business-insider-business-model

A Quick Glance At Business Insider Digital Strategy

Business Insider is among the most popular business information websites in the world. According to Alexa Business Insider is among the top 100 most popular sites in the US, and according to Similar Web that is the most popular business news site in the US. Its mission is to inform and inspire the audience, help its clients, and get better every day. 

Let’s dive inside Business Insider business model.

How much is Business Insider worth?

In 2015 a German publishing powerhouse, named Axel Springer bought Business Insider at a whopping $442 million valuation, finally taking almost full control of the business news publication. Indeed, a remaining 3% remained in the hands of Jeff Bezos’ investment venture. As pointed out in Alex Springer annual report for 2015:

In September, Axel Springer concluded an agreement for the purchase of around 87.8% of the shares in Business Insider. New York based Business Insider, operates the leading digital offering for business and financial news in the U.S. (businessinsider.com).

The report made clear:

The acquisition is a vital part of Axel Springer strategy to broaden its global digital reach and expand its journalistic portfolio in the English-speaking world. Business Insider is thus present in nine countries.

In terms of the financials of the deal:

The purchase price for the acquired shares in Business Insider totaled € 320.4 million. Axel Springer previously held an equity stake of around 8.7% of the company and after the purchase holds around 96.5% of the Business Insider shares.

Axel Springer had already acquired a stake of almost 10% of the company until it took over 96.5% of the company. Instead of cutting with the past, Axel Springer allowed its founder, Henry Blodget to keep a critical role within the company:

Henry Blodget, founder, Chief Executive Officer and Editor-in-Chief, and Julie Hansen, Chief Operating Officer and President, will also manage Business Insider in the future in the respective functions. The transaction was completed at the end of October 2015.

How does Business Insider (BI) make money?

Business Insider has three primary revenue streams: 

  • advertising
  • subscriptions
  • and licensing

BI advertising revenue stream 

The advertising monetization happens primarily via premium programmatic advertising and strategic content partnerships.

While programmatic advertising consists of automating the process of matching advertising demand and offer within BI. Indeed, the main aim of programmatic advertising is to deliver performance and efficiency to offer advertising solution at scale. That might sound trivial yet on a platform like BI where over a hundred million visits happen each month it is critical to match advertising opportunities with the best engineering technologies out there otherwise opportunities in terms of revenues generation might be lost.

Instead, strategic partnerships include major custom programs with Dell, Microsoft, Fidelity, Bacardi, Chase, Del Monte, Netflix, and many others. 

BI subscription revenue stream

business-insider-prime-subscription

Another critical revenue stream for the most popular business news site in the US is subscription-based. Indeed, if advertising still represents the significant revenue stream, BI is investing in growing massively its subscription base in the next years. It is doing so by focusing on both B2B and B2C subscription offers.

For instance, Business Insider also launched another digital subscription offering called Business Insider Prime. It was launched in 2017 and is expanding its B2C offering to include the paid business customer product BI Intelligence:

business-insider-intelligence

This comprises a high priced range of info products and insight which can be bought in a bundle for a subscription price. That is Business Insider’s premium research service which might become another critical revenue stream over the years.

BI digital strategy 

Business Insider has been able to build over the years a massive presence across several channels, and it has been able to adapt quickly to the changing digital landscape.  With an editorial team of more than 300 journalists, BI managed to build a following of over 100 million people in 2017.

If we look at the marketing mix of the traffic landing on the BI site (according to rough estimates from Similar Web:

BI-similar-web-marketing-mix

It is important to remark that those are just rough estimates. Yet they give us a good glimpse at the marketing mix of BI digital strategy. To notice that the BI site is still the place where monetization happens and where the company can have control of its users and subscribers experience. Therefore, the monetization ability of BI can be judged by whether they’re able to drive qualified traffic back to their web properties.

A significant source of qualified traffic is represented by search engines and Google in primis.

semrush-analysis-BI

With almost 30 million visits coming from organic traffic from Google alone, BI has a traffic cost of about $40 million (this is a metric to assess how much is worth BI organic traffic based on the value of its ranking keywords).

BI-traffic-competition

This makes of BI among the top players in the organic reach race (the ability to get qualified traffic from Google).

This also means that were BI losing its ability to rank organically via Google it would be lost a good chunk of its business. However, it is important to notice that even so BI might still survive, given its strong brand, and the fact that direct traffic still accounts for about 20% of total traffic.

Also, if we look whether there is too much overlapping between BI and its competitors it is clear that those large sites are competing for a similar organic reach. Therefore BI ability to dominate the space will be also critical for its revenue generation:

gap-analysis-BI

Business lessons learned from Business Insider

Launched in 2007, Business Insider has been able to gain massive traction in less than a decade and become the most popular business news publication in the US and among the top publications worldwide. How did it do that?

By looking at its business model and digital strategy, it is clear that Business Insider can teach us a few critical lessons:

  • Combine old media with new digital channels: just like BI has been able to build a sizeable organic reach with his site it also established a strong social media presence and it can dominate new digital channels
  • Diversify revenue streams: advertising has been the traditional revenue stream for publishers in the last century and a half. Yet BI has invested massively to create alternative revenue streams, based on sponsorship agreements, licensing and high priced subscription plans
  • Use news to generate buzz for editorial contentBI uses what might be defined as an editorial barbell strategy. On the one hand, it covers stories that have a short lifespan but create short-term buzz also for the editorial side of the business which will have a broader spectrum and timeframe spectrum and timeframe
  • Target multiple customer segments: in the business jargon, it is highlighted often the importance of identifying a customer persona. While this might work initially often, you might leave up significant opportunities on the table. Indeed, if we look at the organic traffic of BI, it is clear that it spans across several segments. Not only business professionals read BI, but also a broader base comprised of consumers. That is also why BI is expanding from B2B to B2C, which allows it to expand monetization, diversify its business in the long run and opens up new opportunities
  • Leverage on bundle offerings: when you look into BI subscription plans it is interesting to notice how single reports cost way more than a subscription plan which comprises a bundle of the reports available on the platform. There isn’t anything new with this repackaging approach. Yet it is important to notice that BI might be leaving up revenues on the table today, to build a more solid subscription-based business model in the future:

Fish-Model-explained

Indeed, even though in the short term the company might have to swallow the fish, which means experience a marketing expense in acquiring new members to its platform, in the long run, it this strategy proves successful it will become a significant part of the revenue generation for BI. Thus, BI is leveraging on its primary driver of revenues, advertising, to sustaining a new part of the business primarily based on subscriptions.

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Published by

Gennaro Cuofano

Creator of FourWeekMBA.com | Head of Business Development at WordLift.io | International MBA

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