State of Financial Publishing 2022
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The financial publishing industry - the world of investment newsletters and trader education - is in a state of transformation. I start this presentation giving everyone the context around that transformation. First, the history of how capital markets cycles impacts customer acquisition in financial publishing. The cycle drives marketing themes and advertising costs. I also explore the context of the transformation of capital markets and it's intersection with building digital investor audiences - the lifeblood of financial publishing. The transformation is creating a "best of times, worst of times" scenario where it feels like the worst of times in the world of promotional and the best of times in the opportunities to expand the business model. This includes a brief look at Michael Porter's 5 Forces model for defining the profitability of an industry. And a look at examples of innovation in the business models of both publishers and fintech companies who need to build digital audience for their revenue model to work. This was the keynote presentation at The Financial Marketing Summit 2022 - available to view here https://youtu.be/I7jz2oL81fY
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State of Financial Publishing 2022
- 1. The State of Finpub 2022
- 3. Alt Asset & new sector promos work best • Cannabis • Bitcoin • MicroCap Stories (5G) • Private Deals Alt Asset & new sector promos work best • BRICs • Currencies • TradingSystems (FOREX BOOM) Alt Asset & new sector promos work best • Dot.com stocks • Internet infrastructure • TradingSystems (first day trading boom) Gold, macro & ActiveTrading Promos Work Gold, macro & ActiveTrading Promos Work Impact on Promotions
- 4. Impact on Trading Products Trading Education &Tools Trading Education &Tools Original DayTrading Boom Forex Trading Boom Crypto Trading Boom Systems Trading products
- 5. Impact on Advertising IR & Pub Spend Tanks IR & Pub Spend Explodes IR Spend Tanks IR & Pub Spend Explodes Publishing Spend Tanks Ad spend starts to recover Lots of ad inventory Can’t get enough ad inventory Not enough ad inventory
- 6. End of America • 14 (ish) months post crash • Mainstream media heavily focused on stock market. • Fear + cautious optimism Plague of the Black Debt • 12-16 (ish) months post crash • Mainstream media heavily focused on stock market. • Fear + cautious optimism • Ad costs down • Prospects paying attention. • Promo competition low. • Ad costs down • Prospects paying attention. • Promo competition low. The biggest acquisition promos come after a crash
- 7. Why are ad costs so high when everyone is spending so much less on advertising?
- 8. The Founder of the Modern Business Strategy Field -Michael Porter “He has influenced more executives - and more nations - than any other business professor on earth.” —Fortune magazine
- 9. Industry Rivalry Threat of new entrants. Supplier Bargaining Power Threat of Substitution Customer Bargaining Power Michael Porter’s 5 Forces
- 10. “The strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation. “The most salient force, however, is not always obvious.” - Michael Porter
- 11. Finpub Industry Customer Bargaining Power Financial Publishing A WEAK FORCE • Massive price elasticity. • Easy to add new high-priced products. • Specialized information so no price shopping. • “Sold” not “bought”. • No organization among buyers. • Customers substitute, not price shop. Publishers don’t compete on price.
- 12. Finpub Industry Threat of new entrants. A MODERATE FORCE • Low relative startup costs. • High media costs to scale. • Specialized knowledge & skills. • Low to no R&D costs. Slightly protective effect on profits.
- 13. Finpub Industry Threat of Substitution This defines the size of the industry more than any other force. A STRONG FORCE (and growing stronger) • Other investment product models: RIAs, funds, etc. • Free research & tools. • Free investing advice from “Creators”, media, etc. • Brokers offering education. • Competitive business models (Tasty Trade). Profits DO flow away from FinPub in lost customers & limits on industry size.
- 14. Porter Stansberry specifically positioned his publishing business as a SUBSTITUTION for the wealth management business that charged a percentage of your portfolio.
- 15. Finpub Industry Supplier Bargaining Power This extracts the largest share of profits from industry activities AND poses the greatest short to medium term industry risk. A VERY STRONG FORCE -$
- 16. Supplier Bargaining Power This extracts the largest share of profits from industry activities AND poses the greatest short to medium term industry risk. Acquisition Media Prices set by media platforms – Google, FB, Youtube, etc Agora Companies got kicked off Google for 2-years. Scale increasingly involves 3rd party media buyers – who tend to promote the same handful of high-converting offers at any given time. Merchant Processing Can set prices & fees. Can shut down you down. Can & does dictate your marketing policy. Labor Massive skilled labor shortage. Commission models for multiple types of positions. In some Finpub models the loss of 2-3 key staff tanks revenue significantly. Lots of compensation competition for skilled labor.
- 17. Industry Rivalry Threat of new entrants. Supplier Bargaining Power Threat of Substitution Customer Bargaining Power Where we lose profits. A WEAK FORCE A STRONG FORCE A STRONG FORCE A MODERATE FORCE -$ -$
- 18. Why are ad costs so high when everyone is spending so much less on advertising?
- 19. Industry Rivalry Threat of new entrants. Supplier Bargaining Power Threat of Substitution Customer Bargaining Power Because these forces are getting stronger. -$ -$ -$
- 20. At the 2021 FMS I predicted: Competition for investor engagement will increasingly be between monetization models.
- 21. Competition for private investor attention. Newsletter Models Fund Models Media/Portfolio Hybrid Model Direct to investor campaigns Platform Models
- 22. More companies spending on advertising in the same channels increases prices.
- 23. Traffic services providers benefit from that spend while publishers suffer.
- 24. So, should everyone start selling media?
- 25. Value Capture vs. Value Transfer
- 26. The Strategic Theater: Who can capture the most investor attention at the highest lifetime value?
- 27. Building a strong relationship between a guru and an customer delivers the highest form of investor engagement – but not always the highest lifetime value.
- 29. “Financial Media is the lifeblood of all these fintech platforms.” -Ian Rosen, FinancialAnswers.io
- 30. Architectural innovation Same model, new market. Radical Innovation New model, new market. Incremental improvement Improving existing business. Disruptive innovation New model, same market. Market Technology Existin g Existin g New New
- 31. Business Model Innovations. 1. Asset management - $1.3 billion AUM 2. Wealth management - $2.3 billion AUM 3. Venture Funds - $300 million AUM 4. Subscription Newsletters
- 32. Architectural innovation Same model, new market. Radical Innovation New model, new market. Incremental improvement Improving existing business. Disruptive innovation New model, same market. Market Technology Existin g Existin g New New
- 33. Architectural innovation Same model, new market. Radical Innovation New model, new market. Incremental improvement Improving existing business. Disruptive innovation New model, same market. Market Technology Existin g Existin g New New
- 34. Architectural innovation Same model, new market. Radical Innovation New model, new market. Incremental improvement Improving existing business. Disruptive innovation New model, same market. Market Technology Existin g Existin g New New
- 35. Who captured more value? $1 billion exit “IG is offering tastytrade a total purchase price of $1 billion which excludes tastytrade’s cash.” Tastytrade had 105,000 accounts and1.3% of the U.S. options market by volume. $275 million exit “IBD’s revenue base is almost entirely digital, with nearly 100,000 digital subscribers across its platforms. IBD operates the investors.com website, which reached an audience of 10.8 million average monthly unique visitors in February 2021.”
- 36. Architectural innovation Same model, new market. Radical Innovation New model, new market. Incremental improvement Improving existing business. Disruptive innovation New model, same market. Market Technology Existin g Existin g New New
- 38. Industry Rivalry. We can’t ignore innovation here. Threat of new entrants. Supplier Bargaining Power Threat of Substitution Customer Bargaining Power Michael Porter’s 5 Forces
- 39. Innovations in audience selection. ESG assets may hit $53 trillion by 2025, a third of global AUM
- 43. The Great Up- leveling. Bigger markets. Bigger opportunity. Bigger businesses. Bigger partners. Bigger profits.
- 44. We’re changing from an industry with a single billion-dollar company… …To an industry capable of supporting dozens of billion-dollar companies.
- 45. Funding. Your ability to raise capital will be an increasingly important part of your competitive strategy.
- 46. It feels like we’re about to enter a new business cycle. Past (business) performance is no guarantee of future results.