As digital media has evolved over the past 10 years, one of the themes has been the need for publishers to add new business models to augment their advertising platforms and diversify revenue streams.
At Praetorian Digital, one of our most successful platform expansions has been into online learning, a business that shares key similarities with that of digital publishing. By developing our own learning management platform and making two meaningful acquisitions—one in the local government space and another in fire/EMS—we’ve positioned ourselves well within what is a high-growth industry.
LinkedIn recently acquired Lynda.com for some of the same reasons that we’ve expanded into the space: We see online learning as a logical extension of our mission and, in our case, an initiative that builds upon our core competencies as a digital-only publisher, from content creation to targeted marketing.
We’ve built the largest online audience in public safety and local government in large part by taking an authoritative approach to content creation with a focus on actionable editorial that helps our public safety audience stay abreast of trends, navigate modern threats and better protect their communities.
Our path toward online learning was part strategic, part organic. For years, we’d had discussions with police sergeants or fire captains who had taken to packaging our content into informal training programs delivered at roll call or during briefings, with our articles or training tips serving as a centerpiece for instruction. We began to look at that use case and consider how we could leverage our content more effectively in an online training environment for both organizations and individuals, and we began to invest in both course content and a technology platform.
And though we’ve long been a big fan of online training as a business model—particularly if you can offer mandated or accredited training—we’ve continued to be surprised at how well it fits our business model and strategic objectives as a B2B publisher.
Here are some of the top reasons why B2B publishers should explore adding online learning to their portfolio:
1. It offers attractive underlying economic fundamentals and valuation…If you talk to any private equity firm or read the general business media, establishing a profitable, growing Software as a Service (SaaS) business model, with recurring billing and reliable revenue, is akin to discovering the Holy Grail. Online learning is a great example. It’s based on a hosted, cloud-based software—which can either be bought or built—and requires development of great content and training workflow tools.
Unlike advertising sales, which is incredibly tough to make recurring, online training provides stable, predictable recurring revenue with great visibility for revenue and sales planning. Doing it right means having great content with tracking and reporting of data, which isn’t easy. But it can be incredibly sticky once achieved – with high switching costs, renewal rates in the 80- and 90-percent range and contracts that renew automatically. Additionally, the business model allows you to bill customers upfront and often realize average time outstanding for AR of less than 30 days.
Accordingly, the repeatable and reliable nature of these businesses is highly valued by investors—we’re seeing valuations of some comparable businesses in the 3-to-10x revenue range.
2. It leverages core competencies…As a publisher, we have an inherent leg up on most startup businesses in online training. We have an incredibly large and engaged audience, count many of the leading experts in our markets as contributors, and possess a robust library of content, from articles to technical white papers and videos. We also have recognizable, trusted brands and the marketing expertise and reach to bring new products to market both for individuals and organizations.
Despite these advantages, it hasn’t been easy. We’ve had to develop some new competencies, such as a more sophisticated approach to technology and the ability to scale an inside sales force calling on our audience.
3. It creates tangible audience value…Online learning provides meaningful, tangible value to our audience and takes much of the informal learning that goes on within our media sites—reading about new trends, analysis of current events and introduction of new products—and places it within a structured environment.
From awareness-level courses that help an individual or organization improve a job skill to formally mandated or accredited compliance training, quality online training leads to a better educated and more effective professional audience. In many cases, it also mitigates risk, lowers insurance premiums and decreases liability.
4. It supports your core business model…Finally, we’ve found online learning to be a 1 + 1 = 3 scenario. For every organization we sign up for online training, we add members to our sites and newsletter circulations and scale our reach. We also gain additional industry data that’s highly valuable to our advertisers. A larger, better segmented and more engaged audience means a stronger advertising business model.
Plus, we’ve found ways to reuse content across both our publishing and online training platforms, leading to content creation efficiencies and lower overall costs. More recently, we’ve been able to incorporate some of our largest advertisers into online training via sponsored courses or by creating custom product training programs.
Ultimately, by adding online training to our portfolio we’ve created another way for our audience to engage with us daily and get the content they need.
Success in online learning is not easy—it requires publishers to master and manage a SaaS business and all of the challenges that come with a complex business model. We still have plenty of room to grow and improve.
But in four years, we’ve been able to build a dynamic, mid-seven figure online training business that covers three markets—police, fire and local government—and is not only growing in excess of 50 percent per year, but is creating incredible value for our audience as well as number of our largest advertisers.