Thoughts On How To Build A Data-Focused Media Company

Sep 16, 2022

In the media world, B2B in particular, data is one of the most discussed topics these days. Even in advertising, the game has changed. Are media brands selling an audience? Or are they selling insights into those audiences based on intelligence generated through their content?

Some companies have embraced the latter, while other still depend on display advertising, awareness and brand building, even online.

But it’s not limited to advertising. Data can be used to market the media company’s products too, like events and subscription. Data is necessary to ensure the integrity of an audience file, especially with the new privacy regulations coming online. Data can also be a product—research reports, market analysis and intelligence, and more.


With these things in mind, we spoke to Peter Goldstone, chairman of GovExec, the Washington, D.C.-based B2B publisher serving the government sectors. Here’s an edited transcript of the conversation.

Fox Tales: How should media companies assess the data-product opportunity?

Peter Goldstone: How do we fund and realize value in our data assets? We don’t start there. We start with what data the market needs—it’s really about the market driving the data imperative. It’s not about what companies have and how they can leverage it. That’s part two. The first part is what the market needs. It’s not what do we value, it’s what does the market value? What decision points and insights does the addressable market value? How do your customers use data information and insights put capital to work to achieve market share and grow? That’s really the first question that has to be asked.

Fox Tales: In considering and then rolling out a data business, or acquiring a data company, how comprehensive does the evaluation have to be? Do you need a formal business plan with targets and timelines?

Goldstone: None of us do any of this without importing the data expertise into our companies—we had to acquire or hire data specialists and expertise. We have full-blown business plans for every company we buy. You absolutely need a business thesis and a business plan to execute on that thesis. Different talents are required. Different capabilities. It’s a whole different business model from having an ad-revenue stream model to moving to a recurring revenue workflow model. In many cases it entails a whole different set of skills and talent.

Fox Tales: And what should the business plan address?

Goldstone: It would measure a lot of KPIs in the market. What data is relevant? How is it relied on? Who’s providing it? Where are the gaps in the market, the white space, and what gaps can we fill? How do we execute on it? GovExec’s data insights set the standard for intelligence data insights and solutions for our customers to thrive in their markets.

Fox Tales: What metrics help companies evaluate the success of their business plans?

Goldstone: It’s like any value proposition. Determine what you need to invest and how you’re going to grow and maximize the assets. We’re looking at a 3X-5X return on equity in three to five years. But we’re going to blow that away. We‘re way ahead of that already. But that’s a traditional valuation standard. There’s also something called the Power of 40: A fast-paced formula where if you’re growing at X percent annually, and your operating margin is greater than 20, that gets you into a whole new realm of value. If you talk about valuation, that’s how you get into the stratosphere with really powerful valuations.

The reason is that the financial marketplace values renewable revenue streams more than transactional advertising. Another assessment you should be factoring in is asking yourselves how much of your current revenue is recurring revenue rather than 1x campaigns.

So there are two things: Is the data business X percentage of total revenue? And what are the renewal rates on data? If you’re over 90% on that, the market is telling you your data is valued.

Fox Tales: Greg Watt (CEO of Watt Global Media) asked about an industrywide standard for assessing a data-business opportunity. Is that possible?

Goldstone: No. That’s a market by market assessment. You can’t do an industrywide thing.

Fox Tales: Where would you advise a company to begin?

Goldstone: You probably start with consulting. And then you have to bring in-house real data expertise. As I mentioned, it’s a completely different skillset. Your media talent doesn’t really understand data and analytics. For one thing, you need to understand as an organization how your customers use data and gear your product accordingly. Data is usually used by the sales and BD side of the fence, and not just marcomm.

Fox Tales: What should media companies do to maximize the value of their data initiatives?

Goldstone: The first step is to find out exactly what kinds of data your customers rely on and where the gaps are in the data stream that you can fill as a company. Where are the info gaps in the market and how can you fill those gaps with data intelligence and insights?

You mention the other people you interviewed. Dodge is a data company. They’re not a media company. Thomas is a directory. I would broadly speak to them and others as content organizations. Some are driven by journalism, while some are driven by data intelligence and insights as a recurring revenue stream. Again, the question is, “Can you establish a data set that the market values and produce a recurring revenue stream based on that value?”

For example, maybe Greg Watt has proprietary information about poultry pricing? What do you own, and how can you monetize it in interesting ways? Are companies sitting on a repository of information that the market can’t get anywhere else—and that can be packaged into a product that can be built into a recurring revenue stream.

It could be open-source data that they can package in various ways. Public data everyone has access to and they have a lens that is diff than everybody else. GovExec takes a lot of public data that’s about government purchasing, and we’re able to serve it up in ways that the market finds valuable.

There’s high-value content and then there’s moderate-value content. It depends on the value the market places on it.

At GovExec, we can tell a contractor what contract is up for renewal, who the decision-makers are, what the value of the contract is, who the historical vendors are, and finally, information about what they’re engaging with on our media platforms. All of that adds up to insights into how to win that contract.

Fox Tales: In an M&A transaction, what would you look for as the buyer?

Goldstone:  We’ve bought 11 companies in the last 18 months. Most of those are data companies. We are looking for a quality, superiority and integrity in the data company that we’re buying—it more must have information, intelligence and insights that no one else has. That’s first. Second is the end-user experience. What are the solutions in which users can plug the data into their own CRM platforms and leverage it in valuable ways? Third, is it a commodity proposition or premium proposition. Can we sell it for a lot of money or should we go for volume?

On the buyer side, it’s about the renewal rates, it’s about user engagement—how many times do their customers log on and use the data product? The top gauge of the value of data is the high renewability of the product.

Fox Tales: Now you’re the seller. How do you measure yourself for when you present to prospects?

Goldstone: Basically it’s the same metrics—high renewal rates, high user engagement, and the fact that no one else can provide the kind of data that you have. And you have a superior user interface that plugs right into the workflow of the customers.

Fox Tales: What circumstances determine whether to build or to buy data expertise?

Goldstone: It’s about time, basically. At GovExec, we could have built a lot of it, but it would have taken a lot of time. And we had a target-rich environment where we could buy those assets. Sometimes you license it. And it could be a build-buy hybrid scenario. But we had an environment where there were a lot of companies out there that we could buy, and then fortify them with a lot of capital. 

Fox Tales: What would you want to learn from this MAP initiative?

Goldstone: What’s the diagnostic of the market. How do you formulate it? What do customers rely on? Before any company tries to get into the data business, they have to ask what the market wants, who’s supplying it, is there an opportunity to fill a gap? The second part is an assessment of the internal assets you have. What can you build and what can you potentially acquire?

Again, GovExec is a perfect example. We had a lot of advertising—we were serving a lot of leads, but we weren’t serving our customers a lot of intelligence around those leads. So we went out and bought that intelligence in the form of acquisitions.

Because, even if you’re serving up leads, you don’t know what happens to those leads. If they sit on a desk. If they get from marketing to sales. Data helps turn those leads into sales-ready leads. And it helps clients convert leads into customers. Think about it in terms of the funnel strategy—where does the media company want to operate?