The problem with media scale-ups – and how Crescent hopes to solve it: CEO Piers Bearne on what smaller media companies can learn from larger ones

From the impact of Covid through to the ongoing recalibration of online advertising, media entrepreneurs have recently faced many different types of challenges.

Many have responded robustly, though it is a disappointing fact that as many as 75 per cent of UK SMEs in the media, information and communication sector do not make it to their 10th year.

In recent years the industry has witnessed the emergence of organisations that are created to work with startups, helping them morph into scale-ups and ultimately advising their clients on potential exits.

Crescent, which began its programme last year, is an off-shoot of Collingwood Advisory which has a long history of engagement with media brands. 

In this interview Piers Bearne, founder and CEO, explains the rationale for the development of Crescent, how it is currently working with a number of innovative media brands and where it hopes to make a difference in the future.

He also comments on current levels of investment in the media, the future of monetisation and why event companies need to adopt an integrated approach. 

Can you explain what Crescent is and what is the key problem you are hoping to address?

Crescent is a scaleup programme for leaders of smaller and early-stage independent media companies. 

When Covid hit our industry in March 2020, we spent a great deal of time and energy providing pro bono support to independent media entrepreneurs. We host a global community of Founders and CEOs, which exploded as people sought support and ideas, and we also created a lot of content to help people make tough decisions quickly. 

After some intense weeks, we took a step back and looked at the fundamental problem for SMEs in the media sector: 75 per cent of UK SMEs in the media, information and communication sector do not make it to their 10th year.

One key reason is that SMEs have limited access to affordable, high-quality business advice. Where they do get it, they are less able than larger firms and corporates to leverage that advice into actionable measures and business decisions to drive improved performance and growth. In the words of one of our pilot programme members, “I just don’t feel like I’m in the room” when it comes to accessing networks and advice.

Speaking personally, I found it very hard to make rational decisions on how to grow my first business. After I sold it, I spent some years helping big media companies to acquire SMEs, and realised just how much value entrepreneurs tend to leave on the table when they exit. The problem is information asymmetry: big companies have some highly effective, replicable habits. We realised in 2020 that if entrepreneurs learned those habits in an accessible way, we could accelerate their growth and reduce their risk.

So that’s Crescent!

So, on a practical level how does Crescent work for media entrepreneurs?

Crescent combines one-to-one advice from a senior industry practitioner, structured business planning assignments, group workshops and “ask the expert” sessions. Founder/CEO teams work in small cohorts of 4-5 with peers who have similar business models, and are supported by a Lead Adviser with decades of industry experience. 

At the end of the 12 month programme, members have a new business plan, and a value creation plan to help them think about medium-term priorities. Just as importantly, they get a lot of tactical advice along the way, which tends to pay for the very reasonable fees several times over; and we provide them with tools and templates (for product development, sales planning, marketing strategy etc).

And what types of businesses are you hoping to work with?

We started with two cohorts of B2B media and events companies. Some have emerging membership models. 

In 2022, we are opening the programme to information / subscription companies, and to specialist / passion-led b2c companies.

Crescent’s content is provided by Collingwood Advisory, and we’ve built an incredible team of experts across those business models, as well as specialists in customer insights, product development, sales, marketing, strategy and tech/data.

Can you give me some examples of the companies that you have worked with?

The PIE News – an international education sector publisher.

FuturePrint – a disruptive digital community in the print innovation space who are building their events business.

SOKO Media – information and events for the apps industry

TREC – community and festivals for inhouse recruitment leaders

And on our pilot programme, TheIndustry.Fashion – a very cool media platform for the fashion industry

What would you say is the core issue facing media startup founders? What is the key barrier to growth? And how can they solve this?

On a personal level, it’s “How do I stop just working in my business, and start working on it?” – which is partly about delegation, partly about having a clear value creation plan and a data-driven business plan, and quite a lot about working on themselves. Learning to let go and develop capabilities below them.

The key barrier to growth for most media companies is that they don’t maximise their strongest products. Sometimes they put their best people on marginal products. Often they launch too many products, which dilutes effort and margin. And in most cases they’ve built a great core product but not locked out the market, invested in increasing customer numbers and spend, and really built a market-leading brand. 

So year 1 of Crescent focuses on market leadership, which is a function of market share, thought leadership and brand reputation.

Generally, what is the state of UK/European media startups? Are there many promising new businesses emerging?  What impact has the pandemic had on startup/scaleup businesses?

I can give you a global picture, at least in English-speaking businesses and countries. We have 400 members in the Media Entrepreneur Meetup, the community we host, and our WhatsApp groups, live Meetups and discussions on the Guild platform are buzzing. A tiny fraction of owner-managed businesses went out of business during Covid – less than two per cent of our members at the time, and the rest have been innovating like crazy, supporting themselves in a way that has been very moving at times, and above all listening to their customers. 

The businesses that did best were those that went back to the drawing board and thought about the value proposition rather than trying to carry on as they were before.

It was particularly tough for companies that were in their first year when the pandemic hit; but even then we’ve seen entrepreneurs trading through, pivoting, disrupting.

And you’re right, there’s a raft of interesting new businesses emerging, as there always is during a crisis. Some are people who’ve been made redundant, and reassessed their lives; many are people who are frustrated how their former corporate employers weren’t listening to the market or looking at emerging areas. 

I wouldn’t say that everyone in the community is making more money than they were before; but there’s a moment in crises when you very reluctantly focus on your best products and people. That unleashes a great deal of energy, helps to tighten up culture, and creates value.

And what would you say are the key revenue opportunities? Has Google’s stance on third-party cookies basically delivered a death knell to solely ad-funded media? Is diversification of revenue streams always the key?

It depends what you mean by ad-funded. Banner advertising (like page advertising before it) is not a sufficient strategy in its own right. But first-party data is crucial, and Google’s stance has created a big opportunity for publishers. They need to deliver marketing solutions to their clients: gating content, demand gen, lead attribution. And when they do, we see tremendous results – Google’s stance has made life harder for advertisers, not smart media owners.

Diversification means different things in different niches. 

  • If you have a b2c or b2b publishing operation and have seen an opportunity to build a large scale exhibition, then you may well find that building the business model around that show is more valuable than building a classic diversified publishing model.
  • If there’s an opportunity to push up into premium intelligence subscriptions by providing data and/or expert networks, then your publishing operation becomes a feeder to the intelligence business, which is typically twice as valuable in terms of valuation multiple.
  • For everything in between, diversification remains important. 

However, I’ve seen many examples of publishers who are seeking diversification for its own sake. It has to make sense. Scraping away for £100k of reader revenues when you could have been expanding the free audience to deliver marketing solutions can be a mistake. And we often see a disconnect between the content that a publisher invests in, and the revenue opportunity. News is a great example: yes it delivers traffic, but if it doesn’t deliver engagement then you just have a flat advertising model and are open to disruption from more solutions-focused publishers.

Monetisation comes from outcomes, not traffic.

If you look at the role of affiliate revenue in Future’s success story, you can see how important it is for consumer media to produce content that creates a connection to a buying impulse. 

And then there’s TechTarget in the b2b space: no news, no nice-to-have, just content that directly feeds a lead gen model. That’s a $1bn company now.

How do you perceive the investment community’s attitude towards media startups to be at the moment? Is it becoming easier for entrepreneurs to raise money? 

You’re asking two different questions, I think.

Do VCs believe in media as a category? Yes, absolutely, if you have the right proposition and credentials. And more so in news/specialist media – look at Tortoise Media, and the investment going into podcasts and video content.

And that’s supported by the appetite of private equity investors higher up the chain. Interest rates are low, there’s a wall of money that wasn’t deployed at the same rates during the pandemic, and early stage investors like to know that the eventual exit route is underwritten in that way.

Is it easier for media startups to raise angel finance? I honestly don’t think it’s been difficult. The SEIS and EIS schemes make it a strong proposition for UK taxpayers, and there’s certainly lots of interest in video and audio platforms. The reality is that maybe 95 per cent of media startups aren’t seeking a great deal of capital to get going, because they are serving specialist b2c and b2b niches. 

You work to help businesses exit too. What would you say are the key types of businesses that larger media companies are shopping for? Which are the hot areas?

We just released our annual Media Acquisition Report, so we have some fresh data on this.

In terms of characteristics, resilience is unsurprisingly high on the list. Quality of earnings remains the underlying priority for most investors, although we’re seeing some bigger SaaS players entering the market, and their criteria are more around audience growth and engagement.

Geographically, the US is very appealing right now, and China has become less so. 

Digitally native businesses are sought after, and we are seeing more and more data experts joining senior teams.

In consumer media, it won’t surprise you to hear that specialist and passion niches are attractive.

In the b2b space, the holy grails remain premium intelligence subscriptions and tradeshows. 

Are there still large media corporations who still need digital bolt-on businesses?

Absolutely. Sometimes for capabilities – for example in data, video, or memberships; sometimes to add a new and interesting niche to their portfolios.

One of your key areas is events businesses. How do you think they will fare in the future post-Covid?

I am not very popular for saying this, but I think pure play exhibition businesses will continue to diminish in number. However, community and media platforms that have live events as part of their portfolios will thrive in many markets. I don’t think the splitting of events from publishing that we saw over the last 15 years has been healthy, in many cases – it’s driven by financial engineering rather than customer value.

Other event formats – from roundtables to meetups to conferences – are in general becoming much more integrated with membership and publishing offerings. And that’s as it should be. 

There’s some excitement around the return of live events right now, but my honest view is that exhibitors and advertisers will be demanding more transparency and lead attribution from live events, and that will mean a reconvergence of events and publishing over the next five years.

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