declined.
Speaker:Okay, so affiliate's gotten hit the hardest and is, and that's directly
Speaker:attributed to, to the SEO challenges.
Speaker:Yeah, and, and I would say, again, I think it's a little bit more specific
Speaker:because people broadly paint it with this brush of saying it's SEO.
Speaker:To me, it's more specific in the sense that what we're really
Speaker:talking about is the way that the Google search results are laid out.
Speaker:You know, we, we have to, I think at this point, almost use a way back machine
Speaker:of our own minds and think about what Google looked like a couple years ago
Speaker:where it was a couple sponsored links, and then you'd have the organic results.
Speaker:Now you've got an AI overlay, you've got a shopping overlay.
Speaker:If you're looking at travel, you've got a travel overlay.
Speaker:Then you've got the sponsored results, then you've got the organic results.
Speaker:So really what's happened is in a sense, Google has gobbled up the
Speaker:affiliate results because it's sitting right under the search bar when
Speaker:you're looking for, for products.
Speaker:so that is unquestionably the component of traffic and the component of revenue
Speaker:that's been under the most pressure.
Speaker:Okay, so you've gotten shoved down off the page to like page two or
Speaker:page three, and that, that ends up, you know, really tanking.
Speaker:Not tanking, but I mean, it's down quite a bit.
Speaker:and so where do you see, I mean, events are up a lot.
Speaker:I mean, I hear a lot from publishers who are talking about experiential
Speaker:events, however you wanna call them.
Speaker:Gathering people in person.
Speaker:It makes a lot of sense.
Speaker:This is not something AI is gonna do unless it's gonna be a bunch
Speaker:of robots gathering together.
Speaker:I don't think so.
Speaker:I just had a breakfast this morning, so I'm hopeful that this, this area is safe.
Speaker:I've got a dog in this fight, that's for sure.
Speaker:so talk to me about how, you know, going from zero, basically not
Speaker:really doing much in the events business to, you know, now having.
Speaker:A growing, and I assume it's gonna be probably become a
Speaker:bigger part of the business.
Speaker:I mean, how, how is that process and, and what are, what are the properties
Speaker:that you're betting on there?
Speaker:Yeah, a hundred percent.
Speaker:So, I think there, first off, I think there's a big analogy with what you
Speaker:were saying when you're touching on B2B because the one similarity.
Speaker:With niches, but also in particular at the events is you're, you're addressing
Speaker:a community or a specific need.
Speaker:And so the, the biggest things that we are doubling down on this year are one
Speaker:military influencer conference, and two, the events business that we've
Speaker:started to build inside donut media.
Speaker:and just to pull out two anecdotes and may maybe to tell you a little bit about
Speaker:the events, so see of the background.
Speaker:Military influencer is an event that.
Speaker:Is really for the veteran or active service member that's trying to
Speaker:take the next step in their own personal or career development.
Speaker:We have three tracks.
Speaker:We have inspirational speakers, we have a job fair, we have a pitch competition.
Speaker:And to me the most, most important anecdotal thing that I've heard
Speaker:outta the event is that people now feel like it's a community reunion.
Speaker:So you're one leveraging that sense of community.
Speaker:Two, providing value to people, and three people are now putting
Speaker:it on their schedule so they know they want to come to it.
Speaker:as a matter of process, you know, when we, when we bought that event, about
Speaker:four years ago, it was about 400 people.
Speaker:Last year we sold 2,900 tickets, and my expectation is this year
Speaker:that it'll go over 4,000 attendees.
Speaker:But you know, like with like, with building any business, it's been
Speaker:filled with both joy and plenty of mistakes along the way too.
Speaker:because
Speaker:Oh, you gave me an opening.
Speaker:Let's talk mistakes.
Speaker:yeah.
Speaker:I mean, I, I think this is, this is, this is learned pain that I would tell
Speaker:anybody that's in the event space.
Speaker:We,
Speaker:Trust me, I've been in the event space.
Speaker:I know there's, there's a lot of pain involved.
Speaker:Anyone who's getting into the event space, I would always say like,
Speaker:you know, we would always, when we would put like an events job up,
Speaker:we get flooded with like, resumes.
Speaker:And I was like, man, you people don't know what you're getting into.
Speaker:This is, this is not for the faint of heart.
Speaker:Go on.
Speaker:Yeah, I think there's no question about that.
Speaker:I think, and, and I wouldn't necessarily say this was a mistake, but I would
Speaker:say in terms of optimizing the results, both for the attendees and for us as a
Speaker:business, we did two years in Las Vegas.
Speaker:I firmly underestimated people's, excitement about going to Vegas.
Speaker:I mean, I, I personally love Las Vegas.
Speaker:I don't think sponsors like Las Vegas, they think that when they
Speaker:sponsor something, they're sending their people to a boondoggle.
Speaker:and credit to my team for pointing out the fact.
Speaker:That the endemic military community in the Las Vegas area is relatively small
Speaker:compared to where we ultimately moved it to, which was Atlanta last year, and
Speaker:then this fall we're moving it to Tampa, which has an even bigger community.
Speaker:So I think number one thing is go where the audience is.
Speaker:number two thing, which is more of a budgeting thing, you know, and I'm sure
Speaker:everybody that's been in the event space that's done something in a conference
Speaker:center or hotel, you gotta be really tight on your budget and who's signing
Speaker:what, because hotels have a way of surprising you with, with expenses
Speaker:and that's never a fun experience.
Speaker:So really being buttoned up as you scale things is the number one piece
Speaker:of advice that I would give people.
Speaker:Yeah, and I, I definitely hear that and it's funny 'cause I always.
Speaker:There's always a divide between B2B and B2C.
Speaker:I feel like events in, in the margin profile, like I, I know at like breakfast
Speaker:and dinners that we do when consumer publish publishers talk about the
Speaker:margins that they expect on the events.
Speaker:It's far lower than what is the norm in B2B.
Speaker:and I think some of that is just.
Speaker:The, you know, sponsorship is, are acts different and you
Speaker:know, it's different when you're matching up a buying a sell side.
Speaker:and I think the costs end up getting like out of control.
Speaker:Yeah, what I would say is it's easy for the cost to get outta control.
Speaker:and, you know, we, it's something that we've learned from and
Speaker:we had a phenomenal event.
Speaker:It was an incredible experience for all of our attendees last year.
Speaker:and we also did generate very substantial profit off of the event last year.
Speaker:But again, it's just practicing that muscle and learning from,
Speaker:from mistakes in previous years.
Speaker:Yeah.
Speaker:And how different is it to, to f from a model perspective, to have
Speaker:a he, to have an event events be an important, component?
Speaker:because like, again, you were sort of architecting this with like, you
Speaker:know, you centralize services, right?
Speaker:So you end up.
Speaker:Taking a lot of costs out of the individual brands because a lot of niche
Speaker:brands, it's like, great, you have a very, you know, you have a tie, you have an to
Speaker:an audience, it's a community, et cetera.
Speaker:You can monetize in, in, in different ways.
Speaker:you know, the problem ends up being they're inefficient businesses.
Speaker:So like, small businesses are inefficient, and so you assume you, you had the,
Speaker:the shared services, you're like, okay, we're gonna centralize everything other
Speaker:than, than, than content, I would assume.
Speaker:Are the dynamics any differently when you enter when, when you
Speaker:have events as part of the model?
Speaker:first of all, I think our, our central services team is a little
Speaker:bit thinner than what you outlined.
Speaker:So for us, I mean obviously it's things like accounting, it's things
Speaker:like hr, it's things like legal.
Speaker:We have a really powerful central org when it comes to marketing.
Speaker:But for us, our verticals and our niches are so specific that we really do have
Speaker:experts in inside each and every one of them, both when it comes to sponsorship
Speaker:and and branded sales, and also the execution of an event like that.
Speaker:So for us, the team that deals with the execution of that event,
Speaker:event and the execution of military spouse fest sits inside of our
Speaker:military and defense vertical.
Speaker:The same is true for donut when we execute on donut live events.
Speaker:Um.
Speaker:What I would say is
Speaker:they each have their own events teams,
Speaker:yeah, they each have their own people that are sitting inside the vertical.
Speaker:And again, that, that for us is, it's an extension of the way that we
Speaker:viewed editorial and content creation, which is the verticals are
Speaker:so specific, you really need people that are expert to make an event.
Speaker:Awesome.
Speaker:when it comes to the margin profile, I mean, event margin profiles
Speaker:are, are definitely solid and.
Speaker:For us, when you get to a certain level of scale, you actually are approaching
Speaker:the margins that we see in digital media.
Speaker:So it's something that's very profitable and I don't think it really
Speaker:switches the margin that much, but it does create a very intense couple
Speaker:weeks for the people that are doing those events and the run up to them.
Speaker:What kind of margins do you, do you aim for?
Speaker:For?
Speaker:For your events.
Speaker:so we're, we're above 30% when it comes to, when it comes to
Speaker:our live events, so pretty solid.
Speaker:Yeah.
Speaker:And so how do you end up, I would assume Mo, like you, you mentioned some are
Speaker:like ticketed, so you're making direct revenue, but I assume the majority of
Speaker:the events business is, is sponsorship.
Speaker:Yeah, sponsorship is still a bigger piece of the pie.
Speaker:tickets in our case.
Speaker:And this is true, whether it's military influencer conference
Speaker:or something like a donut event.
Speaker:Tickets are probably about 30% of the revenue mix with the remainder coming
Speaker:from sponsorship or in the case of donut.
Speaker:It also comes from merch sales at the event.
Speaker:Right.
Speaker:Yeah.
Speaker:so like, how is it different, like with like the donut?
Speaker:Like how there, how that, like experiential strategy versus,
Speaker:you know, in the military,
Speaker:It's very different and it's very specific to what the content is and, and.
Speaker:Equally as important.
Speaker:It's very specific to what the community is.
Speaker:So with Donut, last year we ran eight live events, and last year was really a year
Speaker:for us where we were playing around with formats and saying, what can we repeat?
Speaker:What's the 10 pole big event?
Speaker:But.
Speaker:At the end of 24, and this is one of my favorite events that we've done that
Speaker:we will be repeating again this year, and I love it because it's the example
Speaker:of what a 360 media model should be.
Speaker:So inside of Donut, one of the biggest franchises that we've built is a
Speaker:show called High Low, where two teams compete with the exact same car.
Speaker:One team has more money.
Speaker:That's the high team, the low team has less money, and over the course
Speaker:of the season, they mod their cars.
Speaker:The last season of High Low we did was drag racing Ford Mustangs, and the season
Speaker:finale was actually a ticketed event that was filmed at a drag strip in Arizona.
Speaker:We had about 6,000 people show up, and I just love that as a concept
Speaker:because to me that is really the future of where we should be going.
Speaker:Where.
Speaker:You're creating amazing content in front of live fans.
Speaker:You are monetizing the sponsorship, both of the event and of the media.
Speaker:You have the ability for fans to meet the hosts of Donut.
Speaker:You have the ability for fans to see the action.
Speaker:You have the ability of fans to meet the cast of Donut.
Speaker:and so the dynamics are different.
Speaker:I also think one of the things which, which we didn't have a chance to
Speaker:talk about, which is so important about live events, particularly
Speaker:when they're content based.
Speaker:You know, one of the, one of the guys, Nolan from Donut said to me, you know,
Speaker:when I meet a fan, I make a fan for life.
Speaker:And when you think about the ever changing search algorithm
Speaker:and the way that brands change.
Speaker:That personal connection is absolutely critical.
Speaker:If you can get somebody hooked on the brand forever and they tell their
Speaker:10 friends, yeah, I, I met this guy.
Speaker:We went to the event.
Speaker:It was awesome.
Speaker:that's really a great way of hooking people.
Speaker:So that was one format that we did.
Speaker:We've done cruise in events, which were basically big car shows together
Speaker:with the Peterson Museum in la.
Speaker:We're gonna do two of those this year.
Speaker:We actually even did a collab with Bob's Big Boy last year where we also did a
Speaker:cruising event, which was a blast, and we're gonna aim to repeat that this year.
Speaker:So a lot of different formats, each with a slightly different revenue mix
Speaker:and purpose, but again, a great way to make fans that will last forever.
Speaker:Yeah, I, I like Bob's big boy, by the way.
Speaker:Great buffet.
Speaker:he, he used to always go there before, before high school.
Speaker:so good partner, and I think one of the other things with that
Speaker:kind of event is it's at scale.
Speaker:Right.
Speaker:Like, I mean, you can, like I talk with lots, I do lots of small
Speaker:events, but you know, my business is pretty, is, is pretty lean.
Speaker:you know, sometimes events and you, you see it a lot in
Speaker:the, the business focus pace.
Speaker:They'll be doing like hundreds of, of, of events.
Speaker:is, is your strategy more to let's get to like.
Speaker:Tent pole slash franchise where you know that's where you can,
Speaker:you can get some kind of scale.
Speaker:'cause the knock on events is they don't scale.
Speaker:Yeah.
Speaker:Well, I mean, that's obviously the goal, right?
Speaker:Bigger.
Speaker:would be great for the business.
Speaker:I think again, the first goal for us is to do things that are in keeping
Speaker:with what the brand is and make sure that it's a great experience.
Speaker:In some cases, those really scale.
Speaker:In some cases.
Speaker:The expectation, quite frankly, is that they will be smaller.
Speaker:We do small events inside the home vertical.
Speaker:We did one.
Speaker:Last year with Dwell, where we did a home tour of four homes that
Speaker:had been featured in Dwell in the Hollywood Hills with a meet and greet
Speaker:with the editorial team afterwards.
Speaker:That was a sold event.
Speaker:But to your point, that's smaller.
Speaker:It was about 300 people.
Speaker:still profitable, still monetized really well, still engaged.
Speaker:The audience would love to do bigger versions of that, but
Speaker:it's more challenging with some of the different niches.
Speaker:Right.
Speaker:Yeah.
Speaker:Yeah.
Speaker:I mean, in, in home I can definitely see the, the smaller events
Speaker:probably makes make more sense.
Speaker:And do you, and how do you end up making sure that there.
Speaker:Linked together with the overall business.
Speaker:And by that I mean like sometimes ev sometimes events can, can almost
Speaker:be like a separate business in some ways and they're not as like, tightly
Speaker:linked with the overall media property.
Speaker:And I, I mean, I definitely see this a lot of times, in, in B2B or you
Speaker:know, where the, the events are.
Speaker:Like at some point, like the, the publisher is like, wait, why do we,
Speaker:why, why are we doing the content?
Speaker:Like, I mean, the, the content is completely different than, than the event.
Speaker:Yeah, in our case, because the teams are so in inextricably linked, the
Speaker:content and the connection ends up being maintained in many cases.
Speaker:I could definitely see that for other brands, but that
Speaker:hasn't been the case in ours.
Speaker:The other component of it is that the content is a great
Speaker:vehicle for marketing the event.
Speaker:without the content, there would be no awareness that they exist or you'd be
Speaker:spending a lot in terms of your marketing budget to get people to an event.
Speaker:So our audience is almost like a built-in funnel for the live event strategy.
Speaker:Right.
Speaker:and some of your properties are very, it's interesting 'cause you have
Speaker:some that are more like, I would consider more institutional brands,
Speaker:but like some are very creator
Speaker:like centered.
Speaker:and how do you see that?
Speaker:'cause I mean, there is obviously we're going through a period where,
Speaker:you know, individuals, if you will, have more leverage at least in the
Speaker:marketplace than than institutions in many ca in, in many sectors.
Speaker:Right.
Speaker:How do you end up, how do you end up seeing that with, with
Speaker:your, with your properties?
Speaker:Like, are you seeing the more like creator centered, brands
Speaker:end up, you know, thriving more?
Speaker:The way I think about it is a little bit different than that.
Speaker:So for me, right, there's, there's one key theme that underlies all
Speaker:of media, which is that video seems to be eating everything right.
Speaker:The engagement of video is going up and up and up.
Speaker:And when you move from a text-based world, no matter how great a writer is.
Speaker:To a video-based world, people feel like they know that person.
Speaker:And so I wouldn't say that it's necessarily the, the creator
Speaker:term is consistently used to me.
Speaker:It all starts with the connection that people see when they see
Speaker:a personality on video, whether it's on their phone or their tv,
Speaker:or their laptop, or their tablet.
Speaker:Donut is the only video first brand that we've bought.
Speaker:But one of the things that we've been doing is taking a video strategy and
Speaker:applying it to all of our brands.
Speaker:We've been doing that.
Speaker:For some time now with Outdoor Life, with really strong success, both in
Speaker:terms of engagement from the audience, engagement from brands that want to
Speaker:advertise and sponsor the YouTube channel.
Speaker:we've seen that with task and purpose and building out that
Speaker:channel and continuing to evolve it.
Speaker:So inside of that, it's, it is, it is creator, but to me it all starts
Speaker:with who the personalities are.
Speaker:In many cases, what we've done is.
Speaker:If it's a brand that started out in the text-based world, see if we can get the
Speaker:editorial team in front of the camera.
Speaker:a great case study on that is with the drive.
Speaker:The drive actually was one of the first.
Speaker:YouTube channels about cars and the channel lead dormant for
Speaker:some time because we didn't know what to do with the strategy.
Speaker:When we bought the drive video production costs were higher.
Speaker:We couldn't figure out what the strategy was.
Speaker:And then about a year and a half ago, Kyle, who's the editor
Speaker:in chief, brought the channel back and he's front and center.
Speaker:So he is the creator, he is the personality, and you can see in the
Speaker:comments the way that people react to him.
Speaker:So that's a long way of saying I, I think you're right.
Speaker:But to me it's all about this personal connection that the audience feels.
Speaker:So are you then changing some of the, the, the, some of these brands to be more.
Speaker:Creator.
Speaker:Creator, like, if you will, or have the, and I know creator
Speaker:is in very imperfect term,
Speaker:trust me, as someone who has been at one point labeled a B2B
Speaker:creator, like I know that it's an
Speaker:I think that's a fair label.
Speaker:so yeah, like the, the, the, the, the term is, is, you know, I, but
Speaker:how are you, are you changing some of your brands to be more lean,
Speaker:more into being personality led?
Speaker:Absolutely.
Speaker:there, there's no question about it.
Speaker:And.
Speaker:It all starts with trying to understand where the audience is going and
Speaker:meet the audience where they are.
Speaker:And to me to say that we're in the website business, that that was a
Speaker:couple years ago, now we have to be in the, in the YouTube business.
Speaker:We have to be in the podcast business.
Speaker:We have to be in the event business, and.
Speaker:That's what we've been focused on for the better part of two years, is
Speaker:how do we take those, those tactics, how do we take those strategies?
Speaker:How do we implement them across the whole portfolio to really meet the
Speaker:audience, see that where they are and create a connection with them.
Speaker:Yeah, and I think that the challenge is that like you have to do so many different
Speaker:things, that getting them all to make sense together can be a. Real challenge.
Speaker:you know, because I mean, the business is just more, it's a
Speaker:very, I always find media business, they're very complicated businesses.
Speaker:Right.
Speaker:Like they're, they're just be by their nature because there's, you've
Speaker:got, you've, you know, historically you have different, you've got like
Speaker:content people, you've got salespeople, you've got different groups.
Speaker:And then the way you make money is in a bunch of different ways.
Speaker:And sometimes you're working almost against each other in some ways.
Speaker:And like, you know, just like for instance, this
Speaker:breakfast this morning, like.
Speaker:Trying to get people to like agree on like a common metric within these businesses
Speaker:is incredibly difficult.
Speaker:You know, like is it arpu?
Speaker:Is it LTV?
Speaker:Like nobody can agree.
Speaker:yeah, I think, I think the thing that people get distracted by is you
Speaker:can have a lot of pennies that you hope add up to a bigger number, and
Speaker:people get distracted going down the rabbit hole of, you know, tiny micro
Speaker:distribution components of the business.
Speaker:At its heart, the media business is actually pretty
Speaker:simple, which is audience in.
Speaker:Once you have the audience, you can monetize it, whether it's through
Speaker:advertising or membership or other, and so it's audience in money, in profit out.
Speaker:That's the way it should work.
Speaker:I think the thing that's complicated and the thing that I can share
Speaker:personally, has been a challenge is when you're looking at.
Speaker:A component of the business, like an affiliate business or in some
Speaker:cases and, and we're fortunate enough that we exist in niches and
Speaker:we have communities that have kept.
Speaker:Are editorial traffic strong, but when you have a component of the business
Speaker:that's falling, the thing that is very difficult to do, which we have managed
Speaker:to do, is to scale up the new components of audience and new components of
Speaker:revenue while managing a segment of the business that's under pressure.
Speaker:That's where people get.
Speaker:And, and it's not an easy thing.
Speaker:it's not an easy thing 'cause you're, you're trying to keep people focused.
Speaker:You're trying to keep people motivated.
Speaker:You're trying to manage a p and l understanding that one segment
Speaker:of your business is in secular decline while you're investing
Speaker:in a new segment of the business.
Speaker:And you have to keep operating them too.
Speaker:You're operating the old business and while you're building the new
Speaker:business and you're doing it all like in, in a chaotic atmosphere.
Speaker:Right.
Speaker:And you're sitting there going, well, it's down, but it's still
Speaker:profitable, so I gotta keep doing that.
Speaker:so those are the issues that I think is, are challenging for any management
Speaker:team, regardless of its of if it's media or, or other industries that have
Speaker:also gone through rapid transformation.
Speaker:And for me, right.
Speaker:I started my career in the music business, so we watched CD sales
Speaker:drive off a cliff waiting for streaming to at some point happen.
Speaker:so it's not, it's not unique to the publishing business, but
Speaker:that is unquestionably an issue.
Speaker:And it, it is, is a challenge just from a management perspective.
Speaker:Yeah.
Speaker:And where do you, like, what areas do you think are going to grow the
Speaker:fastest in the next three years?
Speaker:So for us, we are completely oriented around four key components of the business
Speaker:for growth, video, experiential licensing.
Speaker:Ai.
Speaker:And when I talk about ai, it's not just AI to cut bodies, it's AI to
Speaker:make content go further faster.
Speaker:how do we use AI to mine the incredible catalog we have?
Speaker:How do we use AI to take something that's a long form video?
Speaker:Rapidly do a cut down, make sure it's on every single platform
Speaker:and be able to track it.
Speaker:to me those are the most compelling components of ai.
Speaker:And you know, I have some very smart investors and I sat down with one of
Speaker:them and his point was, you have to look at two sides of the page when it comes
Speaker:to AI defensive, which is cost cutting and offensive, which is expansion.
Speaker:Um, we've done a lot of the ways that we can use AI to be more
Speaker:efficient, and now it's all about the offensive components of it.
Speaker:Yeah, I think, and I think, I think for good reasons, a lot of, a lot of the
Speaker:focus this industry has been on defensive, not like offensive, you know, because
Speaker:it's, you know, trying to get payments out of, out of content that's gone.
Speaker:It's been trained on et cetera, trying to get it for refresh content, et cetera.
Speaker:And then there's the efficiency, which is, you know, replacing
Speaker:people with software, which is, is.
Speaker:You know, inevitable in, in, in some cases and, and a lot.
Speaker:Look, these businesses have to get more efficient.
Speaker:They just have to, and that's, you know, that's, that's how it goes.
Speaker:And, and the.
Speaker:The biggest input cost.
Speaker:There's, there's no factories.
Speaker:don't think you guys have a factory.
Speaker:And so, you know, you, it's people like there's, you have to get more
Speaker:efficient in that and putting it towards what is gonna be driving, the
Speaker:value in these, in these businesses.
Speaker:but it, it, AI has to be used to create better products at the end of the day.
Speaker:It can't just be, I don't think we've seen that, you know, like, I mean.
Speaker:like I understand it with like cutting videos and whatnot, but like for instance,
Speaker:like the website experience, right?
Speaker:Like, I don't know.
Speaker:I don't know if there's a compelling rationale yet for
Speaker:many publishers for people to.
Speaker:To be typing the, their, it just seems very strange that they're gonna be
Speaker:typing their, their URLs into, a bar.
Speaker:And if they're not, like, you know, ending up there via search, I just, I don't
Speaker:know if an AI enabled, search experience is on a, on a website is gonna do it.
Speaker:for what it's worth, I don't think anybody knows what the.
Speaker:What all the different platforms are and where, where they're
Speaker:gonna be, I mean, right.
Speaker:We always joke internally because we've had a, over the course of the past 12
Speaker:months, we, and I would imagine many other publishers have seen this, have had
Speaker:a massive regrowth of Facebook traffic.
Speaker:And our joke is like, oh, it's a good zuck year, but, you know,
Speaker:he'd giveth any taketh away.
Speaker:Yeah.
Speaker:so, you know, we, we try and be everywhere and track all platforms and
Speaker:have relationships with all platforms so that we know where things are going.
Speaker:AI is a great tool to help us do that.
Speaker:but I think what you're saying about typing in a URL, you know, we, we
Speaker:still do see a tremendous amount of direct traffic, but I still just
Speaker:view it as this big macro theme.
Speaker:That video is gonna get bigger and bigger and more important to the pie.
Speaker:Yeah.
Speaker:So is that for all brands that you, that that video is gonna be, I mean, I'd
Speaker:assume, will it be central to all brands?
Speaker:I would imagine it will be central to all brands over over time.
Speaker:Right now we do not.
Speaker:We do not publish on every brand, but we do have active video strategies
Speaker:on the majority of our key brands.
Speaker:so outdoor life, popular science donut, real mechanic stuff, the drive task
Speaker:and purpose, the war zone is gonna start publishing in video, over the
Speaker:course of the next couple months.
Speaker:So it, it is very central to our strategy.
Speaker:Okay.
Speaker:Then can I read into that the text is less important?
Speaker:I wouldn't say it's less important yet.
Speaker:It may get there over time.
Speaker:It may get there.
Speaker:talk to me more about that.
Speaker:I'm a words guy.
Speaker:despite us doing this through video and, and, and, and audio.
Speaker:that's why that's my, that's my off ramp.
Speaker:I'm audio.
Speaker:I'm not a video guy.
Speaker:I, I don't know, at the end of this conversation, I might,
Speaker:I might pivot the video.
Speaker:We'll see.
Speaker:Well, I think to me again, we're one, we're following the user
Speaker:behavior, and two, when I look at where things are growing, I mean,
Speaker:I'm gonna, I'm gonna again draw an analogy to where I came from, which
Speaker:was starting in the music business.
Speaker:If you think about.
Speaker:The arc of the evolution of video, like the music business, right?
Speaker:25 years ago, you had to have a record label to get a CD out.
Speaker:Then streaming came along and individuals could publish through an aggregator.
Speaker:Then they could publish directly and get their music direct to consumer.
Speaker:A couple years ago, you still had to go through a TV network
Speaker:or maybe a Netflix to get on tv.
Speaker:Now, YouTube is 13% of television consumption.
Speaker:It's actually almost double the amount of consumption that a Netflix is and
Speaker:any individual can publish there.
Speaker:So the barriers have come down on the distribution side.
Speaker:Number one, and the barriers have dropped dramatically on the production side.
Speaker:So there's more content being published.
Speaker:That's video.
Speaker:Why is there more content being published as video?
Speaker:Well, that's where the consumer demand is.
Speaker:so we've seen demand shift.
Speaker:The second thing that I would mention, which is gonna be maybe surprising.
Speaker:To people that hear this, but I think that we are still in the early
Speaker:innings of major brands and agencies understanding the YouTube ecosystem.
Speaker:So when I think about growth of spend and dollars that can be captured, that
Speaker:is a core ecosystem to our strategy.
Speaker:I just think it's where it's, again, where the eyeballs and where the money's going.
Speaker:Oh, so like when you're saying video, you're saying YouTube in a lot of ways.
Speaker:it's, it's gonna be YouTube and others
Speaker:I mean, YouTube's tv, like it's
Speaker:Yeah.
Speaker:sort of universally seen almost as like tv.
Speaker:Yeah.
Speaker:I mean, I, I can give the, I, I can give the teaser.
Speaker:It's YouTube and others we're gonna be doing some really cool stuff with
Speaker:other platforms, but right now for us it's YouTube is Core Meta and Instagram
Speaker:and Facebook video, and also TikTok.
Speaker:Okay.
Speaker:what is the, like, is the value of the brand as great now?
Speaker:I mean, 'cause you, you, you have a collection of, of
Speaker:really good brands, right?
Speaker:and I think the question ends up being do, do the, do these kind of
Speaker:institutional brands end up losing.
Speaker:Value as, as people are more attached to individuals, right?
Speaker:Like I'm, I'm your, your competitive set in these categories is often
Speaker:a lot of individuals, as much as
Speaker:Mm-hmm.
Speaker:like other, you know, institutional brands.
Speaker:Yep.
Speaker:I, I do think that the brands matter.
Speaker:I actually am bullish on the meaning of brands as AI maybe erodes consumer trust.
Speaker:I think the brands as a trusted place and a trusted resource, and as a place
Speaker:that consumers know they're gonna get.
Speaker:Awesome content, over time is gonna be, is gonna increase, but you are
Speaker:absolutely right that the competitive set right, the competitive set for
Speaker:recurrent is now not just Hearst, but it's other individuals that are
Speaker:publishing the automotive vertical.
Speaker:That's who we're competing with.
Speaker:For attention span and for eyeballs.
Speaker:but I do think that the brands matter because people know what they mean.
Speaker:And I don't think in the case of something like an outdoor life,
Speaker:which has 150 years of brand equity, I don't think that's going away.
Speaker:I think that's gonna be ever more important.
Speaker:I.
Speaker:Right.
Speaker:Yeah.
Speaker:I mean, I think that, I think that that will, that will likely happen.
Speaker:Like, you know, everything's gonna get so chaotic and it already
Speaker:has gotten so chaotic that.
Speaker:You know, brands will, again, play a role, play an important role as a
Speaker:signal of like, quality and trust.
Speaker:You know, I think they always have, so they likely always will
Speaker:in many cases.
Speaker:cool.
Speaker:So tell me about the licensing strategy.
Speaker:I think this goes back to the point about brand importance.
Speaker:So, the best example of things that we've done inside of licensing sit within Donut,
Speaker:where for a long time we've had a big, direct to consumer merchandising business.
Speaker:Two years ago we took that business and we licensed it to Zumi the mall retailer.
Speaker:And that not only expanded the revenue stream, but also expanded.
Speaker:The, the visibility that people have of the brand.
Speaker:And that's a strategy that we're gonna continue.
Speaker:If you think about what donut is, we're looking at other categories.
Speaker:Even looking at things like car care, to expand into.
Speaker:So really exciting way to leverage your brand, even inside Dwell.
Speaker:dwell for a couple years has had its own outdoor furniture line,
Speaker:which has performed really nicely.
Speaker:So, you know, again, another way to diversify away from things like
Speaker:SEO and being advertising reliant.
Speaker:Okay, but you're not gonna like start making your own products yourselves.
Speaker:No, I think for, for us, the, the way I always, I, I would love to make my
Speaker:own products 'cause I think it would be super fun, but at the end of the
Speaker:day, it's not something that, right.
Speaker:The, the balance sheet and the capital requirements of a media business are
Speaker:very different from a product business
Speaker:I, yeah, I feel like that Playbook has, has, has, you know, I mean,
Speaker:like, it's like sort of the, the turn in thesis, like, I don't know if it,
Speaker:the thesis was, was completely wrong.
Speaker:I think the results were very.
Speaker:Hit and miss to become charitable, I guess, like, you know, some of these,
Speaker:these businesses really struggled to, become real, like commerce.
Speaker:When I say real commerce, I mean like, you've got like, you know,
Speaker:ho dinky like had, you know, they, they're holding inventory and stuff.
Speaker:It's not like a licensing deal.
Speaker:it's, it's a different type of business food.
Speaker:52. You know, these, these are, these are real.
Speaker:you know, commerce businesses that have completely different dynamics,
Speaker:Yeah, I think that's right.
Speaker:I think, I think your point about food, sorry about hokey and again, I'm, I
Speaker:guess I'm a caricature of my own self.
Speaker:I'm like a watch guy and a car guy.
Speaker:so the
Speaker:and you're a Miami, you see you're a
Speaker:Yeah, and I'm a, and I'm a, and I'm a Miami guy, so I'm, I'm, I'm way
Speaker:too predictable for my own good.
Speaker:but I think inside of what they own, I think you're, you're, you're probably
Speaker:right about ho dinky, which is they were holding inventory and that's not a healthy
Speaker:thing necessarily for a media business.
Speaker:But at the other end of the spectrum.
Speaker:Doug DeMuro and Cars and Bids.
Speaker:I think those guys have done an exceptional job, and that's a
Speaker:pure play marketplace business.
Speaker:And it's one because I'm a car fanatic that I look at almost every day.
Speaker:So I do think that the thesis can work.
Speaker:Licensing is a little bit different than building a
Speaker:marketplace business in many ways.
Speaker:It's simpler, because you're, you're leveraging the brand equity and finding
Speaker:the right partner to take that brand and.
Speaker:Make it into a product and, and put it out into the market.
Speaker:Right.
Speaker:And are there other aspects of the product strategy that, that are
Speaker:not just, that are not licensing?
Speaker:you know, it, for us it's D two C merch and licensing.
Speaker:merch is an easy one because it, again, it doesn't have that high capital
Speaker:requirement to get it done, and it is a, a really easy exercise in this day
Speaker:and age to figure out how you do merch.
Speaker:We do it with outdoor life.
Speaker:we do it inside of our military vertical.
Speaker:We do it in donut, we do it in the drive.
Speaker:but it really is those two components that we're focused on.
Speaker:Right.
Speaker:And, and are there other sort of growth opportunities that, that you
Speaker:are thinking about like longer term?
Speaker:I, I would say the other one.
Speaker:And this has been in the market with various partners for a while.
Speaker:The other one that we're focused on, on the heels of getting our
Speaker:Donut Fast Channel launched is to do a lot of fast channel expansion.
Speaker:We have a incredibly robust catalog of video content, across all of
Speaker:our core verticals, and a lot of that catalog has not been used to
Speaker:the full extent that it can be.
Speaker:And so we are in the midst of packaging that.
Speaker:That content up and going out to the right partners to, to maximize it.
Speaker:Got it.
Speaker:Okay.
Speaker:Cool.
Speaker:Andrew, thank you so much.
Speaker:Really
Speaker:Yeah.
Speaker:My
Speaker:pleasure.
Speaker:the time.
Speaker:Thanks for having me.
