The American news website Axios was recently sold for $525 million to Cox Enterprises, a family business with - as it turns out - very deep pockets. Axios is only five years old, so what makes this media company so attractive?
Axios was founded in 2017 by Jim VandeHei, Mike Allen and Roy Schwartz, who were inspired to start their own news outlet out of dissatisfaction with the then-current state of online news. Do you know anyone who swears by Teletext? Those people who want opinions kept out of their news and are looking for just the facts? One of Axios' secrets is the fact that they were transparent about their modus operandi from the very beginning. Each story has a clear source (the journalist), the facts have to be correct and they also believe that free content should still have some value. Axios was founded on the basis of a document written by VandeHei in which he explained what was wrong with existing media; the stories were too long, the facts were too few and there was not enough focus on the audience.
The great thing is that Axios has also implemented its core tenet of "simply delivering the cold, hard facts" into the manner in which it presents its stories; the company always uses short bullet points that contain the facts. That's right: just like in a PowerPoint presentation. The media company earns eighty percent of its revenue with the advertisements in its newsletters, although it has also introduced a paid subscription model for readers who want truly in-depth information. Axios earned $87.5 million in revenue in 2021, of which $4 million was profit. In 2022, the company expects to break through the barrier of $100 million in revenue and it currently employs 500 people.
In October of 2020, VandeHei, who used to work as a reporter for the Washington Post and as co-host of Politico, talked about the secret behind Axios in an interview with Press Gazette. It all came from the solid foundation, of course."We've shown that there's such a value in brevity, in being able to make information consumption way more efficient and in the beauty of simplicity and design. People's minds are cluttered. If you can save them time and not give them all these flashing lights, and all this garbage that they didn't need, there's a reward for it… People crave simplicity, efficiency, stuff that they can trust in a clean place."
The core of the company's business model are the 4.4 million subscribers to its twenty-three newsletters about the themes of politics, technology, business, media, the environment, healthcare, science and - last but not least - local news. The company also has a show on HBO (in which Donald Trump was once interviewed) and a number of podcasts. VandeHei about Axios' marketing strategy: "Companies that advertise with us advertise because they care what smart, curious people think about their company or their brand beyond making money. They want people to know the social causes they're involved in, the good that they do in the community, or the big topics they're trying to tackle as a company that go beyond just making money… They also want to recruit good, talented people, and they want those people to see they stand for something beyond profit. That's been a really high-growth market. We've not seen a pull-back in that area. If anything, we've seen companies spend more than ever. So it's different than the typical advertiser in the New York Times and certainly in a glossy magazine."
The investor sees promising opportunities for the development of a business model for local news. Axios recently introduced the option of subscribing to a local newsletter. A local journalist then sends you the latest news coming out of your area every day. It is perfect for readers, journalists and advertisers. Axios introduced this focus on delivering local news in 2021 by launching newsletters in eight cities. That number has since grown to twenty-four. In each city, the company hired two or three reporters to create the content for the newsletter. The newsletters each have forty to fifty thousand readers.
The people of the This Old Marketing podcast are excited about Axios. Joe Pulizzi: "First-party data is a thing. Axios runs on email first and has also stayed true to the bullet points that paved their way to success. Another important factor is that each newsletter has a writer with whom people can develop a connection. Sara Fisher, for example, is responsible for media and marketing.'' Robert Rose shares Pulizzi's enthusiasm. "What I like about them is that they focus on nothing but the news. It is old-style reporting. I believe it will work because it gives Cox first-party data and a platform they can monetise." Joe Pulizzi: "Think of the possibilities for local advertisers who want to spend their money on ads. At the moment, no one is delivering local news effectively."
Let's go back to you, experts of the marketing industry where so much is happening all the time. What makes Axios such a good case when you look at it from the advertisers' perspective? First of all, it is about the first-party data that Axios has access to. Why is advertising in retail media becoming so popular? It is because the people behind an outlet know everything about their visitors. Since Axios is based on email addresses, it does not have to rely on the major platforms such as Facebook (although Axios does advertise there, but that is a different story). Advertisers are apparently drawn to this notion. The second reason has everything to do with how Axios presents local news. The company hires two local journalists and gives them a clear job description: report on the myriad news stories coming out of the city that other media are ignoring. Because so many people are interested in these forgotten stories, they are a very attractive market for advertisers. First-party data, newsletters and local readers who "shop" at the bakery, butcher's shop and bank; that is where the opportunities lie.