03 May 2022 |

Video: Money Maker or Mistake?

By Adam Ryan

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TikTok is the most powerful network in the world right now. 

The platform was the fastest app to get to 1B users in 2021, doing it in half the time it took Twitter and Instagram. But it’s not just teenagers spending hours scrolling — more than 30% of users had a household income of more than $100K, and they’re spending on average 68 minutes a day in the app. 

And TikTok isn’t look to slow down. They recently added the option to post 10-minute-long videos (up from 2 minutes). 

This is to directly compete with YouTube and their longer videos — which is no easy fight. 

YouTube is the most popular platform with 74% of adults, 80% of parents in the US say their children watch YouTube, and it accounts for 25% of global mobile traffic. 

With all of those numbers, it’s safe to say video is hot right now, which begs the question… 

Is it time to pivot to video?

The history

“If we look already, we’re seeing a year-on-year decline on text. If I was having a bet, I would say: video, video, video.”

– Nicola Mendelsohn, VP of Facebook in 2016

In 2016, it was impossible to not hear the words “pivot to video” as a media operator.

Facebook’s executive team, including Zuckerberg, touted it as the “golden age of video” and the best way to reach your audience. There was so much hoopla there’s even a Wikipedia page about it.

Forget why it was such a big deal? Here’s the background:

Facebook claimed videos on the platform had more than 1B views a day. Companies started to buy into the idea that customers would no longer go to a website to read an article, but rather they needed to host the content on 3rd party platforms like Facebook to reach their audience.

So, companies like Mashable, Buzzfeed, Vox, Vice, MTV, Mic, Vanity Fair, Sports Illustrated and more laid off a good portion of their staff to strategically align their newsroom around video instead of text. 

It wasn’t until 2018, when documents were unsealed in a lawsuit, that it was revealed Facebook knew the metrics around video were inflated by 150 to 900 percent. 

By then, those that made a hard pivot into video had a difficult time recovering.

For example, Mashable sold to ZiffDavis for $50M a year after their pivot (they had raised $59.3M) — and, soon after, they retreated from their video efforts. 

Despite all the mismanagement and misinformation, Facebook was only ordered to pay $40M to publishers — a pimple-sized amount compared to the $22B profit they made the same year. 

Current landscape of TikTok 

The Athletic: 23.5K TikTok followers. Last 10 videos averaged 57K views per video, mostly driven by 2 viral videos. Post ~20 TikToks/month from a rotating cast of 2 creators. Content is specifically made for TikTok, but no custom scripts and no sponsored posts in the last 3 months.

Axios: No presence on TikTok

Barstool Sports: 16.4M TikTok followers. Last 10 videos averaged 337K views per video. Post ~300 TikToks/month. Content can be sorted into 2 general buckets: (1) repurposed clips from Barstool-owned shows, and (2) UGC content that matches the persona of Barstool’s audience. CTA drives to the top video on Barstool’s YouTube page. No sponsors on main page (mostly on secondary channels).

Industry Dive: No presence on TikTok 

The Information: No presence on TikTok 

Morning Brew: 336K TikTok followers. Last 10 videos averaged 1M views per video. Post ~14 TikToks/month from a rotating cast of 3 creators who have production and script support. Content is made specifically for TikTok with a CTA to subscribe to the main Morning Brew daily newsletter. Average 1 sponsor per month (last 2 were Carta and Slack, each of which got <15K views).

TechCrunch: No presence on TikTok

P.S. you’re seeing this section because you referred one or more people to Perpetual. Thank you. 

Is video worth it?

It’s safe to say that laying off your editorial staff to move to video is still not a good move in 2022, but that doesn’t mean video isn’t worth an investment.

Video, despite the dependency on algorithms and the production cost, has 2 major advantages: organic growth and extension of audience life — and Barstool Sports and Morning Brew are embracing video with strong success.

Organic growth 

Let’s first look at Morning Brew. They’re releasing about 10-15 YouTube videos a week and a TikTok almost every other day. So much for being a newsletter company amirite? 

So, why did Morning Brew clearly go all in on video? To help save money. 

Let’s do some rough math on Morning Brew. They have about 4M newsletter subscribers to their main newsletter. They may have 2.4% of their audience hit “unsubscribe” to their list per month (.08% per send * 30 sends) — that’s 96,000 subscribers churning per month.

On top of that, let’s estimate an additional 2.5% of subscribers haven’t opened an email in 60-90 days, so Morning Brew will force-churn those users to maintain a quality IP reputation (AKA protect deliverability) — that’s another 100,000 subscribers churning per month.

If this math shakes out, Morning Brew is losing about 196,000 subscribers/month, or about 4.9% of their subscriber list.

BUT the Brew has strong organic growth (SEO, press, social, etc.). Let’s say, on average, their organic growth rate per month is around 1.5%. That means if we take 4.9% of churn and subtract the 1.5% of organic efforts, then Morning Brew loses 3.4%, or 136,000 subscribers.

To make up for this, Morning Brew must add subscribers via paid advertising. So, let’s say it costs, on average, $5 to acquire a subscriber — that means they’ll need to spend upwards of $680,000/month just to maintain their current list size.

This is why Morning Brew went so heavy in video. They figured out 2 things:

  1. If we can use video to spread our brand into new channels, we can potentially double our organic growth while only adding ~10 employees for an additional expense of $150K/month. 
  2. The cohort of organic subscribers is a lot better than the paid advertising cohort, so even if we don’t get as many subscribers, the quality will be higher. 

Sure, there are some sponsors involved and there’s some money to make — but this is a marketing play, not a revenue play… yet. 

Extension of audience life

Stoolies will do anything and everything for the Barstool brand. 

However, Barstool has, historically, under-monetized for how much admiration their fans have for the brand. 

But Erika Nardini is too brilliant to let that happen much longer. She knew which lever she had to pull to bring Barstool into a position to be growing and profitable: 

Go as deep as possible with their current audience. 

The strategy is simple: If someone follows Dave Portnoy on Twitter and loves all his pizza reviews, how do we get that person to watch other Barstool shows and follow other Barstool creators? 

Barstool’s top monetization channel is podcast advertising. So, ultimately, they’re trying to drive Dave’s fans into other shows. How do they do this with TikTok?

Their TikTok is largely curated UGC content. But it’s not just any UGC, it’s some of the best UGC on the internet – and this has enabled them to amass a huge audience with little to no production cost. And now, when they want to boost one of their own shows, they sprinkle it into their TikTok feed to this huge audience.

Similar to Morning Brew, video on the main Barstool TikTok channel serves as marketing, not as revenue. 

That’s a wrap

It’s pretty shocking how few media companies are utilizing TikTok and YouTube.

Sure, it’s expensive and the payoff isn’t immediate, but the reality is this: Brands who use TikTok and YouTube well while maintaining a strong core business will have a huge advantage.

These platforms can be profitable marketing channels to drive your core business forward, assist with organic growth, and deepen your relationship with your audience. 

Facebook’s lies in 2016 have undoubtedly impacted media operators’ decision-making in 2022 as to whether TikTok is worth it. 

These scars shouldn’t be ignored, but it’s time for media to give video another shot.