Native Commerce: Media That Makes Real Money

The Transcript

Native Commerce: Media That Makes Real Money

Voiceover: Rainmaker.FM is brought to you by The Showrunner Podcasting Course, your step-by-step guide to developing, launching and running a remarkable show. Registration for the course is open August 3rd through the 14th 2015. Go to ShowrunnerCourse.com to learn more.

Brian Clark: Hey, everyone. Welcome to another episode of New Rainmaker. I am your host, Brian Clark, founder and CEO of Copyblogger Media.

Today’s special co-host is kind of a character, Mr. Ryan Deiss, DigitalMarketer.com. Smart guy, he does a lot of very smart, lucrative things. Ryan, why don’t you tell us a little bit about this collection of businesses built on media websites that fuels the Deiss empire, if you will?

Ryan Deiss: I’m just excited that I’m a co-host. I didn’t realize. Are we going to interview somebody else, too?

Brian Clark: No, no.

Ryan Deiss: Do I have to be prepared and stuff?

Brian Clark: No. I’m going to make you do all the work. If I said, “Here’s our host, Ryan Deiss, who’s doing all the work, and I’m just kind of here,” that’s not going to go very well.

Ryan Deiss: I thought I was the ‘very special guest’ or ‘the talent.’

Brian Clark: We can edit this to be ‘very special guest.’

Ryan Deiss: Yeah, but let’s edit it in somebody else’s voice that way it’s not going to seem as dumb.

Brian Clark: You’re the kind of guy who would want your name not in alphabetical order. It would have to be “… and Ryan Deiss?”

Ryan Deiss: Yeah, absolutely.

Brian Clark: Yeah.

Ryan Deiss: Let’s make sure we get that in post, please.

Brian Clark: Got you. Got you. As far as you know, we’re going to take care of that.

Ryan Deiss: Exactly. By the time you find out about it, it will be too late.

No, really, I’ve been listening to this podcast since the very first one, so — and I say this through gritted teeth because I never like to compliment a friend, certainly not with them around — this is easily in the top three of my favorite podcasts, so thank you for having me.

Why Advertising Alone Won’t Support Media

Ryan Deiss: No, to answer the question about, as you’ve referred to it, ‘the Deiss empire,’ which is very gracious, I have a lot of people on the team and partners, stuff like that, that have as much and in many cases more of a role to play in the success of the ‘empire.’ We’re really fortunate that we’re in a lot of different markets.

You and I have the same perspective to this, this whole ‘media first’ attitude, right? Like, “Let’s go out there and build media properties and gather the crowd and aggregate the attention and do that first.” That’s the way that my business has always been, and now we’re in I really don’t know how many different markets. But there’s obviously Digital Marketer, which I think I’m best-known for. Some of the more lucrative things that we’re in, we own MakeupTutorials.com, SurvivalLife.com, DIYReady.com, and PioneerSettler.com.

So we’re in all these different, really cool markets where we get to play and dabble in a lot of different areas and then share and report on all the stuff at Digital Marketer. It’s a lot of fun. It keeps it interesting.

I don’t know, are you like me? I think most entrepreneurs are like this. If you’re forced to do the same thing every day, you will break it just so you can fix it. Right?

Brian Clark: Yes, yes, which is why I’ve started distracting myself with new projects so that I don’t break the thing that actually pays the bills.

Ryan Deiss: Bingo. There. And that’s how the empire happens. There you go.

Brian Clark: Yeah, that’s cool. Yes, I remember when we finally met, or maybe it was the second time we saw each other in Austin. But it was after we started this podcast, and you were like, “I’m completely down with your ‘media not marketing’ approach.” That’s where we really started geeking out about things.

Now, it doesn’t take a genius in this day and age to realize that traditional media models are broken. I’ve also heard you say that e-commerce models are in trouble. What do you mean by that?

How to Deal with the Threat of the “Walmarts of the Internet”

Ryan Deiss: I mean, everybody is screwed, right? With the e-commerce companies that are out there, they are getting commoditized left and right by — I don’t know if you’ve heard of this little company called Amazon. They are going out there, and now most people, when they want to buy something, they just go to Amazon. I mean, Amazon has really become the search engine, so if you’re out there trying to launch your e-commerce site … and we used to do this.

My business partner, he had a number of sites, the little e-commerce sites that sold dry-erase boards and different things, because people used to go to Google if they wanted to find something to buy. Now, they realize, “If I want to buy something, I’ll just go straight to Amazon.” Right? Their members have Prime.

The small e-commerce sites really can’t compete, and now you’ve got Alibaba coming over to the top on Amazon. And they are going to further commoditize it, because now Alibaba is going to allow the consumer to go directly to the manufacturer. Another piece of that supply chain is getting removed, which is great if you’re a consumer. It’s not so great if you’re an e-commerce player, because how do you get found anymore these days?

E-commerce sites are getting commoditized by the Walmarts of the Internet just the same way that local mom-and-pop shops on Main Street got commoditized and eventually pushed out of business by Walmart. At the same time, you’ve got these four media companies that can’t make any money either.

Brian Clark: Yeah, here’s a guilty admission on my part. I don’t even think it’s about getting found with the Amazon thing in that … I forget what it was. A guy put out a great article about a certain supplement and gave me the information that I needed, and he’s got the little shop attached to his site so you can order supplements from him. Of course, I then copied the exact bottle and everything into Amazon so I could one-click it. They’ve got my credit card information, and they’ve got my delivery information. It’s pure laziness more than anything, because I actually did find it through this poor guy. He was doing everything right. My number-one rule is ‘never sell anything that Amazon sells.’

Ryan Deiss: Yeah, I think that’s a big part of it. I mean there are ways to get around it. There are ways to win even if you’re selling something that Amazon is, but you’ve got to completely change the model. I know for us, we spent a couple of years trying to figure out, “How can we beat Amazon? How can we win? How do we make this happen? How do you beat, ‘Walmart?’” Right? The answer is ‘you can’t.’

Brian Clark: That’s what I thought the answer was.

Ryan Deiss: You can’t. Right, that’s exactly the truth. You can’t, but here’s the other reality: you can’t beat them at their own game. But the other thing is, you really don’t want to. You don’t really even want to compete with them at what they are doing. You don’t want to be Walmart. Let me ask you: have you ever shopped at a Walmart?

Brian Clark: I try not to, but sometimes …

Ryan Deiss: Sometimes you have to, right?

Brian Clark: Yeah.

Ryan Deiss: You try not to, but sometimes you have to. That’s the general response that I hear from people, like, “Yeah, I go there because they have the best price.” I don’t think the web needs more Walmarts, right?

Brian Clark: Yeah.

Ryan Deiss: Another question, have you ever been to a Bass Pro Shop? Do they have those in your area?

Brian Clark: Yeah, absolutely. It’s just a big outdoorsperson, outdoorsman. Is that gender neutral? No it’s not, but you know what I’m saying. You go in there, and it’s just like sports and fishing and boats and guns …

Ryan Deiss: With ‘man,’ so no. Outdoorspeople.

If you’re outside of the States or if you’re in an area where they don’t have one of these Bass Pro Shops or Outdoor Worlds, let me describe it to you. I mean, you walk in, and it is about the size of a Walmart, maybe even bigger. But it’s just outdoor stuff. They literally — some of them — have a pond in the middle. You’re going around, and you’re picking up a fishing rod, and you’re saying, “I wonder if this is a good fishing rod.” The dude says, “Why don’t you just go try it right now? We’ve got a stocked pond in the middle of our freaking store.”

You have people fishing in the store. I went to one to see “What is this whole thing about?” I don’t like camping. I like hotels, room service, and stuff like that. I went because I wanted to see. This is a retail model that is working. This is a retail model that’s actually working, that is winning. What are they doing so well? I’m walking around and there’s people that showed up at this place wearing camo. They are not going hunting there. They showed up wearing camo. They showed up with duck calls around their necks, right?

It’s not like they bought shoes at a shoe store, and they’re wearing them out. No, no, no. They showed up with the duck call. So what Bass Pro Shop has done is they’ve created this environment. They’ve created this movement. They’ve aggregated this audience.

Then a buddy of mine, who really gets e-commerce — his name is Ezra Firestone — he said, “Yeah, in the future, if e-commerce stores want to succeed” — I think this is really profound, and I think this is any online seller — “you need to have your property, your site, a whole lot less like Walmart and a whole lot more like Disney World.”

If you think about Disney World, you go there for the rides, and you go there for the experience and for the fun and for just the whole package — but you exit through the gift shop. That’s when it hit. That’s when this whole reality struck, and that’s when I said, “Okay, what you’ve got to do is you have to combine the two.” Media and commerce shouldn’t be these separate things.

Media should be used to create the environment, to aggregate the audience, to gather the crowd of like-minded people who are excited to be there. Then you have the opportunity to sell them your stuff. They want to do it because they love you and they love your brand.

I mean, that’s what you’ve done with this podcast. You start out with the Rainmaker podcast, and then you come out with the Rainmaker Platform. The media, the gathering of the content, that’s what came first, so that’s our whole model. Everything that we do, it’s “Let’s go out there, and let’s gather the audience.”

Brian Clark: You’re a man after my own heart, obviously, in that regard. But you’re using a little bit different terminology, and this is what really caught my eye. ‘Native commerce’ — where did that come from?

The Story behind the Term ‘Native Commerce’

Ryan Deiss: Native commerce is the new hipster-approved phrase for this thing that you and I have been doing and just didn’t give it a cool name. That is the new thing. Don’t confuse native commerce with native advertising. Native advertising is advertising that’s designed to look like content, which really, that’s just the hipster-approved name for an advertorial.

Brian Clark: Exactly. This is the hipster name for content marketing?

Ryan Deiss: I think this is about more than content marketing, right?

Brian Clark: Yeah.

Ryan Deiss: This is bigger. This is about creating community, right? It really is about establishing, in your world, the theme park. It’s about building your own private little Disneyland, your own private little Bass Pro Shop. Another area — do you have a Harley-Davidson dealership in your area?

Brian Clark: Yeah. Another cult brand. All right.

Ryan Deiss: They just show up. Another one would be the Apple Store. People go to the Apple Store just to hang out. I look at all these different companies, and I say, “These are media companies.” What they are doing is they have built media, and now they are selling them stuff. Yeah, the big phrase that’s out there right now — and you’re going to start hearing it a lot more — is this concept of ‘native commerce.’

The selling that is going on is directly aligned to the media property, which historically, those two things were kept separate. You had your editorial team, and you had your advertising team, and they didn’t talk. You had the wall up between them. Now, what’s happening is they are merging. It has to be done right, and it has to be very, very transparent, but when it’s done right, it’s powerful. Where I first heard this phrase — have you ever heard of Ben Lerer of Thrillist?

Brian Clark: Yeah. Thrillist, I actually subscribed to that in Denver for a while until I got beaten down by the frequency, but it’s really a well-done media property for local if you’re in the right demographic, which I think they are going after the 18-to-34 male. Right?

Ryan Deiss: Again, I’m using the word ‘hipster’ a lot because it’s very appropriate, but it’s basically Esquire magazine for hipsters. I mean, that’s the whole thing. For the young guys, Esquire magazine skews a little bit older. They are really going for the 18 to maybe 24, but when you get up to in your 30s, they are like, “Ew, you’re old, gross.”

Thrillist, which is definitely a property worth checking out, in 2009 — all right, check this out — did $8 million in revenues from ad sales, from advertising almost exclusively, which is pretty impressive. Right? They had this giant staff, this giant editorial team, all these people producing all this content, and it wasn’t working. In 2010, they acquired JackThreads.com. Are you familiar with JackThreads?

Brian Clark: I remember when they did this transaction and turned effectively into, again, what we used to call a ‘content marketing company,’ but I’m digging this ‘native commerce’ thing, even if it is a hipster term.

Ryan Deiss: Yeah, I think it’s an important distinction, right? I think a lot of people who are doing content marketing see it as a separate activity. “This is something that we do. This is the marketing component.” It’s not built-in and really inbred into the actual … I think it’s actually a part of the product.

Brian Clark: Yeah.

Ryan Deiss: You wouldn’t say that Disney is doing content marketing. No, the experience is all an aspect of their product and an aspect of what they deliver as a company. I think that’s a crucial distinction of really bringing these two together, fusing them, that makes it work. Thrillist did it. They acquired JackThreads. They made a big deal, and they said, “Hey, we now own this company.” Very transparent. They didn’t just start like, “We bought this company, and therefore, we’ve improved our margins in one of our top advertisers.”

No, they were very, very transparent about it, which, if you are a follower of Thrillist and you believed them and you really loved what they were about, you were totally cool with. They acquired JackThreads in 2010. Remember, I said in 2009, they did $8 million in revenue. In 2014, they grew to $100 million in revenue. From $8 million to $100 million in about five years, and 80 percent of that revenue was e-commerce, e-commerce sales for JackThreads.

How to Intelligently Aggregate Attention

Brian Clark: You know, it’s interesting about this, and we’ve touched on this in past conversations. The whole reason I tried to explain content and audience-building in terms of ‘media not marketing’ is I saw a lot of light bulbs go off. I think what you just said is another light-bulb moment that I have taken for granted: that it’s an integrated thing.

We’ve always integrated. There is not marketing versus product development. We’ve always preached ‘it’s one seamless thing that the audience drives,’ and that’s exactly what Thrillist did when they made that acquisition. I think they had a pretty damn good idea what their audience was going to respond to.

Ryan Deiss: They knew because they’d already done the hard work. They had already gathered the crowd. And this is the thing. I just got back from a big podcasting conference. I know you weren’t there, but a lot of members of your team were there. I’m walking around talking to these podcasters who have a lot of downloads. They have a good following, and they are not making any money. I’m telling them, “You’ve already done the hard work. You’ve already gathered the crowd.” Companies don’t ordinarily go from $8 million to $100 million in five years. That’s big.

People were like, “I can’t believe they grew so fast.” It’s because they’d already gathered the crowd. The hard work was done. If you’re out there and you’ve got a blog property you’ve been posting to for a while or a podcast, and you have listeners and you have readers, and you’re just not making what you want to make, just know: don’t stop doing what you’re doing. You’re doing the hard work. You’re doing the important work.

Brian Clark: Yeah, this is such a common story of the audience without the revenue. I think it’s a lack of integration thinking, frankly. All right.

Ryan Deiss: Yeah, it’s integration thinking. But also — I heard this because I went to this conference — they were talking about Midroll. You know Midroll, the podcasts?

Brian Clark: Yeah, absolutely.

Ryan Deiss: I don’t want to dive too much into podcasts. There’s a lot of parallels between podcasting and blogging because it’s all just media. What they were saying, one of the questions was, “Where do I need to be before you’ll consider selling space on my podcast?” talking to Midroll. I think their number was something like, “We really want to see you getting at least 50,000 downloads a month.” Fifty thousand. And you just heard, in that room, everybody went, “Ohhhh.” Right? Because that’s the problem with advertising.

Brian Clark: It’s always been a problem.

Ryan Deiss: Advertising, it only works at critical mass, but the problem is now, even when you get critical mass, it still doesn’t work.

Brian Clark: That’s why I gave up right from the beginning in ’98 when I was building audiences — the classic case you were just talking about and not making any money. It’s because the numbers you need to make money from advertising are immense, but the amount of money I had to make when I figured out that the Internet was a direct marketing medium … You could have an audience of 1,000 and make a fortune if you’re selling the right thing. That was the beginning of my entire career, and I still find that it’s somewhat odd that we’re still struggling with getting people to understand that at this point.

Ryan Deiss: Yeah. I think you go back to the article — I’m sure you’ve read it — but if some of the listeners haven’t, Google 1,000 True Fans.

Brian Clark: It’s a classic.

Ryan Deiss: It makes a point that if you’ve got 1,000 people that really love you, congratulations. You’re set. You’re maybe not popping champagne bottles for breakfast — not that you should do that anyway. I don’t know why I even went straight to that, but if it’s mimosas, I guess it’s appropriate. But you’re doing well. It shows the math of how 1,000 true fans can really support you if you’re not just reliant upon advertising.

Brian Clark: Yeah, okay. I’m going to put you on the spot here. Give me the Deiss three-step process for making this happen. Can you do it?

Ryan Deiss: Yeah. We’ve been looking, because it’s actually quite simple. It really is. So the first thing that you’ve got to do, which, this is why I love talking to content marketers, because they get this. They get that this is step one. Content marketers and podcasters. Just anybody out there. Bloggers. This first step is to aggregate the attention. Start building the audience, but you don’t have to start building the audience to a point of critical mass.

I think people don’t realize, if you get 100 people that come and read your blog or that subscribe to your newsletter, people will look at that and be like, “That’s nothing.” If you are offered a speaking opportunity to come and speak in front of 100 people, most people would jump at that. We forget that these numbers that we’re talking about online, those are all still people. You can do well for that. Start and do that. But here’s the key: when you’re aggregating that attention, it must be market-centric.

This is why you hear a lot of people saying, “Media is in trouble.” Usually, what they mean is, when you dig into the articles, they are talking about some news site. This news site isn’t making it. I think the reason is because most news sites are not market-centric. They don’t advocate for a particular market, for a particular avatar. You look at political news sites, and typically, most of those are doing a little bit better. Why? Because they are advocating for a particular market: people who are politics junkies.

A lot of celebrity news sites, they do, because they are entertainment junkies. You’ve got to be able to — when you’re building your audience — say, “Okay, this is my person. This is who they are.” Going back to it, like for Disney. Disney can say, “This is who our market is. It’s, for the most part, families.” You get people who are Disney buffs. They have additional market of the people who just love Disney, and they are just Disney nuts. But their market is families.

You look at Apple. Apple has always been about the crazy ones, the technology nerds. Part of Apple’s problem as they are growing is when it’s everyone, the nerds start to go elsewhere. Whether the watch is a big success or not I think has more to do with the product, but if Apple were to come out with a car — I know there were some mutterings that they were talking about it — would that be successful? Yeah, because if you define yourself as an Apple person, you want Apple stuff. Harley-Davidson is the same way. They are media. They advocate for a specific person, for a specific market.

That’s why I think we need to start thinking about, if you can’t say, “Okay, this is who my person is. This is who I’m advocating for. This is who I’m talking to,” then I don’t think this is going to work very well for you. You need to know specifically, “Yup, this is who I got, right here.” That’s the first step. Knowing your ‘who’ and starting to really advocate and to serve that particular market.

Brian Clark: It’s interesting. The hard problem of saving journalism, I think, boils down to exactly what you’re saying, because the idealism of objectivity, which we can argue about whether it was ever there or not, is what keeps news companies from becoming Fox News, which is what? Still the most lucrative news organization in the world, even though a good chunk of the world can’t stand it. They know exactly who they are talking to. Flip side, go to MSNBC, and it’s the other side of that very broad right and left dichotomy.

Ryan Deiss: Exactly. So when you’re aggregating this attention, you’re not selling information, even if what you’re giving is content. I think I’ve heard you say this before: content comes in two categories. It’s information and entertainment. You must be entertainment. Okay? You must be entertainment. Now, does that mean that you need to get on there and start singing and stuff like that? No.

Brian Clark: No.

Ryan Deiss: Of course not.

Brian Clark: It’s coming up with the interesting analogy. I became notorious for using pop-culture references to try to teach people everything from copywriting to email marketing, right? Then, that became a thing, so I stopped doing it. But that was the principle at the time. Make it educational, but also bring a smile to someone’s face so that they actually make it through the article.

Ryan Deiss: Of course. Let them find someone who says, “Yeah, that’s my person.” You’re right. Fox News is a great example of that. Fox News is not information. I’m not saying this in a political sense. It’s entertainment. MSNBC, when you go and tune in — if you’re a liberal and you watch Rachel Maddow … I don’t want to make this overly Americanized, because I know you’ve got listeners all over the world, but this is the case for all aspects of politics. People find their person. It’s the case for business people.

You’ve got folks that really love Richard Branson, and you’ve got people who really love Trump still. And you’ve got all these people who have their person that they want to follow, and it’s because they find them not merely informative, but also entertaining. Offering a unique perspective, right?

That’s how you’re going to aggregate attention for your people. You’re not trying to do it for everyone. All right, there’s people I know for an absolutely fact who do not like me, but they love you, Brian. Now, maybe we can start to share them. There’s people who they think that I’m a douchebag or whatever, but they think that you’re really nice. Little do they know …

Brian Clark: When I suggested that we lead with the question of whether or not you truly were a douchebag, you didn’t seem to be fond of that.

Ryan Deiss: No, the answer is ‘yes.’

Brian Clark: I’m your spin doctor.

Ryan Deiss: Yes, absolutely. Thank you.

Brian Clark: I know you’re solid.

Ryan Deiss: He’s my PR guy.

Brian Clark: Yeah.

Ryan Deiss: No, but you get around. There’s people that like me, and there’s people that don’t. There’s people that like you, and there’s people that don’t. At the best, all you can be is you, and I know that sounds cliché, but it’s true.

Brian Clark: No, it’s true.

Ryan Deiss: When you’re aggregating that attention, remember that you’re an entertainer. You’re not an informer. The people in the evening reading the national news, I’m sure they get paid well. If they are on ABC or whatever, they don’t get paid anywhere near as well as entertainers at the top of their game and get paid. You’re an entertainer. You’re a story teller.

You have perspective, and you have opinion, and that’s why people are going to tune in and continue tune in. That’s step one, to start aggregating that attention, whether you aggregate it through a blog or through a podcast or whatever medium you’re most comfortable with. And you shouldn’t limit it to just one. Wherever you start, though, just remember that’s what you’re doing. Have that market.

Why Advertising Is Market Research More Than Monetization

Brian Clark: The next step, which is the one people struggle with, is figuring out what people want to buy, and you have a very interesting perspective on this. We both believe in building audiences, the warm relationship, the ‘know,’ ‘like,’ and ‘trust,’ yet you advocate using advertising or cold traffic to actually figure out what people want to buy. Am I getting that right?

Ryan Deiss: Specifically advertising on your site to figure out what they want to buy. I think that you should advertise. Really, the big mistake that a lot of content marketers run into is — and I hear them brag about it. They’re like, “We don’t allow any advertising on our site.” That’s fine. We don’t really allow any outside advertising on Digital Marketer either. And others are saying, “We don’t really do any promotions or anything like that. We don’t allow any third-party offerings.”

It’s okay. It’s just that you’re limited. You’re limited to what you can guess the market wants to buy. While I don’t believe that advertising is a great monetization strategy long-term for a media property, I do think that advertising, whether you’re doing it by just opening it up and allowing advertisers to come in or whether you’re advertising stuff as an affiliate, I think that advertising it’s great for market research.

Brian Clark: I got you now, okay.

Ryan Deiss: This is how you figure it out. How did Thrillist know that JackThreads would be a good acquisition?

Brian Clark: Right.

Ryan Deiss: JackThreads had advertised on their site and kept renewing.

Brian Clark: Yeah.

Ryan Deiss: That was always my point. If they keep buying, then clearly they’re making more off of this than I’m charging. Maybe I should be them. Maybe I should do that. And I love advertising for market research. I love advertising for figuring out what people want to buy over surveys, for example. I’ve heard a lot of people say, “Oh, survey your list and ask them,” but there’s two big problems with that. Number one, surveys give you the opinion of people who are willing to take surveys.

Brian Clark: Yeah.

Ryan Deiss: Me? If somebody is like, “Oh, take a survey,” I’m like, “Oh, that’s okay, I have …”

Brian Clark: “Never. I don’t have time.”

Ryan Deiss: “I have a life,” right?

Brian Clark: Yeah, and it’s interesting. I just had Darren Rowse, who comes firmly from the blogging world, but he was talking about making affiliate offers. And that’s something I did in the early days of Copyblogger, too. Because you’re right. It’s not until they actually buy. I’ve never surveyed my audience one time, ever, to figure out what they buy. I do a lot of weird observational stuff, and then I see if they buy things.

Ryan Deiss: We have surveyed, and some of our biggest flops have come because we gave people what they wanted, what they thought they wanted. And the second way I said it was actually more accurate. The reality is, most people don’t know what they want. The more important reality is that it’s not their job to figure that out. It’s yours.

Brian Clark: Right.

Ryan Deiss: That’s the value that you provide. You’re the expert. You’re the authority. You tell them, “Hey, you should want this. Even if you don’t realize it right now, we’ve done the research. We’ve done the testing. We figured it out. You’re going to like this if you buy it.”

Now, a lot of people are very uncomfortable with that positioning, and they’re like, “Oh, no, let them tell you what they want.”

I think that’s one of those logical lies. That’s one of those things where I get accused of being douchey, in the, “You’re selling people stuff and they haven’t asked for it yet.” I was like, “I know.” That’s also what every great product and business has done. They’ve given people something ahead of when they knew they needed it. There’s always a place for filling those. There’s obvious stuff. “You know you should be doing this because it’s working,” but I would just be very leery of just putting it back on your customers and saying, “You tell me what you want.” It’s like, “Are you going to do some of the work, Mr. Website Owner? Would you do some of that?”

I think people vote with their wallets. If you have a media property right now and you’re not taking advertising and you’re not monetizing through other ways but you’ve got this just staunch approach that, “No, we’re ad free,” you’re missing your greatest market research opportunity.

If just the idea of accepting money does it, then I guess place ads for free. At least get some data from it or run it as an affiliate. Go out there. Find offers. If you’re in a market worth being in, there will be someone selling something to your people. If you truly can’t find anyone else out there serving the market, then you’ve unfortunately chosen very poorly, or you’re just not looking hard enough, because it’s out there.

How to Develop Proven Products and Services

Brian Clark: This reminds me of, remember the old copywriters’ advice that “If you see the same piece of direct mail in your mailbox month after month after month, study it, because it’s working?”

Ryan Deiss: Yeah.

Brian Clark: Yeah, that’s where copywriters would draw some of their inspiration, because they knew it was actually being paid to be mailed over and over and over again. Therefore, it’s probably a control, which means there’s good stuff in there. It’s the same concept, but this is even more direct. Your exact audience is, for example, buying from JackThreads enough to make it worth advertising over and over and over again. Thrillist says, “Why don’t we acquire that company?” It’s simple, but it’s brilliant.

Ryan Deiss: You’re a student of copywriting and marketing. You’ll really appreciate the story. Have you heard of Troy-Bilt?

Brian Clark: No.

Ryan Deiss: They sell rototillers and gardening things.

Brian Clark: Okay, yeah.

Ryan Deiss: They’ve run short-form infomercials and have been in catalogs forever. You’ve got the Troy-Bilt tiller. Here you are, and you’ve got this land, and you want to plant a garden. So you buy this rototiller thing, and you go out there, and you chunk it all up. The owner, I think he’s long since passed away, but the eventual owner of Troy-Bilt: do you know how he made his riches the first time around?

Brian Clark: No.

Ryan Deiss: Selling rabbits’ feet.

Brian Clark: Really?

Ryan Deiss: Check this out. The original offer for the rabbit’s foot — it’s like the scammiest thing in the world. It was basically, “This is a magical rabbit’s foot, if you wish…” I mean, you remember rabbits’ feet, right, when we were kids.

Brian Clark: Yeah.

Ryan Deiss: You could buy them. They were real feet of rabbits. Disgusting. No one would even come close to accepting this. Back in the day, everybody was like, “Yeah, sure, I’m going to walk around with a rabbit’s foot on my keys. This makes tons of sense, apparently.”

The original rabbit’s foot offer was basically just, “If you wish upon this rabbit’s foot, all your wildest dreams will come true right now.” Understandably, the government stepped in and said, “Hey, homie. Um, you can’t say that.” Now, he tried to get around it, being like, “It’s a religion,” and then this and that, but it was like, “No, dude. You’re just lying to people. Stop.”

His business, appropriately so, was done. But he was able to rent his mailing list. He found that there was this person who had this rototiller that kept renting the list over and over and over and over again. He reached out to that person and acquired the company. Reached out to the person, acquired the company, and the Troy-Bilt company — which is now a gigantic company who employs hundreds if not thousands of people, giant, giant company — was built on the back of that one offer.

Now, again, I don’t suggest that you go out there and sell a bunch of scammy stuff to build an audience.

Brian Clark: No, but the principle is, though, that he determined something that was selling off an audience he already had.

All right, step three — and this is another place that other people get stuck — we’ve talked in a couple of different contexts just now about acquiring companies, obviously not something that is open to everyone right out of the gate. I’ve talked a lot about how I used partnerships and collaboration to get products done, and we build a few here and there.

What’s your favorite approach? I know you guys create your original courses and membership sites. What do you do for your more physical-oriented companies to get those products to exist?

Ryan Deiss: If it’s an individual product, we would always rather acquire if we can get it. If we find that this particular thing is selling really, really well, then we’ll try to acquire it. But like you said, that could be expensive. To go to somebody and say, “Hey, I want to buy your company” can be tough.

I’ll also say this: don’t assume that you can’t do it. If it’s a good company, if it is a good company with good financials — solid financials that a banker would look at and say, “Okay,” and it has good cash flows — what we’ve been able to do in the past is purchase companies with a fairly small down payment and using debt, bank debt or from a high-net-worth individual and just paying them interest on it.

Brian Clark: Right.

Ryan Deiss: We’ve been able to acquire companies on the cash flow that is currently coming out of that company.

Brian Clark: Right, makes sense.

Ryan Deiss: You go, and you buy the company for a little bit down, and then the cash flow that the company is creating today is basically what pays for the company. As soon as you turn your media toward it, it’s going to go up.

And there are some other things, so that works out well. Not every company is for sale. It could take a while. It could be really difficult. Joint venturing is another way to do it, and I know you’ve done that a lot. You go to somebody who’s got it, and you say, “Hey, let’s get in this thing together. I’ll put my media muscle behind it, and you handle this part.”

Maybe your partners or maybe you just get a preferred royalty or commission or something like that. The other thing that you do is just create it or source it. So we’ll go, if we know something is selling really well, and get it sourced. We’ll go to China if we need to, and we’ll source something. Or if it’s an information-based product, which we sell a lot of those in the crafting space.

We have a product on how to make cheese. We don’t know how to make cheese. We found someone who knows how to make a cheese and do other types of crafting. We just put out a casting call: “Hey, who knows how to make cheese?” We found somebody that does, hired a production company. The whole thing cost us I think between $15,000 and $20,000 to put together. A lot of people would say, “Oh my gosh! How could you spend that much?” Because we know it would work. We had already tested it. We already knew it would convert. It was already there.

When you no longer are guessing, when you’re no longer saying, “Well, I guess I’m going to create this product and hoped that people buy it,” when that’s no longer what you’re doing, you can make investments like that in these different products with great confidence. The idea is just get it, and then when you have it, be transparent that it’s yours. A lot of people say, “Don’t you have to disclose?” whereas if it’s advertising you don’t really have to disclose. “But if it’s yours, you’re receiving commission, and you have to disclose it?”

My thing is yes, you do, and you should. If you’ve done a good job aggregating the attention, gathering the crowd, and they know, like, and trust you, then they’re going to be excited that you have it.

One of my favorite examples is this: we do a big event every year called Traffic and Conversion Summit. It’s a bunch of small business owners talking about traffic and conversion, as the name would suggest. Last year at Traffic and Conversion Summit, we gave a booth to a company that we had started called Hong Kong Tailors, and Hong Kong Tailors makes custom suits.

I get up on stage, and I say, “Hey, by the way, one of our sponsors isn’t so much a sponsor. We actually own them: it’s Hong Kong Tailors. If you want to go out there and get fitted for a suit, you can. By the way, if when your suit comes you’ve got three arms, hey, my bad. Please don’t be mad at me or anything like that.” People laughed and rushed out, but they wanted to get the suit, even though what do I know about suits? Nothing. They know me. They know Digital Marketer. They like it, and they trust it, that no matter what, we were going to do right by them.

And we kept hearing that again and again and again and again. The same was true with Thrillist and JackThreads. If you love Thrillist, you’d wanted to now buy from JackThreads. They had created Disney World.

Brian Clark: Yeah, absolutely. I mean, if you’ve done it correctly, not only should you be proud to announce that it’s yours, but you should get that type of reception. And again, you’re way safer. If we’re still in the realm of any sort of guesswork, it’s about as highly educated a guess as you can get when you’re actually serving an audience of real people as opposed to some idea you had that you ran out and built and then try to figure out how to sell.

Ryan Deiss: Yup, and we’ve done it in, like I said, the crafting space. We’ve done it in the makeup space, all these different markets that we know nothing about, because the market tells us, “This is what we want.” Okay, we’ll get it for you. We’ll get it for you.

Brian Clark: You may be infallible, but I’ve made about 100,000 mistakes over the last 17 years. If you can find that you have made a few, could you share them with us?

Mistakes and Misconceptions to Avoid

Ryan Deiss: Yeah, this one time I thought I made a mistake, but it turned out I didn’t.

Brian Clark: Ba-dum-bum.

Ryan Deiss: Now, we’ve screwed up a lot, tons, tons and tons and tons, in fact. Yeah, here are some of the things that we’ve figured out along the way. We were really successful early on when we were doing this in having a subscription component as one of the things that we are offering. Whether it was a higher level of the property or an association or a thing-of-the-month that you’re going to get. We tried to force-feed that into every market that we went into, and we found that it just flat-out it didn’t work in a lot of them.

I think that not every market is going to lend itself to subscription, and that’s the thing that a lot of people in the media space want to do. They want to create, “Oh, we’ve got this club,” or this “higher level. We’ve got this pay wall for the stuff in there.” We have it with Digital Marketer Lab, which is the higher level of Digital Marketer. You have it with Authority, which is the higher level of Copyblogger.

It works in a lot of markets. It doesn’t work in a lot of markets, too. Don’t necessarily try to force that. Don’t necessarily try to force the subscription side of it. Just figure out what they want.

And that’s the thing. In a lot of these markets, if we had gone out and tested or just acknowledged why there’s no really other subscription offerings in the space, maybe there’s a reason for that. They’re just buying a lot of stuff. Let’s just give them what they want. That’s the first thing that we learned. We wasted so much time and money really trying to force subscription.

Brian Clark: Yeah, let me share something on that, because you’re about to see the next ridiculous VC and private equity bubble. We went out and talked to a few people, and again, we ended up going with debt. We took out a couple million bucks instead of taking someone else’s money, because we have a good relationship with our bank, and we’re highly profitable, all those things that investors apparently hate. But all they want is recurring revenue. Like every company in the world is going to be recurring. I’m just like, “Oh, Lord,” but that how it works. It’s the next trend, and then there’s nothing but that.

Ryan Deiss: Yup, and what you’re starting to see is people not wanting it, not wanting to sign up for it, and when they’re in it, canceling like crazy because they look at their credit card statement, and they’re just inundated with all the subscription offerings. I don’t need a subscription service for toilet paper and a different one for razor blades and a different one for this. It’s just kind of like, “God dang, guys.” I think you’re still going to have it in premium areas and associations.

Brian Clark: It makes a lot of sense. Like your site and Authority, these are continuing education for professionals, and they’re reasonably priced. The return you get on that it makes absolute sense. And maybe the razor thing. I’ve actually contemplated that because the razors in the store are outrageously expensive. Maybe that kind of recurring commodity thing when you don’t want to think about it and you don’t want to go shopping and you don’t want to run out, maybe. I don’t know.

There is a limit to it, especially when you start seeing your credit card statement, and you’re like, “I don’t need all this stuff.”

Ryan Deiss: Yeah, I’m not saying, “Don’t do it,” but don’t force it. If it’s not there, if you’re not seeing it, don’t force it. We had that in the beauty space, because we’re like, “Oh, Birchbox.”

Brian Clark: Yeah.

Ryan Deiss: What we found is that type of thing, people really aren’t wanting that. Now, in some other aspects of beauty, we can pull it off, but when it came to makeup samples and stuff like that, it wasn’t jiving.

The other thing I would say is, “Don’t overvalue product.” People spend so much time creating their product. People will spend years working on their products. People will invest lots of money, or they’ll try to buy a business that has a product that they think is really, really cool, but without aggregating the attention first.

It’s just so exhausting. I’ve seen this happen to friends of mine, where they’ve just spent a lot of time creating a product, creating a product, creating a product. Now it’s done, and they’re like, “Okay, it’s done. Now what do I do?” It’s like, “Well, now the hard work starts, so … yeah.” And it’s going to be a while. Whereas when you aggregated the audience and you know what you’re doing then you go and you create the product, it’s exciting, because when it launches, boom: you just announce it to the audience that you already have, and you don’t have to wait.

Just remember: for us, and I think this is important, a product does not a business make. For us, the market defines our business not the product. You have these people that are here and then they’re gone. They’re one-hit wonders. That’s like a singer that had their one great song. That was their one product. That’s the piano key tie.

I want to be Chanel. I want to know, “Okay, this is the Chanel woman. We need to make her this type of person, this type of dress. And as long we’re always advocating for this type of woman, the styles may change, but we’ll always be here.”

That’s the other thing. I think if you’re media-first, then that’s kind of innate. You never get tied to a product. But just be careful: no sacred cows out there with the products. Then finally, don’t limit yourself to what you know or to what you are passionate about.

I see people all the time doing this. They’re like, “I’m really passionate about this.” I’m like, “That’s really adorable. Do you know that other people are, too? Are they willing to pay?” Like, “Do you have a reason to exist there?” Think like a publisher. Think like a producer.

I mentioned before, I’m not really into outdoors. One of our markets is Survival Life, right? We’re in the survival and preparedness space, which now, it’s really more outdoors. We sell a lot more camping gear and stuff like that. We actually have one of the top-selling tactical knife brands in the U.S. because of the media that we own. I’m not passionate about that, but I don’t have to be passionate about that, because I’m the publisher. Publishers aren’t passionate about everything they put out. I’m certainly not passionate about makeup.

Brian Clark: It’s the producer mentality. But eventually, producers make all the money if you think in terms of the Hollywood model, and they’re not necessarily passionate about every film. They are definitely following that methodology.

I think it’s hard when people start because if you’re the content creator, it takes something to get you to show up every day. If you change your model, then it’s much easier not to have to need that subject matter passion in order to show up at work. That again, it goes full circle to what we said, which is that entrepreneurs tend to get bored, and you’re going to break the thing if you’re in it too closely. Maybe step back a little bit, and think about more of a business/producer mentality.

Ryan Deiss: I’m not saying there shouldn’t be passion on the team. I’m not passionate about makeup, but we have somebody on the team who is. There needs to be that passion there.

What I’m suggesting is, if you’re content marketing about content marketing because you love content marketing and all you want to do is talk about content marketing, then maybe and it’s not working out and you’re having a hard time breaking through because of jerkfaces like Brian Clark who are gobbling up all the content marketing real estate. Maybe what you should do is deploy your content marketing expertise and skills as a publisher, as the — what I would argue — more important half of a business partnership with someone who is passionate about a subject, who can be the expert, who can bring that passion, who can bring that enthusiasm.

What you bring is the enthusiasm for the thing that you’re great at, which is content marketing, which is publishing. Just don’t limit yourself and your market to what you know. There’s so many out there and so many that are underserved that want to be served. Certainly, they want to be served in this model where you’re giving them that one-stop-shop, Disney-World experience.

Brian Clark: Well said, and a great place to stop, I think. Tell people where they can find you. And I just found out that you have finally entered the world of podcasting. Tell us a little bit about that.

Ryan Deiss: Yeah, you can find me … you want me to just give them my home address so they can just come and swing by?

Brian Clark: Yeah, I’m parked out in front of your house right now.

Ryan Deiss: Yeah, 1439 Elm Street. No, I’m just kidding.

DigitalMarketer.com is where we do that voodoo that we do, and hopefully you go to Digital Marketer and read some stuff that we’ve got on our blog there. Maybe you like it and you want to sign up so we can inundate you with email and offers unapologetically. DigitalMarketer.com is where you can definitely find us.

And yeah, Digital Marketer just launched its first podcast. It’s called Perpetual Traffic. We debuted at number one in business. I think we got up to like number seven in all podcasts. We were able to hang out there for a good little bit.

We’re still doing really well on the business and the marketing categories, but everyone’s like, “How did you do that?” Simple. We own media, and so when we launched it, we were just able to tell all of our 500,000 closest friends that we just launched a podcast. That’s the power of already gathering the crowd. When you own media, and not only can you do native commerce, but you can also birth other media. That’s why I think everybody who’s here, we’re totally preaching to the choir if you’re listening to this, but just know that you’re starting at the right place.

Be thankful that you found this world when you did, because you’re doing it the right way. You’re definitely starting at the right place. Once you’ve aggregated the attention, then you can go out to all those people who started at the product phase and are weeping and gnashing teeth because they spent all their time on their product and they don’t know how to sell it, and you can go and really help them out one day.

Brian Clark: Yup, in its early days. Everyone wants to say, “Well, if I would have started 10 years ago.” It’s still early, I think, in this particular transition, if you will, from the way media used to work. And it’s kind of falling apart in front of our eyes. We’re inventing the future, which, not to be grandiose, but it feels pretty good.

Ryan Deiss: We were born in a wonderful place and time because yeah, I agree. The fact that no one can agree even on what to call certain things tells you that we’re early — really, really early — but it’s going to happen fast, so I wouldn’t hang around too long.

Brian Clark: Yup. Ryan, thanks for stopping by today. This has been a fairly substantial conversation, but it’s also right up my alley. I love your perspectives. I’m going to kick around this ‘native commerce’ term a little bit. I’m always really slow to adopt new terminology, but it makes sense.

Ryan Deiss: It does, and I agree. Thank you so much for having me. Really, that means a lot.

Brian Clark: Yeah, no problem at all. All right everyone, we will be back next week with more, but hang in there, keep going, and we’ll talk soon.