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Bundling Execution: Capped by Ad-Supported and Paywall Model Limitations, Financial Content Creators are Monetizing their Retail Bases with an Emerging New Model
Financial Content Creators are innovating on an Emerging New Model
Content creators have anchored, inspired, and engaged over 15 million new U.S. retail investors to trade online in the last year, yet they are getting the raw end of the bargain. Creators and publishers deliver news, signals, analyses, perspectives, and education, doing a great job offering value to retail investors. It is with their efforts and success that I have seen retail investors being touted as a force to be reckon with in the financial markets.
Despite this, publisher segments have been struggling to keep their revenue sources vibrant. Thanks to the changing behavior of online investors and pressures on traditional advertiser-supported (CPC/CPM/CPA), pay-wall subscription and affiliate-based revenue models, the insatiable appetite of online investors discovering value from free content has forced publishers to innovate a newer model. This is the model of “bundled execution.” Content creators are collaborating with brokerage API’s and bundling the capability of trading from within their own content, becoming a premium one-stop destination for both insights and action.
Ad-supported models have been a source of revenue for content publishers and platforms for nearly two decades. Publishers frequently give away their content for free and rely on click-through and conversion-to-sales rates that advertisers pay as a source of revenue. While this is an easy way to get started and create revenues for content publishers, in most cases, it is non-sustainable as the primary revenue stream considering the vast amount of production costs and time involved to create engaging content. To generate any measurable revenue, publishers need to convince millions of users to access their content in an environment where most users find ads repulsive. This approach is heavily rigged to primarily create revenues for the search giants and ad platforms rather than the true value creators, the hard-working content publisher.
Leveraging paywalls and selling subscriptions have also been the primary model of monetization for content publishers over the last decade, particularly for trade signal creators and newsletters. This model intends to create a consistent revenue stream and can easily be up-sold to an existing base. The downfall of this model is a high churn rate— with plenty of free content available, users tend to discontinue their subscriptions at alarming rates, diminishing subscription returns. This model also faces challenges of content piracy and redistribution. Publishers are often forced to spend large marketing dollars to keep up with the churn in addition to the already growing creation costs.
Affiliate revenue channels have been available for over a decade but have only recently begun to be used in large part by publishers. This model pushes publishers to act as affiliate marketers for a third-party product where publishers receive a percentage, or a fixed fee referral, from key sales indicated by the third party. While it has the potential for higher returns on each conversion, it is an unpredictable revenue stream, forcing content publishers to abandon their core competency of creating compelling content. In many cases, it negatively affects the content publisher's ability to convert their users into their own paid customers.
Despite the drawbacks, content publishers continue to adapt and innovate. At their core, they are "creators." Financial content creators have begun to find success through “bundled execution,” attracting additional subscribers, keeping churn rates low, and unlocking the ability to charge a higher subscription rate. Retail investors are in a perennial search for compelling analysis to drive their execution objectives. Publishers who create engaging and actionable content for retail investors are offering seamless trade executions through brokerage partnerships. This innovative approach has shown substantial benefits to small and mid-size publishers that struggle to tamp down churn and bring in enough subscription revenue. As these successes become more apparent, larger publishers are shifting to adopt this strategy.
With the advent and wide-scale adoption of cloud technologies, APIs are making it possible to trade from any third-party platform, including content publishing venues. Content publishers work with execution venues and custodians to integrate the ability for a retail investor to not only consume content, but also act or initiate trades without ever leaving the publisher's website. Publishers can integrate this capability seamlessly with minimal technical lift or capital expenditure. Publishers are collaborating with brokerage firms who offer APIs and with heavily discounted or zero fees, provided customers have a subscription with the publishers.
This structure enables the publisher to become a "one-stop-shop" by offering exceptional content and the ability to act instantly and seamlessly. This creates a positive impact for the publisher that establishes a sticky customer relationship, emphasizes key differentiators for their content, and adds significant value proposition to their content-subscription offering. With traders boosting legacy ad and affiliate models, publishers are continuing to see improvements in churn rates by offering discounted per-trade or per-contract pricing through brokerage partners.