How brands like GoPro & Red Bull turned the marketing message, and medium, into revenue streams.
I’ll never forget when it all clicked for me. It was mid 2009 and I was sitting in a 2010 business planning kick off meeting for Red Bull listening to their Vice President of marketing give an overview of the 2010 strategic priorities. Contained within those priorities was a concept around the “Media House”, a new arm of Red Bull’s business, separate from their traditional “product business”. The idea was hard to grasp, it was extremely new for the time, there was no proof of concept and no one else that I could see in business was doing anything like it. Without any context to reference, it took me some time to wrap my head around the concept. I sat in the meeting bewildered until about 15 minutes before the end of the presentation when it all came full circle. And I got it.
You see, brands, especially in action sports & entertainment, have been telling stories for decades. They have been sending influencers, athletes, musicians & notable figures on trips around the world. Sending individuals to 3rd world countries to play music, sending athletes to Alaska to explore new terrain. They have been finding relevant ways for these ambassadors to achieve something amazing. Do brands like Nike, GoPro and Toyota embark on these endeavors, sending Paul Rodriguez to China to skate, because they believe in the sport of skateboarding? The answer is, for the most part, no. They fund these trips because it drives outcome for them. It is a different media strategy — instead of buying advertising, they use their resources to create something interesting and tell the story in a meaningful way through editorial. It is a standard communications & PR strategy. Telling a strong brand story to consumers is nothing new and it is at the heart of any good communications department. It is these compelling stories, relevant to media outlets & pitched the right way, that drive editorial outcome. Sometimes massive outcome, sometimes targeted and niche, but it is always to drive outcome. The goal is to find a consumer in their natural habitat, while reading snowboarder magazine, and instead of interrupt them with an ad, be seamlessly integrated into the content they are reading. It is a much more-credible-than-advertising way to interact with people.
And it’s true — these trips are indeed compelling. And what Red Bull’s VP of marketing was referencing, around their new “media house” strategy, was to take this story telling one step further. I mean, we’re talking about the best athletes in the world, embarking on often times the trip of a lifetime — to surf a never ending wave, to snowboard in the Andes — and to top it off it is being captured in high definition by the worlds best story tellers. Content that any sports fanatic would die to engage with.
So, the question then became, why was Red Bull giving this content away?
In a world of never ending profit, what Red Bull found at an early stage is that this content is valuable. So valuable, that although it is branded, the stories are compelling enough in their own right to stand on their own — and Red Bull need not give it away. They should be licensing it, selling it to TV networks, to magazines — the way media companies do. And so, this was the mission: Red Bull would build a media business that delivers more profit to their organization than their product business, not by changing tactics, but by simply changing their approach to the media. And it began, Red Bull Media House was launched in the US.
The truth is that even for 2010 it was new — but not that new. The movie industry had been doing this in another way for some time. It used to be that movie company X produced and funded a movie, they then needed to market the movie to sell tickets. On opening week, and the weeks shortly thereafter, Movie Company X had to sell Y amount of tickets in order to make the entire endeavor profitable. However, somewhere along the line, for specific movies, the entire business model changed. Movies became a vehicle to build a franchise of branded products. Movies operating this way need only to break even, profit from ticket sales is a bonus, as all the movie is doing is supplying the engine for a franchise of branded products. Look at X Men or “cars”. Walk into a Wal-Mart and try not to purchase a cars pillow, lunch pail or toy. They are everywhere.
Furthermore, the sale of toys, pillows & lunch pails drive into the movie series — in turn selling more movie tickets to “Cars 2”. The movie-goers, who love the cars movie are inadvertently watching an hour long advertisement for the products they will see next time they are in Wal-Mart. It is a cyclical process, whereas both the marketing message and the medium they are being consumed through are revenue streams for each other.
At brands like Red Bull or GoPro, these trips, the content their athletes & partners are creating, used to be about selling their products — a can of liquid or camera. They would hope that after the content was created and a carefully crafted press release sent, that editorial outlet X would respond and ask for an interview with the athlete and Voila — they had their outcome — right in the most credible section of the magazine, the content. But somewhere along the line, these companies wised up, they changed their approach to media. They started making TV networks, magazines, radio & consumers pay them for their content. Of course, the content is branded, drives relevance around their products and is an incremental revenue stream.
In the world of big business — where profit drives corporate decision-making — I can’t think of a better way to spend resources. Turn the marketing message, & the medium it is told through, into an incremental profit center outside of your company’s traditional product sales.
