When marketing becomes a money-making machine

Marketing has always been considered a costly thing. The world's largest advertisers even spend billions of dollars on marketing every year, making the marketing department synonymous with "burning money."

Now, some brands have begun to make full use of marketing assets and turn it into a profitable business. For example, the RedBull Media House, founded by Red Bull in 2007, now has 135 employees. It not only produces a large amount of content for Red Bull's content marketing, but also exports content for use by other organizations. Now, brands such as PepsiCo, Mondelez International, and Mastercard have joined Red Bull in turning marketing into an important source of revenue.

There are several reasons driving the transformation of brand marketing departments from “money-burning” departments to departments that directly generate revenue: as a spending department, the marketing department needs to prove its value to the board of directors; when budgets are tight, the marketing department craves for more budgets…especially in the digital world where consumers’ ad blocking behavior is becoming more and more common, brands need better content to reach consumers. At this time, high-quality content is not only an effective marketing tool for brands to reach consumers, but also a product of the brand and one of its sources of revenue.

When content becomes product

Marketers have always used content as a marketing tool. When content marketing became popular, even the best content was only a means to tell brand stories to consumers. But when a brand’s content is done well enough, it can also become a product.

In May this year, PepsiCo created its own content studio, the Creators League. The 4,000-square-foot Creators League in New York includes a recording studio, screening room, and editing and production facilities. The studio is directly managed by PepsiCo's marketing department, and has recruited a large number of full-time engineers, editors, and producers to reserve talent for some major projects in the future.

Kristin Patrick, senior vice president of global brand development at PepsiCo, said that while the Creators Alliance creates content for all PepsiCo brands, it also provides branded content to other creative communities.

In the six months since its establishment, the Creators Alliance has reached content cooperation agreements with a number of companies and institutions, including cooperation with AOL's Partner Studio to create content around music, pop culture, health and welfare, and disseminate it on AOL and Microsoft's media platforms. It has also reached an agreement with The Firm and hip -hop artist TI to produce a video to promote the first-ever U.S. Women’s Summit in Washington, D.C., by telling the stories of first lady Michelle Obama, actress Meryl Streep and Oprah.

PepsiCo isn’t the first brand to sell content as a product. Previously, Red Bull, the "content producer in the beverage industry", has produced a large amount of content around sports, culture, and lifestyle, while also building its own sports assets - the Red Bull F1 racing team and the Red Bull extreme sports events. These contents not only serve the Red Bull brand but are also exported externally.

In March 2016, Red Bull announced a partnership with Reuters to provide Reuters with content in the areas of sports, lifestyle, etc., including content on sporting events such as the Mountain Bike World Cup, Dakar Rally, skiing, skateboarding and beach volleyball. Reuters will distribute the content to more than 3,000 publishers across its broadcast, digital and traditional print businesses.

"The demand for sports and lifestyle content continues to grow, but some publishers lack the time and resources to produce content," said a spokesperson for Red Bull Media Studio. In comparison, Red Bull has a great advantage in this regard. It has organized and sponsored many sports events, and turned the events into content and published it on some of its own media channels. This content will then be disseminated by other media that lack such content.

So, for Red Bull, content has become one of its sources of revenue. Take the movie "The Art of Flight" it released as an example. According to media reports , the production cost of the film was 2 million US dollars, but after being uploaded to iTunes for more than a week, the download volume has been at the top of the list. Based on its download price of 10 US dollars, although the specific number of downloads has not been obtained at present, it must be admitted that the content can already bring considerable income to Red Bull.

Brand We-Media Channels

During the marketing process, some brands will create their own media, such as blogs, social media accounts, magazines, YouTube channels, etc. Initially, this was just because "where the consumers are, the brand will go there." In this process, the brand gradually built its own huge media matrix. The brand found that it had transformed itself into a "media" and could obtain advertising revenue by providing media channels for other brands.

Channel one, OTT video. Some retailers and automakers are already starting to earn advertising fees through OTT videos, and if the content is good enough, they can also earn subscription fees. Ooyala, a video publisher owned by Australian communications group Telstra, currently provides video services to many 2C brands.

Channel two: brand’s own magazine. Some companies will create their own brand magazines. The initial purpose is just to convey brand concepts and product information to consumers, but as the influence of brand magazines continues to grow, it can actually become an independent media channel.

In July this year, Swiss jewelry maker Swarovski and Condé Nast reached an agreement to relaunch its biannual magazine Salt, which is currently published in English, Chinese and Japanese with a circulation of about 25,000 copies. The magazine, which was founded in 2010, was originally intended to serve Swarovski's marketing. Its content focuses on "fashion, design, jewellery and trends". As the magazine's influence has grown, the revenue it brings has been able to offset its production costs - the magazine retails for £5.99 and also features advertisements from other high-end fashion design brands. According to the magazine's publication rate, a single-page ad costs £6,000 and a back cover ad costs £11,000.

Channel three: brand activities. Some brands have launched their own brand activities, which can also become a communication channel when they have a certain influence.

Take Red Bull as an example. It not only has its own media matrix, including TV programs, online content and magazines, but also has its own sports events and holds a large number of sports events every year. In May this year, Red Bull and GoPro signed a one-year exclusive agreement: GoPro became Red Bull's exclusive camera provider and content partner for more than 1,800 Red Bull-sponsored sports events in more than 100 countries and regions around the world. In return, Red Bull will obtain equity in GoPro. At that time, GoPro will work with Red Bull to produce content from Red Bull events for digital and social channels. GoPro's stock price rose 7% after the company announced the agreements with Red Bull.

Media investment is profitable

As audiences become increasingly averse to traditional advertising, some brands are shifting their media buying from TV to content and collaboration with platforms, hoping to gain profits from their media investments.

Mondelēz International has launched a “fearless marketing” media profit model, which it plans to offset 10% of global media investment and even generate profits by 2020. To this end, Mondelez International has entered into content partnerships with many film, television and digital channels, such as Amazon, Netflix, BuzzFeed, etc.

“Consumers’ attention is becoming increasingly difficult to capture. As audiences take control, the old ‘interruptive’ model of advertising no longer works,” said Laura Henderson, global head of content and media monetization at Mondelēz International. “This new model will shift the focus from the old ‘interruptive’ 30-second TV ads to content production, while raising the bar for our content production to capture audience attention while also making money. By creating content that users love, we can realize a return on investment, offset costs, increase ROI, and make media spending sustainable.”

Mondelēz International already has successful experience in content production. For example, it previously produced a video for Oreo in Southeast Asia. When the video was broadcast on TV, the revenue earned by Mondelez International from the video offset its production costs by selling sponsorship partner rights.

Currently, Mondelēz International has launched three projects:

The “Heaven Sent” livestreaming event launched by chewing gum brand Stride. On July 30 of this year, Stride Gum’s live event Heaven Sent premiered, live streaming professional skydiver Luke Aikins jumping from 25,000 feet and landing safely. The event is executive produced by Mondelēz International and will air exclusively on FOX.

One day after the event was broadcast, it generated 5,000 discussions and over 500 million impressions. It was also adapted into a special documentary and mobile game. Mondelez International also plans to create a 360-degree video experience based on this event.

Entered into a partnership with BuzzFeed. Mondelēz International partners with BuzzFeed to create exclusive branded content.

Mobile games. In 2012, Mondelez International launched a "twist, lick, and dip" mobile game for its Oreo brand, which eventually received 7 million downloads. In view of this successful experience, Mondelez International will launch a series of branded games. Its candy brand Sour Patch Kids will be the first brand to launch a mobile game. In the next 18 months, other brands will gradually launch their own mobile games.

Laura Henderson also said that the measurement dimension of ROI in the new model is different from the past: "We will get returns in a variety of ways. If we can offset the costs, then our investment is effective." She also pointed out that this model is a "long-term focus", which is mainly reflected in the fact that there will be a big change in media buying. Mondelez International will change from a transactional media buyer to a content investor and producer.

Find business opportunities in marketing trends

Mastercard CMO Raja Rajamannar spoke at this year's Cannes Lions International Advertising Festival about how he found that Mastercard had spent too much money on "warm and fuzzy" ads over the past few years, which helped build Mastercard's brand but didn't help commercially.

In this context, Mastercard's marketing strategy has shifted from past "warm" advertising to real-time promotions, which can help brands quickly seize those instant business opportunities. To this end, Mastercard formed a "real-time marketing lab" that keeps up with real-time trends and determines which activities Mastercard can launch promotions around.

Mastercard has summarized some key points for tracking trends: for example, it must be able to last for more than three days to ensure that the brand has time to follow up and gain a certain proportion of voice; it is necessary to ensure that there is a certain degree of correlation between the hot spot and Mastercard, etc.

A successful case is the collaboration between Mastercard and the movie Mary Kom. During the film's release in India, MasterCard reached a cooperation with the film's distributor - the distributor opened some of the film's resources to MasterCard, and the audience could get certain discounts when purchasing tickets with MasterCard.

The attempt was a huge success and brought MasterCard considerable revenue. In view of this, it has extended this real-time promotion to the UEFA Champions League final held in Europe this year, and plans to promote this model globally.

“Marketing doesn’t usually generate revenue; it’s a money-burning business,” Rajamannar said. “But marketing itself has some valuable assets that brands can use. But if you can monetize those assets and generate revenue, why not do it?”

He also believes that income does not necessarily refer to cash flow, it can be in any form.

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