Content And Commerce: The World’s Most Profitable Business Model?

Content and commerce is the business model responsible for some of the biggest companies in the world. Think I’m exaggerating? Say that to brands like Disney, Red Bull, and even Kylie Cosmetics. 

It’s also the business model that’s allowed absolute nobodies to build profitable ecommerce brands from scratch. One popular example is seeing a fitness guru build up a 500,000 subscriber Youtube channel and then launching their own supplement line or even starting a healthy beverage brand.

Funny enough, it’s not even a new business model.

In fact, it’s even older than the golden age of advertising.

Yet, it’s only now gaining serious traction because of the internet. Now, you don’t have to get picked by any decision makers or spend a fortune to start an offline media company. Today, anyone can start a youtube channel and a Shopify store for virtually nothing and grow that into a thriving business.

But before you just start going wild on social media, you need to understand the specifics of the content and commerce model. This includes understanding what content and commerce even is in the first place and why it works so well.

What Is Content And Commerce?

As the name says, the content and commerce business model is where you are using content to attract people who are interested in a topic and then sell related products and services to those same people.

Probably the most famous story about this comes from Star Wars.

When George Lucas was pitching Star Wars, Hollywood didn’t think it was going to be a winner. So George made an insane deal that completely changed the industry forever. Instead of asking for more money, he asked for the rights to all the Star Wars merchandise.

The total after 35 years?

$12 billion in merchandise sales.

Ever since then, no Hollywood studio has ever given their director full rights to all merchandise related to their movie. It also showed them how much money there was to be made by producing movies (content), that then translated into merchandise (commerce).

This is not just a movie thing though.

This applies to all other forms of media as well.

Youtube channels about home decor can lead to you starting your own candle business. Email newsletters about wellness can lead to your own brand of personal care products or even starting your own makeup line. Podcasts about nutrition can lead to starting your supplement company. TikToks about fashion can lead to starting your own streetwear brand. Unboxing videos can lead to starting your own subscription box.

Heck, this can even work if you decide to sell on Etsy.

Why Content-Driven Commerce Works

If there was ever a “guaranteed” way to build a wildly profitable ecommerce business, it would be through content and commerce.

Here’s why…

Building an audience first virtually guarantees product-market fit

If you’re starting a new ecommerce brand with a unique product and you start promoting it with Facebook ads, you’re pretty much guessing. You don’t know if that audience you’re targeting actually wants what you have to offer because you’re trying to connect random audiences with a random product.

By building an audience first though, you can collect both qualitative and quantitative data before you ever spend a cent in manufacturing. This means half the battle is already done and ensures you are more likely to launch a successful brand off the back of that audience. Even if your product doesn’t sell though, you can always sell something else without having to do additional paid marketing.

Building an organic following diversifies your traffic and cuts costs

In the early days, Facebook ads used to be so cheap, it laid the foundation for today’s iconic ecommerce brands like Blue Apron and Bonobos. Since then, costs have skyrocketed. Yes, it’s still viable for most brands to use Facebook ads, but it’s a radically different playing field. And once you turn it off, there’s no more traffic coming in.

On the other hand, building an organic audience can lead to cheap customer acquisition costs. If you’re the founder and you create the content, you build a highly profitable audience for free. And if you’re outsourcing the content, while it is even more expensive and slower than paid ads, the costs plummet as the organic traffic compounds over time. Like stocks, the longer you hold, the more your principle compounds.

Audiences can be monetized in multiple ways

When you’re running a pure ecommerce company, you only really have one source of revenue. This, of course, means your brand’s physical products. However, while physical products sell really well and should spearhead your monetization efforts, they do have lots of downsides that other monetization methods do not. Primarily, the problem of cash flow since you’re always balancing between investing on inventory versus profits.

When you have a growing audience, you can monetize them in multiple ways. One way is with your ecommerce brand. Another way is with sponsorship packages to monetize your low value visitors. And yet another way is with experiences and events like a conference or obstacle course. That’s just the start. This not only diversifies your revenue, but also bulletproofs your business as the downsides of any particular revenue source is shored up by the strengths of others.

Content can be shared, ranked, and ultimately sell

Advertising is great. It’s critical for all ecommerce brands to make paid media actually work for their businesses. The big weaknesses of advertising though is that the moment you turn off ads, the traffic stops. Plus, even great ads still only convert a fraction of your potential customer base.

On the other hand, content is an asset that compounds the brand’s growth because it’s more likely to be distributed. Content can drive demand for new product categories or unknown brands in a way advertising can’t. And content can influence purchases just like ads do, but usually through associations rather than direct response.

Content Commerce Examples: Complex

Complex was founded by Marc Ecko, the same guy who founded the extremely popular apparel brand, Ecko Unlimited. It’s a media company founded in 2002 that’s 100% focused on “youth culture”. It originally started as a magazine for sneakerheads and has since grown into a video-first media company with tons of different shows.

Their most popular show is called “Hot Ones”. It’s basically an interview series where famous people are interviewed while eating chicken wings with different really hot, hot sauces. Because the hot sauces are so over the top hot, it leads to some really great reactions from the guests and makes it almost like a challenge/interview hybrid show.

Since the point of the show is to taste and rank different hot sauces though, Complex decided to partner with a hot sauce creator to make their own “Hot Ones” branded hot sauces. Those hot sauces are then featured on the show and sold on their website. Today, they make $10MM per year in hot sauce sales.

Content Commerce Examples: Glossier

Emily Weiss was a styling assistant at Vogue who was so passionate about beauty, that she decided to start a blog in 2010 called Into The Gloss. What made the blog special was her interviews with prominent influencers about their personal care routines. She would wake up at 4am to write her articles and did this for years to grow.

After a few years, Into The Gloss grew into a really popular blog. So Emily launched a women’s beauty and personal care line called Glossier, which was based on her audience’s feedback. Once she launched with her original 4 products, she used the blog to seamlessly lead to product sales. And then used that leverage to grow through retail. Today, Glossier is now valued at over $1 billion.

Content Commerce Examples: T-Nation

T-Nation was founded by TC Luoma back in the 90’s. Originally, it was called Testosterone Magazine and was both a blog and physical magazine that catered to the hardcore bodybuilding crowd. Eventually, they dropped the physical magazine and went all in with their online presence. 

T-Nation is famous in the fitness world, particularly because they regularly publish articles from some of the top names in strength & conditioning. This included coaches who’ve trained elite athletes, championship winning bodybuilders, scientists that were behind some of the biggest breakthroughs in fitness, and way more.

Eventually, they decided to launch their own supplement line to their readers of their blog. This includes everything from traditional protein powder to supplements that help with nutrient partitioning. Considered to be one of the original and most influential online magazines of the fitness world, they now make millions selling their supplements.

The Biggest Content Commerce Trends

The core principles of the content and commerce business model have stayed the same for the past 100 years. There is no “growth hacking” in this system. Focus on building an audience first and then sell something that audience wants. In fact, some people consider it to be the de facto business model of the internet in general. 

But there are some content commerce trends you should stay on top of…

Vertical Media

When most publications see an opportunity to grow so they can make more ad money, what do they usually do? They expand into different categories. After a while, you end up with a site that covers everything from sports to personal finance. The problem with this model though is that it dilutes your audience.

That’s why the biggest trend in media today is to do the opposite. The key is to stick to one vertical per publication. If you want to grow past that, then launch a new, separate publication to cover that vertical. This makes it easier to grow your audience and keeps the quality extremely high, which is what you need if you want to sell products to them.

Owned Media

One of the biggest benefits of the internet was social media. All of a sudden, you can go from 1 to 1 conversations to talking to the entire world on sites like Facebook and Twitter. For a lot of creators, this made it really easy to grow because you could make something and then have tens of thousands or even millions of people share your work without any additional effort or costs. This came with a huge downside though in that you’re always building on rented land. 

Sites like Facebook have repeatedly killed organic growth and sites like Youtube have repeatedly deleted entire Youtube channels after years of hard work by the creator. And that’s on top of Google’s already constant SEO slaps. The only way to avoid any of this is to use these outside sources of traffic to build your own owned channels like an email list. This is why email newsletters are a massive trend because along with SMS and physical mailing locations, they’re the only assets you really own.

Premium DTC Products

Content and commerce has been around for a while. It’s not easy business. And because most people who get into it usually are only good at one or the other, you end up with an audience or commerce problem. Of the two though, the biggest is the idea that the commerce side of the equation is basically just cheap merchandise. Unfortunately, cheap merchandise doesn’t really bring in money.

This is why the trend is to now operate like a DTC brand. Instead of launching cheap merchandise, the combination of vertical media and owned media now makes it viable to sell premium priced products that have enough margin and demand to really make a strong profit. This is why you now see more and more media companies, from Lyrical Lemonade to Barstool Sports, launching premium products that go way beyond just a logo on a shirt. They’re real products that make real money.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.