“The Sell Sider” is a column written by the sell side of the digital media community.
What’s one way to combat subscription fatigue? Create a bundle.
“Our view is that what Apple has done, what Netflix has done, we want to do in the active lifestyle category,” said Outside CEO Robin Thurston.
In February, the company made a flurry of acquisitions that spanned media and tech, including Outside Magazine, backcountry app Gaia GPS and the event registration company athleteReg – all negotiated over Zoom during the pandemic.
The company’s portfolio now spans active lifestyle media brands, including Backpacker, Yoga Journal, SKI, Women’s Running, Triathlete, Climbing, Clean Eating, VeloNews, video production via Warren Miller Entertainment and tech with its app and event software.
Together, its products will be bundled into Active Pass, a $99 per year subscription.
“We have a bunch of niche categories, with a lot of enthusiasm around them,” Thurston said. “People want to support the amazing content we’re creating.”
Before Outside, Thurston co-founded MapMyFitness, which UnderArmour bought in 2013. The sportswear manufacturer now sells millions of pairs of connected shoes – which sync with the MapMyRun app. The experience taught him that many people with an athletic bent do a few different sports – validating the idea of an active lifestyle bundle.
Thurston talked about how Outside is solving for the future of media with AdExchanger.
AdExchanger: What kind of revenue mix makes sense between subscriptions and advertising?
ROBIN THURSTON: Today, about 65% to 70% of revenue is from advertising across all the media properties. We believe that revenue from the media properties will grow double digits over the next couple of years. The flip side of that is we think the subscription revenue will be 65% to 70% of revenue in three years. While advertising is going to grow, our view on creating a stable business is to transform it into a membership model for the consumer that wraps all these brands and products together into one membership, Active Pass.
There’s a theme of consolidation going on in media – which Outside seems to be part of. Why is media consolidating so much?
When you’re competing against platforms that are significantly larger, and sucking the air out of the ecosystem for any dollars available for vertical media players, scale matters. Scale makes it easier for consumers and advertisers. Our category is no different than the other categories out there.
Outside raised a $150 million Series B in February (as Pocket Outdoor Media), which felt unusual. Among mature publications, it’s much more common to receive private equity money.
Frankly, being private equity-owned is a big reason why those companies haven’t grown. I didn’t want to take PE money, because I was concerned that they would want to come in and optimize the EBITDA of the business. I wanted to build a product that fundamentally changed the way consumers accessed this information. We think there’s a lot of growth ahead. It made my job a little harder, but I tried to find partners that believed in the tech, and that the fastest way to get where I wanted was to acquire the brands and audiences.
What do you see as the entry point into Outside’s membership?
We are agnostic to where people enter the platform. If you start on Yoga Journal and register, and select that you’re also into cooking and backpacking, instead of having to go to those other sites, you have a personalized feed – similar to Apple News, where you’ve selected a whole bunch of topics you want to follow. From a personalization perspective, we recommend additional things based on what we see you reading or doing on the platform, and continue to hyper-personalize.
How are you thinking about your data?
First of all, we are not going to sell our data. It’s to create a better experience for the consumer. If you start on Yoga Journal, and you select you are into yoga, cooking and backpacking, we think that’s a better experience to receive ads about products you are interested in.
Talk about this idea of building tech to personalize media.
If you think about what Amazon Prime or Netflix have built, they make it easy to access the content and services. They’ve built infrastructure that not only personalizes the experience of the user, they put the right products in front of you at the right time. Forty percent of sales on Amazon are things that they weren’t planning on buying, but they made the perfect recommendation. We are building all the AI and machine learning models to be the ultimate recommendation engine.
Running a subscription business puts you in the company of direct-to-consumer marketers. What’s it like to build up those capabilities?
These days, you have to, frankly, be amazing at optimizing the CPA for new customers, and we intend to invest heavily in that over the next 12 to 18 months, in addition to product and engineering – because we want to own our code and the experience we’re building. Dedicated, loyal, returning and recurring audiences helps from a direct-to-consumer marketing perspective.
Are there missing pieces in the bundle you’re creating?
We just got 10 acquisitions done during Covid on Zoom, which for me, frankly, is kind of crazy. I’m very much used to doing these things in person. We will look at things that are really good fits, and create more value for the consumers around Active Pass. At the right time, we certainly anticipate we will make more acquisitions.
This interview has been edited and condensed.