Work at a Digital Media Company? Here’s How Much It’s Worth

We’re in a huge boom of VC-backed media start-ups with tons of investment in digital media brands that are growing because of the obvious shift of consumer attention from print and radio to mobile and internet. And if you work at one of these, you might be wondering how much your equity is worth or when/what the co’s exit prospects are.

There’s a pretty neat article on Medium called The Art and Science of Online Media Exit Valuations. It’s a simple 101 about how media companies are being valued these days based on interviews with real media investors and detailed research on these types of companies.

If you’re just looking for the so-called “multiple valuation” punchline, here it is:

Digital media companies tend to sell for between 2.5 and 5 times (2.5–5x) revenues from the previous, or “trailing,” 12 months.

Also:

Most digital media companies sell for about 8–12x EBITDA.

I find it interesting how investors prioritize different types of revenue. Digital media is generally very TBD in the business model department and part of the excitement to me is how much experimentation we see in this space: loyalty programs, tip jars, paywalls, merch, licensing… but according to Dorian Benkoil and Rafat Ali’s research, four areas add big value. These could kind of be used as a playbook for CEOs and strategists trying to bump their valuations:

Subscriptions services — because these are much more predictable than advertising
Paid research
IRL events/conferences/parties, and…
Databases of user info (very lacking for co’s in the distributed media world)

YouTube TV — UGC and Vlogging Next to Premium Television

Bloomberg has an awesome breakdown of YouTube’s really cool announcement today. They’re launching their own “skinny bundle” of network and cable traditional TV access which will fuse with a high-tech cloud DVR and their own recommendations for YouTube videos.

A conversation will commence online about the viability of these low-priced “skinny bundles” and I tend to think they’re not a great model and won’t last. I don’t think Google thinks they’ll last either — I think their intention is to blur the lines between content on YT and TV. Because that’s the battle they’ve been fighting for years… Google is dominating digital ad spend but barely chipping away at television ad spend.

If they can change media buyer perceptions — prove that their content is just as premium as TV — then maybe they can get some of that dough. I don’t think it’s nearly that easy. Literally, this is the example, cited in the Bloomberg piece:

A query for cooking shows, for example, might turn up recommendations for Hell’s Kitchen, the TV staple from Fox, alongside Epic Meal Time, a web-only show produced by Studio71 GmbH.

Now THERE’S a stretch: Competition reality fans seamlessly transitioning into a handheld brofest about binge-eating. Is surfacing vloggers next to This Is Us going to accelerate cord cutting? Or shift ad spend from TV to digital? There’s no way.

This is a really cool service and it’s extremely thoughtfully designed. I’m thrilled to use it. But the idea that just putting these two types of content next to each other will somehow “merge” them in the eyes of audiences and advertisers is flawed. Until YouTube makes content like Empire, it’s not going to command revenue or ratings like Empire.

YouTube Bets It Can Convince Cordcutters to Pay for TV via Bloomberg

Annoying, Unskippable Ads Get a Really Bad Rap — And Might Be Better for Us

Jason Hirshhorn piqued my interest quickly (maybe accidentally?) in the mix of his rantnrave on Redef today [bolding from me]:

All advertising is content, some more enjoyable than others. Sometimes the less enjoyable ads sell product better, using less of a viewer’s time.

That’s a great trade off for a viewer! The advertiser gets to sell HARD in exchange for not much of your time. I’d take that any day.

And yet, most advertising “quality scores” (a fundamental component of bidding algorithms aka getting a low CPM) would penalize an ad for local-car-dealership-style of hammering jingles, prices, locations and calls to action. And skippable ads obviously disincentivize consumers from watching brisk but sales-ey ads… they get annoyed and hit skip. It’s all in the name of “the user.”

I’m afraid that the ad networks, ad tech and technologists are favoring more insidious, “engaging” branded-content type ad creative because it supposedly puts the user first. We know that branded content is sometimes just manipulative… hiding the fact that it’s advertising in favor of engagement. So we need to be open to unskippable, “less enjoyable” ads and heavy calls to action — because sometimes they can be annoying, but they use less of our attention… and attention is way more valuable to the user and the platform.

Farewell Defy!

Sadly, it’s time to part ways with Defy! I’m making a slight career realignment to find a big next move that embraces everything I love about creative storytelling and digital strategy.

I wish the best to Defy Media and Clevver as they continue to challenge traditional entertainment. It’s a thrilling battle! I’m going to miss the team a ton. I’ll never forget the energy in those cluttered halls — it springs from every individual’s culture, attitude and passion. It’s completely infectious and it’s changed how I look at creativity.

Over the coming weeks, I plan to put a lot more time into my class at LMU, a cool new side project, a new launch for Deck Around and even the blog you’re reading right now. Most of all, I’m thrilled for what’s next and ready for the adventure ahead. Onward!

Free, Editable Google Slides Conversion Funnel for Sales, Marketing and Social Media Presentations

UPDATE 2/16/2024: Thank you to everyone who’s come to use this template! You’re in good company. Over the past several years, executives have used this slide who work at Capital One, PwC (PricewaterhouseCoopers), Verizon Wireless, National Research Group, Equifax, Mathison and Flipkart — and those are just the ones who reached out to me! If you’re finding it helpful, please let me know or buy me a coffee (and expense it to your company!)

I love to use conversion funnels to help structure and organize my consulting presentations. I find that funnels can help describe everything from marketing plans and social content strategies to casting actors and hiring talent.

I almost always keep my presentations simple by doing them in Google Slides and I’ve built a really basic funnel template that I use over and over again in the program. I thought it would be worth sharing because the first time I needed one of these, it was in a time crunch and I couldn’t find a simple enough template. Here it is for you to swipe and use in your own presentations! You can customize the colors and text to your subject.

Google Slides conversion funnel template

CLICK HERE TO CHECK IT OUT

Here are the instructions which are also included in the link:

Go to File > Make a Copy… because this funnel is in view-only mode

Edit the text in each layer of the funnel — you can add types of content, audience estimates or percentages

I like to color-code presentations to help people follow my slides — you can do this by starting with a full funnel as your “table of contents” slide then using the colors from each section of the funnel when you explain each layer in more depth; you can also switch the funnel colors to grey if you want to de-emphasize them during your presentations (see next slide)

An Outrageously Common YouTube Watch Time Misconception – The Real Definition

Watch Time is the most important metric that YouTube uses to promote and drive audience to a video. In a way, it’s the most important metric on any platform. Netflix uses very similar information to decide on the shows it renews, greenlights and licenses. Snapchat, Amazon and Facebook have been known to use a similar engagement metric too. But there’s one secret side of watch time that most creators completely miss.

The “basic” definition of Watch Time is how long people spend watching your video. Cool. It’s not how many people watch your video… it’s how long all of those people watch it for. And this is fine, colloquial way of looking at Watch Time. It’s a proxy for how engaged your audience is with your content. And that’s about all the information YouTube provides you with in the Watch Time section of your Analytics.

But it’s missing one, extremely important distinction. One critical precept of the definition. So many people miss this and it’s fundamental. Watch Time is not about how long people spend watching your video. It’s about how long people spend watching other videos, after they’ve watched yours. That’s right. Your video’s engagement only matters to the extent that it gets people in the mood to watch more content.

Don’t believe me? Read more about when YouTube announced this! It’s also defined in the YouTube Playbook like so:

YouTube optimizes search and discovery for videos that increase watch time on the site.

How could YouTube judge me based on something the users do after they watch my video? It would seem like you have no way of controlling what people do after watching your content. But that’s not true! Think about this from a psychological perspective. Your job is to engage viewers. If you’re successful at that, you should be able to increase watch time on the entire site of YouTube.

How? Firstly, you can just make “binge-worthy” content that hypnotizes people into watching subsequent videos in your series. Make sure you’ve got never-ending “rising conflict” to keep people hooked and subscribed. Or you can make videos that are incredibly effective at framing or promoting other videos that aren’t yours. In that way, you can actually boost watch time by simply being an outrageous curator.

You can also avoid things that are apt to get people out of the content-consuming mood.

For instance, don’t drive people off YouTube… it’s unlikely that they’ll come back. Don’t tell people to search, donate to your Patreon or go to your own .com.
And don’t make extremely short videos because it just opens more opportunities for people to get distracted. Short-attention-span content begets short attention spans — flakey users who will leave YouTube.com.
Another common misstep: pushing commenting and “liking” and sharing at the end of a video. In my experience, those actions are very low weight to the YT algorithm compared to watching more content. Asking people to be contribute in the comments or respond to a prompt will kick them out of consumption mode and into productivity mode.

Of course, there are reasons to break all of these rules in the name of your business model or goals… but you have to be aware of how they’re impacting watch time.

Reframe how you think about engagement and it might inspire you to address watch time in completely new ways. Remember this common misconception and you’ll have a secret edge compared to Creators who have no clue.

The Most Important Thing About Creating Content Or: The Secret to Great Content Strategy

Have you ever watched a show and thought this show is perfect for me? Maybe a movie?

The last time this happened to me was True Detective on HBO. It had a cast I love, a plot that intrigued me and cinematography I admired. That seems like a lot of expensive reasons to like a show: world class writing, acting and filmmaking!

People love all sorts of content. What do they all have in common? Some of my colleagues would say story, many would say character. But then how would you explain that some people hate a certain book… even though it’s a great story? How would you explain BuzzFeed or ESPN? How would you explain a stand-up comedian? Story and character don’t really explain those things… especially not why people love those things.

That’s because the most important part of creating content people will love is… understanding what people love. It’s the “understanding” part that’s important. It’s understanding them deeply — what they want and need. How they spend their spare time. Their fantasies and fears. In one word, it’s empathy.

Most people don’t think of it this way, but great content that you love is engineered to be that way. It’s not an accident that you like the shows you do. It’s usually not just some guy making something that he alone thinks is perfect for himself — at least not if it’s a show you love.

Great creators get inside your head, take out your thoughts and wants… then give it right back to you.

The process of doing this kind of research and thinking is the essence of what some people call “content strategy.” Here’s a clear and perhaps simplified version I can think of and you may have heard of it before. It’s how House of Cards was allegedly developed. Have you seen that? If you have, you probably liked that it starred Kevin Spacey, thrilled you like a thriller and had a creepy tensions that’s probably hard to describe. Well, none of this was a mistake. Netflix found in its data that:

Netflix users like Kevin Spacey
Same with their computer-generated genre “political thrillers”
It also showed that films by David Fincher are popular — he produced House of Cards and his involvement leaves you with that hard-to-pin-down creepy feeling… you’ll sense this pacing and style in other movies like The Girl with the Dragon Tattoo or The Social Network
(Bonus: The DVDs of the original House of Cards mini-series were also popular among Netflix’s by-mail customers)

In fact, Netflix was so certain of their content strategy here that they didn’t ask the producers to do a pilot of it.

This actually makes a ton of sense! What does a pilot really do? It’s engineered to get into a different kind of head: a development executive’s head! A great pilot empathizes with a development exec by introducing the characters and showing them the direction of the show. It’s not really for the audience. You don’t have to sell a show to the viewer in the very first episode if you already know they love Kevin Spacey, David Fincher and political thrillers. You’re reading their mind already. The pilot doesn’t matter — it’s a homerun for that audience.

And a homerun for an audience entertains them. And the key to entertaining them is understanding what they want. And truly understanding someone — truly getting them — that’s empathy. I have a literally religious obsession with that word, empathy. And that’s why I think it’s the most important part of creating content.

Next time you create something, think less about what you like. Consider what people like you like. And you’ll know you’re creating something they’ll love.

The CRAZIEST Magic Trick You’ll See All Day

Eye Tracking Reveals New YouTube Thumbnail Tricks

Mashable and EyeTrackShop did a study of several social media sites and buried in the data are two eye tracking studies on the YouTube homepage.

There’s little debate that thumbnails are critical to a video’s performance and this study punctuates that (especially in terms of subscribers, who get your videos through their homepage). But the study also reveals a little wisdom about what kinds of thumbnails specifically perform the best in a competitive environment. Here’s what you’ll notice:

All of the top thumbnails contained faces and humans. The most effective ones were close-ups.
The 3 most effective thumbnails featured women.
The most effective thumbnail, by far, featured a close up on a woman and what appears to be a bright red heart.
Most of the top 6 thumbnails had a high-contrast background in either black or white. Two of the top 3 thumbnails were actually completely in high-contrast black-and-white. Black-and-white thumbnails aren’t widely used so this is a really interesting discovery.
The least effective thumbnails appeared to be pulled from “bootlegged” footage from TV or a movie.
Thumbnail effectiveness trumps upload order and probably even title in terms of fixation.
It appears that after a user sees a thumbnail, they read the title of the video.

Another interesting note — people are quite likely to fixate on their own profile icon and the adjacent functions there near the top of the page — comments and inbox. So, don’t count those out as effective ways to reach an audience.

YouTube’s Secret New Related Videos Design

YouTube is occasionally showing users a new, re-designed related videos grid. You won’t see it at the end of every video (YT is probably just testing it), so here’s a peek.

I’ve seen lots of eye-tracking studies on video sites and users BURN the frame where the video is, so end cards like this get a really high click-through-rate. This is valuable real estate. Notice that share functions are much more hidden than before. YouTube is trying to encourage users to engage in longer viewing sessions — focusing them on watching another video rather than sharing, replaying or embedding. But sometimes giving users too many choices like this results in a poorer aggregate CTR, so we’ll see where this goes.

YouTube recently acquired Next New Networks and folded them into a “lab” part of the company focused on improving the platform for creators. This new design looks EERILY similar to the end cards that Next New puts at the end of each of their videos. Something tells me they had a part in this…

The main difference is that Next New’s end card is animated; the videos are playing versus the still thumbnails in YouTube’s design. This might up the CTR. But still — given the new redesign, is it worth creating end cards any more?

Update: Looks like this “end-screen” is here to stay. YouTube just announced it.