At the Content Marketing Institute Conference in September, an event filled with over 1,700 fellow content marketers, I had the pleasure of meeting Michael Struble, a financial executive from NYC. Michael is a Director at Wasserstein & Co., an independent private equity and investment firm. We struck up a conversation after my presentation, and I was very intrigued to hear not only what led him to a marketing conference, but his thoughts on the rapidly growing content marketing industry.
He was nice enough to take some time to chat with me about this recently and share some of his ideas on content marketing’s future.
Q: As a financial executive, what led you to start noticing the content marketing industry and following its growth?
A: One of our focuses at Wasserstein & Co. is the media sector. My first exposure to content marketing, in the crudest sense, was in the form of custom publishing, at our B2B media companies such as ALM Media and Penton Media. About eighteen months ago we started noticing a mini sector in the overall marketing and advertising industry along with the growth of other media companies that grew up as custom publishing businesses. These companies had longstanding relationships with clients, high renewal rates, and for the most part created custom magazines for clients; but expanded to offering digital capabilities as well. We first heard the term content marketing around this time, which led us to wonder… what else is in this space?
Q: What do you think the future will be like for the content marketing industry?
A: It’s probable that in the near future, content marketing will earn a higher percentage (greater than 5-10% currently) of a company’s total advertising spend. As the world looks at ad spend across all media, we think all of the rest of these pieces will be content marketing …. engaging and talking to customers directly, not on the back of someone else’s platform or content.
It’s in the initial phases – we will get to that point. It’s still playing out and seems to have lots of momentum. That was evidenced by attendance by CM World. People from smaller businesses with less than fifty people, to multi-national corporations, were feverishly taking notes on how to do this and engage with customers on a regular basis.
One of the barriers of growth has been the lack of education out there. There’s still a big learning curve among all sizes of businesses. Small, medium and large companies can all do this – and effectively. Many organizations still think in campaign terms, though. They do something for a month, then go dark, and say something again. But what if, during those months where you don't have something to talk about, you continuously talk to customers via some sort of content marketing.
Many companies think they can do it. It’s not hard, but it requires a certain skill set to talk to people, drive conversations and create community. People think that it will be easier than it turns out to be. Hopefully it will get easier.
Q: What do you think the shift from more “traditional” marketing and advertising to content marketing means for businesses and agencies?
A: From a purely financial perspective, what’s attractive about content marketing vs. traditional marketing and advertising is that content has real stickiness with customers.
An agency’s success can often be tied to one or two individuals with great relationships, and the business can be fleeting. If a rep leaves and takes their business elsewhere, or a campaign ends, many businesses move to another agency. That is really unattractive from a financial buyer’s standpoint. You need to have the recurring revenue to expect each year and the activities to make that spend bigger twelve months out of the year.
One of the other things we’ve seen – in the current state of content marketing – is that there seem to be three distinct players:
1 - Traditional custom publishers making the transition into a full service content marketer with some traditional services;
2 – The content agency that has the capability to do full content marketing but offers the secret sauce of strategy, the more thoughtful part of the deployment
3 - The more commodity based agency that produces and tracks content through technology.
This third bucket is valuable but can be easily replaceable from firm to firm. Anyone can have an SEO/SEM specialist or develop a technology with a dashboard tracking leads and click-throughs. A metrics based software site has the risk of commoditization that someone else can build on. The flipside of that – once that technology is imbedded in the client, it can be an impediment to the client moving. That second bucket is the one that will win you business and keep you in business… smart, strategic ideas for clients that show them results and keep them coming back.
Models two and three would create the juggernaut Content Marketing business. You need the high level thinking and strategies and the tools/software to measure and manage – and do it on your own. If you can have both of those things, you will develop revenue streams with very sticky customer satisfaction and premium price points to follow.
It can be difficult at times because you see companies more focused on technology raising incredible amounts of VC money. They’re on the upper echelon of the technology spectrum. But at the end of the day, I worry that those businesses based on software and technology platforms will be replicated.
Q: Lately there have been several mergers and sales of content marketing and inbound agencies with larger companies. Do you think the trend of agencies buying similar agencies will continue, or will agencies and media holding companies seek out those that offer more complementary services like design or development?
A: I think there will be validation among the content marketing players, either from content marketers themselves or from the top down with holding agencies coming in. If they don’t have the capabilities and skillsets in the agency, if history is any guide, they will go out and buy them.
At the moment there isn’t a big pool of money to go after which has kept the big agencies focused on more traditional budgets because they keep the lights on.
The content marketing trend is still in its infancy. While the attendance at CMWorld was great, there are still some people out there who have doubts, whether content marketing will become a self-contained line item on marketing budgets. Frankly, it doesn’t come down to what we call it. It’s just moving money from one bucket to another. Content marketing is just another way of talking about how companies talk to their customers, it can go by any name, but it’s watching where clients spend money.
What validated the trend, regardless of its name, is when Coca-Cola staffed a content marketing department of forty editors and content creators in their own office, and was doing it with internal resources. It will be interesting to see how that experiment plays out.
In addition, there’s no disagreement about RedBull. They’re the preeminent marketer out there. That’s the simplest validation of content marketing in itself. Companies need to start thinking about themselves as a media company, and should do their best to create great content that people want to engage with.
It will be interesting to see how this all plays out, and it’s changing all the time. The more that folks like SPROUT Content and others in the content marketing space can evangelize this, the more believers you create.
Thank you Michael. We couldn’t agree more. What do you think the future of content marketing will be?