How Companies Are buying Media Houses to Scale - Savage and Palmer

How Companies Are buying Media Houses to Scale

by | 27 Jun 2022 | Business & Strategy

Companies are buying digital media houses to take advantage of their extensive user base, data-driven consumer insights, and content creation expertise, to introduce new products and services in different categories. Last year, The Good Glamm Group, an Indian content-to-commerce company, acquired MissMalini Entertainment, for an undisclosed sum. MissMalini is a well-known celebrity media and influencer talent management network.

The Good Glamm Group has spent almost Rs.1885 Crore in the last 12 months to acquire 9 brands including digital media brands like Plixxo, ScoopWhoop, BabyChakra, and MissMalini Entertainment. The media unit of this content-to-commerce company generates more than 35 billion impressions in a month, and has a massive base of 150 million unique users. Though the acquired entities continue working independently, now their content usually links back to the Good Glamm that is scaling their operations.

This buying spree of the Good Glamm Group led to India’s top influencer management platforms coming together to form India’s biggest creator ecosystem i.e., Good Creator Co. This ecosystem includes digital media platforms like Plixxo, MissMalini, Winkl, and Vidooly. All these platforms are acquired by the Good Glamm Group. Despite this, the launch event of Good Creator Co. unveiled that Good Glamm Group has acquired Winkl and Vidooly.

Other instances where large companies acquired media houses 

HubSpot acquired The Hustle

HubSpot reportedly paid $27 million for The Hustle, which was established by Sam Parr in October 2021. The Hustle is a media house that has worked to create a newsletter, Trends, a SaaS platform, and My First Million, a popular podcast presented by Parr and co-host Shaan Puri. The Hustle was rumoured to generate $10–$12 million in sales, indicating a 2.25x–2.7x purchase price multiple.

Penn National Gaming acquired Barstool Sports

Penn National paid $450 million in January 2020 for Barstool Sports, a digital media firm established by Dave Portnoy in 2003, and was majority-owned, at the time, by The Chernin Group. Barstool creates sports and pop culture content and had a revenue of $90–$100 million at the time, indicating a price/revenue multiple of 4.5x–5.0x.

Robinhood acquired MarketSnacks

Robinhood, a no-fee stock trading firm, made its first acquisition by purchasing MarketSnacks, a millennial-focused media brand. This acquisition may appear unusual for the leading fintech company valued at more than $5 billion, but it seems a sensible decision considering Robinhood’s growing ambition to become a one-stop-shop for the needs of young investors.

JP Morgan purchased The Infatuation and Frank

The Infatuation, a restaurant discovery site, and Frank, a college financial planning platform, were bought by JPMorgan Chase. Founded in 2009 by Chris Stang and Andrew Steinthal, The Infatuation has its presence in 50 different cities across the USA. It provides restaurant reviews and situationally detailed dining guides. Students use ‘Frank’ to access a faster application process for student assistance, financial guidance, and a marketplace to find affordable online programmes for college credits. This acquisition gave JPMorgan Chase access to Frank’s client base of more than 5 million students at 6,000 schools and institutions in the United States.

How can this strategy help businesses scale?

Acquiring a media house lets businesses access an extensive audience base and specific communities. This strategy can help companies with customer acquisition at the lowest cost. For instance- The Good Glamm acquired Plixxo and MissMalini; one has done an excellent job in the micro-influencer arena and the other is a leading celebrity and macro influencer platform. Thus, The Good Glamm can utilise influencer-led marketing for their new line of products through content to commerce channels.

Further, these media houses come with their own set of special skills i.e., creativity, ability to churn out large volumes of unique content, different forms of digital marketing abilities, technical knowledge on how to disseminate different kinds of content etc. Companies can use these special skills to build a hub for knowledge and specific types of content.

What’s in it for the business that is buying?

The Indian market doesn’t have the depth where one brand or category can make a thousand crores. A brand that deals with skincare, beauty products, or lifestyle products usually generates a maximum revenue of Rs.500-700 crore. If you wish to create a company that generates $1-billion, you could have 8-10 brands, each generating Rs. 500-700 Crore. A business that is buying media houses can accelerate revenue generation by scaling and expanding themselves, as well as the brands they’ve acquired through content to commerce approach.

Buying a digital media house or content-based brand means you will have a library of sharp, targeted content, to leverage your reach and obtain more consumers to buy your products.

Targeting customers through content is the most practical and cost-efficient way of grabbing their attention. They can combine product exposures within content pieces that are contextual to the story that the user is reading. Thus, they can expose prospective customers to the products directly.

What’s in it for the business getting bought over?

The kind of acquisition Good Glamm has done in the last 12 months will certainly help the acquired brands as they will receive hefty investments to grow and expand. Moreover, they now benefit from the expertise of professionals from different or similar industries.

Brands acquired by a billion-dollar business can also have access to broad offline distribution networks spanning thousands of points of sales terminals. And, the best part is that all the acquired digital media platforms can continue to work as independent brands and media houses.

These brands require phenomenal brand building to create a memorable picture in people’s minds, and under the banner of a unicorn or house of brands, they can utilise their expertise in branding, marketing, and advertising to establish themselves as a brand that stands out from the rest.

Most importantly, these brands will now have to worry less about the technical aspects of keeping a business afloat, and can now focus on what they do best i.e. create great content.

Is this a feasible strategy, and, if so, for what kind of businesses? 

The internet is here to stay, and in-home consumption will rise. Today’s internet market enables many new companies to emerge and grow. As a result, conventional brands must keep an eye on the future, as more customers are prepared to take chances with new brands, trends, and ideas.

In India, the D2C (direct-to-consumer) revolution is still in its early stages, with the beauty and personal care categories being underserved online. Apparel, technology, and food continue to dominate online purchases. As a result, there is enormous space for expansion, and acquiring brands that will push their products can help a business to become a billion-dollar entity.

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