Content Marketing is About Trust & Relationships
Buy the rumor, sell the news
Happy New Year, and welcome back to Buy the Rumor, Sell the News. Welcome to the fifty-four new subscribers since the last issue. Buy the Rumor, Sell the News collects my periodic thoughts on finance, technology, entrepreneurship, the intersection of those topics, and other topics that strike my fancy. If you want to connect with me, the best way to do so is to follow me on Twitter.
In this issue: content marketing and how it works, and what’s next for commercial real estate.
Content Marketing: It works when companies give up control
I have been spending some time over the past few months thinking about content marketing, and how to do it well. In some situations, it’s pretty clear how and why content marketing works. For example, a company founded by a charismatic CEO often has the CEO doing content marketing for the business. Think Martha Stewart or Michael Jordan.
But there is a whole world of other businesses where the product being sold is not Martha Stewart or Michael Jordan, but rather something more prosaic, like business services sold to other businesses. Even here, though, content marketing can work. However, it has to be done differently. You’re not selling a person but rather a service.
Still, it’s worth understanding how content marketing works, generally, even if your business entails selling services to other businesses. This all crystallized this afternoon for me, when I was directed to this deck, entitled “Why Content Marketing Fails.” A lot of people think that creating marketing content and broadcasting it to the world induces customers to sign up and buy stuff from you. But it’s not that simple. There’s some nuance to be had here.
When content marketing works, it does get people to buy the product or service that the company is selling, but it’s usually not a linear process from content marketing piece to sale recorded. Rather, it looks something like this:
Content is created and broadcast via social media channels, email lists, etc.
Some portion of people who see the content click on a link to go to the company’s web site.
If they like the content, and the company sells something that they may be interested in, they’ll remember the company.
They may see more content from the same company in the future. They’ll visit the company’s site again.
The company builds trust with this particular person, and a relationship between the company and the person develops.
When they need the company’s product, they come back.
The problem here is that the company doing the marketing doesn’t have much control over how long this process takes. For one person who looks at a piece of content marketing, the time from click to buy could be a week, but for another person, the time from click to buy could be months or years. And, for complex business services, the time from interest piqued to contract signed could be long for all engagements.
But, when you consider the scale that content marketing can operate at, given the vast size of social networks and email lists, the time to sale doesn’t really matter. The company is developing a relationship with so many different potential customers that at least some of them are bound to buy. And, if a company is operating correctly, its sales pipeline is not relying just on content marketing.
What’s next for commercial real estate?
One of the more interesting questions to arise out of the pandemic is what happens to commercial real estate. A lot of knowledge workers have found that working remotely (or working from home) has been a boon to their productivity, and they are not eager to return to the offices. Company executives have expressed surprise at this, but being the mostly rational people they are, they realize that their office needs in the future may be reduced.
Let’s assume for the sake of argument that once it is safe for America to go back to the office en masse, the following variables are in play:
some companies adopt a hybrid approach such that some employees work from home and some work in an office
some companies adopt a fully remote approach in which no employee works in an office
some companies adopt a full return to the office in which no employee works remotely or from home
In this case, overall demand for offices declines, because some employees who fall into one of the first two buckets above will not be working in offices.
How can commercial landlords handle this decline in demand? Real estate is brittle, in that if demand declines, the landlord can’t easily move the building to a new location where demand is greater. An office is not like Amazon Web Services, where supply for computing power can be increased or decreased as the market fluctuates. The building exists whether there are tenants or not, and the building has ongoing maintenance expenses, tax expenses, and so on. Commercial real estate operators operate on the assumption that their cash flows are more or less predictable.
If we assume that a structural change in the labor force has occurred due to the pandemic, and that that structural change is a permanent one, then commercial landlords are in the unenviable position of having to adapt their business model to one in which demand for office space is in long term decline. I read a book this week, Rethinking Real Estate, which contemplates this exact issue:
A central theme of this book is that technological and cultural changes are making all real estate assets riskier. To be precise, these changes reduce the inherent value of real estate assets and make them more dependent on their operators and their distributors. This does not mean that real estate assets will become less valuable. It means that preserving and enhancing their value will require more active management. Management, in turn, will be increasingly reliant on technology.
Specific to office buildings:
This [historic] confidence [that landlords had] is based on the fact that many office buildings are anchored by large and well-capitalized corporate tenants who sign long leases with clearly defined rent escalations….In short, quality office buildings are the darlings of institutional investors….Whether or not WeWork survives, the strong demand for its type of offering points to a future in which the value of even the best office assets become less predictable and more dependent on specific operators. WeWork does not represent a passing fad or a marketing gimmick. It is the most well-known among hundreds of companies that emerged over the past decade to fill a gap between what most landlords offer and what a growing number of urban tenants want.
All of this puts real estate owners in the uncomfortable and unfamiliar position of having to innovate, rather than to sit back and collect rent checks. It will be interesting to see how landlords adapt to this new normal.