Would you buy a Super Bowl ad if your marketing team had the budget? Imagine the hype. The creativity. For many small businesses looking to put their brand on the map, this would be a no-brainer. But what if your company were, for example, a soldering company with a target group in the construction industry? Might be better to reconsider your options.
What’s the most effective use for this budget? You could be running a massive digital advertising campaign. You can buy traditional media during shows that are more engaging with your target customers, such as: B. a time slot at HGTV. Or maybe you would use the budget to hire a reputable agency to help you redefine your entire marketing strategy from scratch. The possibilities are many. But there is one tactic that many companies may overlook: strategic acquisitions.
“Acquisition” does not exactly fall under the marketing category on most balance sheets. But for some companies, this is exactly where it belongs. A few weeks ago, AppSumo hired me to write an introductory guide for buying and selling businesses. While researching the piece, I interviewed several people with experience in buying businesses. One surprising finding was how many people were quoting marketing as the main reason for acquiring other companies. Here’s what I learned:.
Super Bowl audience
Greg Elfrink is the Director of Marketing at Empire Flippers, an online brokerage website dedicated to buying and selling businesses. He told me about the soldering company that was wrestling with the decision of whether to buy a Super Bowl ad. The company decided not to pursue the idea any further and found that the general audience was too unfocused for its niche offerings. What could they do instead?
According to Elfrink, they have decided to use their budget to start a series of acquisitions in their space. They bought a mix of soldering and soldering companies, blogs and newsletters. The results were breathtaking.
As Elfrink explained:
At the end of all of these acquisitions, they found that with the push of a button they could now send an email for free to an audience the size of buying a Super Bowl ad – except much more targeted. You’ve basically created a self-fulfilling marketing funnel, a beautiful content marketing principle that not many people ever apply.
Opportunity in the ‘Cemetery of the newsletter‘
Codie Sanchez has had an impressive career in M&A (mergers and acquisitions). She has worked for some of the best-known financial institutions in the United States, including Vanguard and Goldman Sachs. She has also taken the entrepreneurial path, launching several successful mutual funds and purchasing several small businesses. Recently, she has made it her business to educate others about buying and selling businesses through her Unconventional Acquisitions newsletter.
Newsletters really caught the eye of Sanchez a few years ago due to their growing role in the larger media landscape. “I think the media industry has been a broad target for private equity in the past“Said Sanchez.”Most newspapers and media around the world are owned by private equity firms or billionaires. And many of them were bought, not built, these days. ”
Even before Sanchez started buying newsletters, she analyzed the media room. “Private equity firms love subscription business and anything that has steady cash flow. In theory, online newsletters could have that. “
As a former journalist and current newsletter writer, Sanchez understands the challenge of maintaining a content-driven business. She argued that many people would not have the patience to maintain a newsletter long term, even if their newsletter garnered a significant audience before it was abandoned. And you I wondered if there might be a way to purchase inactive newsletters to grow your own newsletter business.
When I noticed the massive proliferation of newsletters, it became clear to me that it wouldn’t last for them to multiply and continue at this rate because people are tired of creating content. Everyone thinks it’s a great idea, but it’s hard work creating content consistently. So there is a mass cemetery with newsletters with a significant audience.
Sanchez is now contacting the owners of inactive newsletters. She is looking for an audience in her niche that likes to read her content. When a former newsletter writer shows interest, Sanchez tests subscriber engagement by first paying to run an ad. If there is significant engagement, she may offer to purchase the newsletter. When it fits well, she’ll buy the newsletter and send emails to the list asking them to sign up for their similar newsletters. She scales her following by building on the work of other creators.
There is a plugin for that
WordPress is the most popular Content management system (CMS) in the world, with users from TechCrunch to the official Star Wars blog.
WordPress acts as an open source tool, which means that literally thousands of developers have created unique plugins to support various functions for website builders. Most of these plugins are available for free, so developers rarely get a profit for their work. There is Noah Kagan Founder of AppSumo, a marketplace for buying digital tools, saw a potential marketing opportunity.
These plugins did not offer any cash flow. However, owning these plugins offered a key advantage: the range. Kagan stated:
We noticed that a lot of people are using WordPress and that a lot of WordPress plugins have not been monetized. I contacted the top 500 plugins and said, “Hey, can I buy you?” Since they don’t make any money and there is no market for plugins to sell, you can get really good deals. I think we have a few million installs of WordPress plugins that we used to bring people to AppSumo.
Getting users to install a WordPress plugin often requires extensive marketing efforts. By acquiring non-monetized plugins, Kagan was able to purchase someone else’s marketing efforts at a significant discount, much like the way Sanchez acquires email subscribers. If a user wants to learn more about a specific plugin, they might be just a click or two away from AppSumo.com.
Look beyond traditional marketing playbooks
Marketing isn’t limited to just social media ads, SEO, and traditional media. Sometimes, on the surface, the most successful campaigns don’t sound like the marketing tactic you came across.
Instead of buying an ad space in the Super Bowl, you can slowly gain an audience of millions that you can reach at the push of a button. Instead of using standard opt-in techniques to grow an email or WordPress fan base, you can shorten the line by buying an audience that someone else took the time to create.
Perhaps it is time for more companies to add “acquisition” to the marketing category on their balance sheets.