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David Higgins was the editorial boss at Foxtel. He was also an editor at news.com.au. In August, he co-founded Stockhead, a media startup that covers what the mainstream business press often ignores: the small- and mid-cap stocks on the Australian Stock Exchange. Call it the “ASX2,000.”
The content, delivered primarily on two daily briefing newsletters and the website, is directed at daytraders and speculative investors.
Not many media startups combine journalism with modern digital marketing smarts. As part of its distribution toolkit, Stockhead uses the best of ad targeting — custom audiences, re-targeting — to reach dedicated readers.
The business straddles that fine line between editorial and paid content; it covers around 1,500 stocks and sells content marketing services into the same market segment..
David and I spoke about the convergence of media and content marketing — its opportunities as well as its challenges.
Note: Stockhead appealed for significant changes to the original interview text on grounds that it revealed too many operational aspects of the business. Amendments were made on April 19, 2018.
What was the opportunity that you saw in the market that led to Stockhead?
Vertical media plays work in segments where there are companies needing to get a message out. In our case, that’s small-cap companies on the Australian Stock Exchange. There are about 2,200 companies listed on the ASX. Analysts really only cover the top 200 companies, so there’s another 1,800 or 1,900 companies struggling to get press coverage or analyst coverage.
But we know they have money because they’re on the stock market. They have very good access to capital markets to raise money, and they need to spend some of that money on marketing.
Most of them are not very knowledgeable about marketing. Often these very small companies would be made up of just a handful of people. They’d rather put their money into hiring the best geologist or getting the best drilling equipment.
So this is a market that has money and needs to get a message out. Vertical plays work here because you can do it with a low cost and you can be number one in your area.
Find a segment where there’s an audience that’s been underserved or not served at all; that is true in our case of small caps.
“This is a market that has money and needs to get a message out” — StockheadAU's @cowspanker on building a niche media startup focusing on small cap investors.
Are you the only ones doing this? How does the business model work?
We’re the only ones that take our approach. There’s one other small one now, but initially when we came into the market there were a few companies that were purely doing native advertising, but without the journalism.
Our core business model is working with clients on a retainer who pay us to create sponsored content articles. Our biggest expense is the journalism, so we wanted to create a masthead that could do our marketing for us. Much of our money comes from sponsored content — clients pay us to create native advertising for them. We also do display advertising, some CPC advertising, and programmatic display advertising through Dianomi, which is kind of like a finance version of Outbrain.
How does the sales process work?
We sell directly. Most of these clients don’t have media agencies.
But the key — and this is where content marketing typically falls down — is in the media buying and media planning for the clients. It’s just as important as doing the creatives.
Most publishers doing content marketing are probably pretty good on the creative side but are not making use of the ad tech that people like Facebook, Google and Twitter have. It’s about custom audiences, retargeting, and ensuring that the client’s content is not only being put in front of the right audience, but that those audiences are captured and retargeted in subsequent campaigns.
So do you guys do that in-house?
We do that entirely in-house.
The really interesting thing here is that the media industry is at war with Facebook. You open the Monday media section of The Australian newspaper and it’s an absolute war that they’re waging against Facebook, and I completely understand why they want to position their environment as a premium environment. They’re using whatever leverage they can get from Facebook’s troubles and YouTube’s troubles to present newspaper environments as great. I’d be doing the same thing.
But on the other hand, news publishers are never going to have the same ad tech in terms of retargeting and custom audiences. So my personal strategy is to partner with and use Facebook’s technology to enhance my offerings, rather than be at war with them.
But that’s also the challenge isn’t it? To help clients understand the value of reaching targeted audiences?
That’s right. You’ll go in and meet with a marketing director of the company and you explain how the sales funnel works in Facebook ads manager and the behind-the-scenes technology.
All marketers have experience with using Facebook, and they’ve heard of the Boost button. I would say most marketers probably still think that gathering and buying Page Likes is the way Facebook works.
Explaining and getting clients to understand the value of things like how Custom Audiences work and retargeting are important. Working with a client to get their email newsletter and upload those email addresses into Facebook and create a lookalike audience — that’s just the first step.
A lot of our clients when we start working them don’t even have Facebook Pages. And you can’t do branded content for clients anymore without tagging them in the branded content tool. So often, you have to create a Facebook page for them.
So when you’re out pitching, you’re wearing two hats — as a cofounder and as an editorial head. Does that get in the way?
Not really. Our investors were looking for someone who had the editorial experience. They left me to build the business. We have a different manager who runs the sales side.And that works very well.
Tell me about your team and how you operate.
We have four full-time journalists including myself doing about 75 to 80 stories a week.
The content work is all-consuming, especially for a small team. We started with a daily email with eight or ten stories, and we quickly realized we needed a lunchtime email wrap. The editorial guys work very hard. They’re writing on average five stories a day.
They’ll do three short breaking news stories in the morning each and then that goes into the lunchtime email, which has about eight or nine stories in it. And there’s a morning wrap and then they’ll write another two stories each in the afternoon, which they publish at the end of the day or hold over to the morning.
Half of the stocks we cover are in mining, then tech and health. We work mostly on Slack; Zoom for video conferencing. We also use Trello to organize our sponsored content.
I think since so much of journalism is outsourced and freelanced these days, the majority of journalists in the world move back and forth between independent journalism content and sponsored content. But we haven’t seen any conflicts come up so far.
You’re going after day traders and retail investors. How do you get your messages out to your readers, apart from the newsletters?
That’s a really interesting question. We don’t really spend any money on paid marketing. We did when we initially established our brand in August 2017.
The journalism in the content is our marketing, in the true sense of content marketing. With all the algorithm changes that Zuckerberg has done with Facebook, we’ve all seen organic traffic slow.
You now get fewer people reading a story via Facebook than you did in the past. This has been the experience with most news publishers. That has meant that email marketing is now much more important. I was initially a little bit skeptical about email marketing because it wasn’t done well. There wasn’t much care and there wasn’t much transparency.
Email now for publishers is quite important as a high-quality audience to completely own. Sure we have custom audiences to target in Facebook, but we don’t own that data. Facebook does.
What’s the open rate on your emails then?
Very, very high. We’ve taken the slow and steady route to ensure the quality of our email subscribers is high
So that’s what I say to publishers: Digital news is always a numbers game and it’s easy to get sucked into that.
As clients and marketers move slowly toward measuring conversions, rather than horrible old things like engagement or reach, they will be able to see how many people are landing on a piece of content marketing and converting.
Do you find it hard to explain what you do since it’s a cross between editorial and content marketing?
It’s really a hybrid of content, journalism, and media buying. Media buying is the least understood. Creative agencies and media agencies are still pretty separate in the industry. But on social platforms, creative and media buying are inseparable. You should always do the media planning before the creative.
A news publisher that is prepared to sell media on a platform like Facebook has an advantage over a creative agency or a media agency because they’re able to combine a deep understanding of the content with a deeper understanding of how to build a sales funnel for a client, as well as the creative and media buying together.
I know this comes up a lot about your ownership by M+C. You have this as a disclosure on your website. So what’s the relationship there?
My colleagues in other news organisations have a go at this from time to time. That’s understandable coming from the traditional church and state view of things. I myself worked in big newspaper companies for 20 years for most of my career, and I understand my colleagues who still work in those environments still say that’s a story.
We’ve actually found it pretty easy to separate the two. Our investors in Stockhead are also investors in investor relations and PR. But that’s where the relationship begins and ends. They would never ask me to do them a favor by running a PR story from one of the companies.
Any kind of client content is declared by a disclaimer and the label ‘Special Report’ or #ad in our social media.
I use the label ‘Special Report’ because that’s what I grew up on. That’s what ad supplements were always called in The Australian and the Sydney Morning Herald when I was a cadet.
How about your disclaimers on social?
Facebook has a specific framework around the use of the branded content tool which we use when we post to Facebook either organically, or as a paid sponsored content piece. We have to tag on the branded content tool the client’s name in the ad and so Facebook will run that post with the word paid in the post whether it’s organic or not.
Twitter doesn’t have that framework. But we use #ad, which is commonly used by influencers. In the articles labeled ‘Special Report’, we have a disclaimer which says this article is brought to you by the client. There’s also a 100-word disclaimer included in every article. And on email, we say ‘Special Report’.
Whether it’s the Sydney Morning Herald, The Australian, Australian Financial Review, Guardian, Business Insider or Stockhead, clients want sponsored content created by journalists.
Stockhead has a distinct writing voice. How did that come about?
It actually started with an insight: The fastest-growing demographic in share ownership in Australia are the millennials. And because we’re particularly focused on the speculative end of the market, we knew that we needed to present content in a way that was exciting and fresh, and fitted in with the other new media products that young people were consuming. We looked at Mic, Business Insider, BuzzFeed, The Verge.
We looked at the way headlines were evolving to be more chatty. We like content to have a little chuckle.
It surprises me that the business pages of newspapers haven’t become more colorful or fun. Business pages of newspapers and the financial press have not changed since I was a business journalist 20 years ago. That’s hard to understand really.
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