The Trouble with Scale
AllGear Digital's model shows that intent and loyalty may trump scale in the next generation of media.
Conversations with media people these days feel like small talk at a funeral: a little sad, heavy on nostalgia, and there’s always an existential dread hanging over the exchange.
This vibe is pervasive enough that I didn’t think twice when Ben Delaney made a comment in our recent interview that’s basically media industry conventional wisdom – Display advertising is dead, and has been for a decade or more.
But maybe gloom isn’t the whole story. Shortly after I hit publish, I got a text from Rob Hudson, SVP and Head of Sales for AllGear Digital. Rob argued that with the right audience, display advertising can be a thriving component of a media brand, and that not all media sees such a dire future.
So I hustled to get on a call with Hudson and AllGear’s Co-Founder and CEO, Eric Phung, to talk about how their outdoor publishing house is navigating these waters, leveraging some real tailwinds driving their display business, amongst other revenue sources.
Don’t fool yourself that they’re just trotting out the 2010 playbook. AllGear Digital runs complex integrated campaigns, and has podcasts, strong social presences, an in-house custom publishing unit, a thriving affiliate business and much more. Regardless of how the revenue comes in, it was nice to hear people this upbeat about media business in general.
The conversation was wide-ranging, and we get into:
Balancing individual brands and a parent brand
How audience intent affects the business
The overhyped death of display
How AllGear Digital is growing into creator-driven YouTube and other social platforms
AllGear has eight media brands in its portfolio — GearJunkie, Switchback Travel, The Inertia, Pack Hacker, Bikerumor, iRunFar, ExplorersWeb, and WildSnow — plus another seven in its broader advertising network.
Patrick Crawford: You have a diverse set of media brands, from Gear Junkie to Switchback Travel to the Inertia. What’s the thread that ties it all together?
Eric Phung: In the media space, it’s hard with all the macro trends. And it’s not just outdoor media; it’s media in general – could be politics, sports or anything. A lot of these businesses have been established for 15, 20, 30 years, and they’re mature businesses. When you’re a mature business, you’re in the long tail. You’re not hitting these 50% wins, or these 100% wins.
I think what separates us is that we have a lot of unrealized growth potential that a lot of our competitors don’t have. And so, even when there are changes in tech or changes in AI, our net growth opportunity is greater than our downside. And that’s because ultimately, we’re a growing startup.
Number two is that we focus on an active lifestyle audience, and they’re consumers of gear. They want to know that whatever gear they’re using is the best in the market. That helps us separate a little bit, because when advertisers come work with us, they know that not only is our audience interested from a lifestyle perspective, but that they also have an intent to purchase gear for the outdoors. Our audience not only lives the lifestyle, but they also purchase the lifestyle.
Rob Hudson: From a portfolio perspective, I think one of the differences is that each brand has its own identity. So if we acquire somebody like The Inertia, it’s going to maintain that identity. We’re not in the business of homogenizing the portfolio into a singular brand and just trying to be this big, broad, active lifestyle group. We want audiences to retain and maintain what they learned to love over the years that these businesses have been in business.
We’re not in the business of homogenizing the portfolio into a singular brand and just trying to be this big, broad, active lifestyle group.
I think that a couple of things happen out of that. You retain this highly engaged audience, which you know from your time at Freeskier, people went there for a reason. They wanted to see what was new in freeskiing. They wanted to learn about the athletes. One of the approaches with Outside as we started to build the portfolio was, “How do we make them all one?” And I think that we lost some of that userbase of the people who are passionate, and who live and breathe the lifestyle and want to be there.
One of the unique things about the AllGear Digital portfolio is that you can go to The Inertia and then you can go to GearJunkie. They still look like two separate brands. We very much like maintaining and retaining those audiences to make sure that we do have the highest performance when it comes to all of the metrics that marketers are looking for, rather than watering it all down and homogenizing it across the board. Then you’re losing that performance in that core vertical.
But we still have the ability to tell the story to non-endemic clients who maybe just want the outdoor adventure seekers. We can put you in all these places, but the core bike market and the core surf market and the true endemics, they still have a home.
EP: When we started out, there were really two paths to go. One path was to basically consolidate everything into one brand or core brands, but we took a different path.
We tell all of our new sites when they come in that we’re going to keep them the same editorially. Whatever they’re doing editorial-wise, it might be different from the way that we create content on other sites, but that’s okay, because that’s how they built their audience. We like to keep the editorial teams the same, and anything we can do to add gas to the fire, we’re there for that. But at the end of the day, it’s about the audience. That’s what we’re bringing into the portfolio.
PC: One of the pitches that bigger media groups make is that if people are interested in multiple topics within the group, then you should try to keep them within your ecosystem for all their various interests. But you have taken the opposite approach, and even though people might participate in multiple sports that you cover, you don’t connect them from the user perspective.
EP: Yeah, that’s because their loyalty is to the brand at the end of the day.
The audience of iRunFar, they run ultra-marathons. I look at my editors’ schedules and some days they reserve three hours a day for running, and that audience is committed to it. They may have heard of GearJunkie, but at the end of the day if they had to choose one or the other, they’re always committed to iRunFar, so trying to get an audience that’s committed to one brand and make them commit to an adjacent brand or new brand, it doesn’t really make sense.
Instead of consolidating them, we’d rather increase their exposure to that existing brand and increase their loyalty to that brand. But from a reader’s perspective, all we care about is that iRunFar’s readers are really loyal to that brand.
PC: One of the critiques you get when you work in this space is that every company has to expand beyond its core of any of these sports. The core is too small. The core doesn’t have enough money. Are they wrong? You don’t seem to be fighting that battle.
RH: I don’t think they’re wrong, because anytime you’re growing a business, you’ve gotta grow. There’s only so much money that the endemic space can really drive. So, how do you start untapping that next level and those bigger deals?
But where I do think it becomes a little bit grayer is the fact that loyal, core audiences are always going to perform better with their specific alignment. That’s why we see better performance, because of the way that our audience was built. So even when a partner comes to us looking to reach “adventure seekers,” it’s still going to work. It’s just that maybe we don’t have $100 million dollars that we could sell them; we have $20 million. But it’s still just such a valuable audience.
But at the same time, one of the things that we’re doing to offset some of that is building out this network of partners. Like our partnership with AllTrails, for example, and we’ve got a new partner coming on board here soon. Those things definitely allow us to expand that offering much more.
EP: And I would just add that all these brands started out as core. At some point you’ve owned the core, but you do want to attract new audiences. The way that we approach content is, number one, we’ll always have core content – whether it’s core backpacking, core ultra-running, core cycling – and rather than pivoting our content away from core to non-core, we’ll add on non-core.
I think that’s how you should grow a business, always having your fallback, which is your core audience. And always be testing new types of content to see what resonates. We don’t say it’s one or the other. Really, it’s core first, and then after that, you talk to your editorial teams like, let’s keep growing. It’s not core versus non-core; it’s core plus non-core.
PC: Rob, give us a picture of what’s working and where the money is coming in between affiliate, display and other types of revenue.
RH: For us, display is leading the charge. Eric touched on it a little bit in terms of the opportunity to grow because we hit that timing right. But I also think the display is working because of all the other things we talked about. Performance is better because we’re a transactional audience that has purchase intent.
Even in the last 10 months, we’ve run a lot of test campaigns that have now turned into 6, 7 figure deals. Advertisers understand the value now, and that’s what drives a lot of this display revenue growth.
Now, granted, we don’t just sell display. We have custom content. We have video content that is doing half a million views on Youtube. There’s obviously a package and a campaign objective that we can accomplish. But display is not dying, because our audience is the lead. That’s our special sauce.
I also think there’s a pullback in Meta. I think brands are starting to gravitate more toward these highly engaged vertical audiences, and that’s why our brands just stand out a little bit more, because we are dedicated platforms that have a true voice. We’re always gonna test and learn, but we’re not gonna waver from who we are as a company, as a platform.
I do think that the company was founded in that philosophy, that we are a transactional audience that can write quality reviews that are editorially driven. They’re third party endorsed, and people want that to make their purchase decision. And I think that’s just so different from my background. We tried affiliate everywhere I’ve been at, but it just never worked. And I think that’s because the audience that it was built around was there for a different reason, and that was deep storytelling or big content pieces. Not this, “Hey, we’re a third party that’s going to tell you exactly what this product is and the value is in this product to help you make that purchase decision.” We wouldn’t be growing an AllGear Digital advertising network with brands AllTrails and RVShare if it wasn’t for the fact that we’re seeing a huge uptick in display media.
PC: Eric, I’d love to hear your thoughts on growing this display network. Obviously, you’ve got custom publishing and custom content production. Where’s the next area of growth?
EP: At the end of the day, we’ll always be a media company. We’re not going to be a tech company. We’re not going to be a retail company or anything like that. And that’s who we will be a year from now, five years from now.
A year ago there was no big vision, long-term strategy of growing this advertising network. At least with AllTrails our idea was, using our talent, using our skills, using our brand, using our platform, doesn’t it make sense for our advertisers to reach a similar adjacent audience? An audience that we love working with? They’re a non-competitive audience. It’s not a pivot, but an extension.
Fast forward to today, and we have an opportunity to extend our strategy outside of the portfolio and build an advertising network. That’s the avenue that we’re running down now, and we’re pretty excited about.
The offer for larger advertisers is not that we’re not going to get you 5,000 engagements or 10,000 engagements, but can we be that gateway? Can we be the platform that gets them one million, two million, four million engagements?
You can work with 100 different publishers to reach 100 different audiences, or you can work with one publisher to also reach those same 100 audiences. From a pure efficiency or impact standpoint, it’s always better to work with one group.
PC: Rob, you once mentioned to me that the companies you’re adding to this network didn’t already have this type of advertising business, so it’s essentially free money for them. But the challenge is that because they didn’t already know how to run this business, you also have to help them learn to run an advertising model.
RH: Yeah, a hundred percent, and I think that’s slowly becoming the business thesis. For this network, we want an exclusive relationship. If we’re competing with sales teams, competing with other ads ops teams, it just creates more friction in the partnership, and it doesn’t allow us to really run free with our strategy. I don’t think we’re totally saying no to some of those partnerships, but we definitely see a better success story when it comes to brands that don’t already have that.
PC: Tell me about the PackHacker acquisition. How did you think about that acquisition? How is working with that working for you?
EP: The number one factor is the quality of the content. We could see the quality of the video. We knew the quality of the editorial and the quality of the site aesthetic.
We’ve looked at other brands, and the quality wasn’t there, and ultimately we passed on them. And the reason why is because when you have a quality product, the rest will take care of itself. The business side will take care of itself. When you don’t have a quality product, you’re basically swimming upstream. You can’t really do much with it.
When you have a quality product, the rest will take care of itself.
There are gonna be technological changes in the future, but the quality brands will always have a place. If you don’t have quality, technology is just basically saying that you don’t have a place in this market, or you don’t have a place in the ecosystem.
And then number two on that is they’re in the travel review space. The review side is something that we look for. Sometimes it’s there, sometimes it’s not, but it is a plus, and it fits into what our audience is looking for.
And then third is that they’re in a travel space that we’re not as strong in, and that was a path for us to add another category that is not existing in our existing portfolio.
And then, finally, is it adjacent? That’s our last checkbox, our last goal that we look for. Is it outdoors focus, or is it outdoors adjacent? In this case, we saw it as adjacent to what our audience is, and adjacent to what we’re building.
PC: YouTube channels like Pack Hacker probably are right at the edge of this divide, where it’s like, are they going to be employees or are they talent? You need to build these personalities within your ecosystem, but also if they leave, it’s over, and nobody really knows how they were associated with your brand.
EP: With Pack Hacker specifically, the YouTube channel is strong, but it’s not necessarily the main driver of the revenue and the P&L. You never want a key-man or key-woman risk, so when we acquire a brand, we want comfort that the brand can last and remain a quality brand within our portfolio. Number two is that, for any of our talent or for any of our editors, if they want to build their brand, we’re 100% supportive of that.
We like to leverage our talent and say, if there’s anything else that you guys want to do besides edit, I will give you the opportunity to do that, and we’ll also support that. We’ll invest in that if needed. And it will come in as a partnership versus, “We’re gonna own everything. Or you guys are gonna own everything.”
PC: Are there any examples of that, where you’re investing in a collab project with an employee, or somebody who’s talent in your group that you’re willing to talk about at this point?
EP: Not yet, not yet. We always tell our teams, if you guys have an idea, bring it up, we’re here.
PC: I think most editors, at least editors that are at a certain point in their career, don’t really think that it’s their job to create distribution.
EP: You always want teammates that are really good at what they do, and you also want them to be creative and forward-looking. But we are in the beginning stages of writers and editors thinking beyond just being a writer or editor. At the end of the day the writing medium will always be strong, but there are other mediums to reach audiences now.
PC: To some degree a matter of incentives, and media companies unintentionally set up an incentive system where it’s hard for the editors to focus on distribution because they’re working so hard to increase publishing volume.
RH: I think we’re at an intersection right now that we don’t know the answers to these questions about creators versus editors versus influencers, and how they’re all gonna work together,
Eric said earlier that we want people to reach audiences in all mediums. That could mean a specific person who has a really good idea to launch a podcast or to start a Substack, or any of these ways that we need to tap into audiences where they are. Is there a licensing deal to be able to do this creative expression with new mediums that we don’t necessarily own and operate?
I don’t think anyone in the market, not just our company, knows how that’s gonna work in the future. We’re in a colliding world right now in the media landscape, and we’re gonna have to figure it out really quickly.
PC: You’re exactly right. I was looking at your media kit right before this call, and there are already about a hundred things on there, from podcasts to websites to Youtube to out of home. It’s really hard for a media company to get lean, because you still have to be in all the places where all the people are, whether you’re one person or a hundred people.
RH: And to choose the right ones. Social media platforms are launching like wildfire, and which ones do you dive in and focus on that actually might make a difference in your business versus which ones will never work? It’s an interesting landscape right now. I think it’s actually super exciting, though, because on the YouTube side, we’re generating millions of views for branded content for our editorial products. There’s some real uniqueness and opportunity for media companies that are willing to lean into it and be like, let the worlds collide. And let’s remake how the media looks in the future.
PC: As long as you’re agile, and you don’t carry too much baggage where you have to service these big legacy ad deals, and you can’t let go of them.
RH: The people who are agile will navigate this. I think Pack Hacker is a perfect example in that it’s a very different acquisition, but it still fits this evolving media landscape thesis. So it was strategic. But at the same time, it is a little bit different, like you said, where it’s not a platform and all running through the pages of this website. It’s a video-forward YouTube channel, so that’s a whole new set of rules, too.
But being agile has allowed us to create products that we can sell. We can still continue to push the affiliate side of the business to make sure that that is strong and healthy. It’s a fun place to be right now. I don’t know why everyone’s doom and gloom.
PC: I’ve got a few guesses why everyone’s doom and gloom, but we won’t discuss those now.
RH: Those are over beers.
PC: Yes, it’s a plan. Thanks guys!