Posted on Wednesday, Apr 22nd 2015
Recent market reports suggest that the global media industry is a $600 billion business with most either already running digital operations for their magazines or in the process of transitioning to them. Despite the high digitization of media, only 20% of ads are currently digital. Social magazine and Billion Dollar Unicorns Club member Flipboard believes that they offer these publishers the ability to make the switch to digital through their service.
Palo Alto-based Flipboard was founded in 2009 when entrepreneur Mike McCue was on his way to a family vacation after selling his startup TellMe Networks to Microsoft for an estimated $800 million. On his flight, Mike was flipping through a magazine and realized that while the same article was available on the web, it did not look as good as it did on print. Magazines in print form offered impressive graphics, quotes, inset maps, and beautiful photography. And all that was available in print along with advertisements. He realized that there probably was an opportunity to reform how content and advertising was presented on the web.
He then got together with Apple iPhone engineer to realize this vision of creating a web portal that felt like a print magazine while presenting trusted content that would matter to the reader. By 2010, the two had released their first Flipboard app. Today Flipboard has expanded to share stories with over 100 million people and adds over 250,000 users daily. Flipboard’s success can be gauged from their tie-ups with over 800,000 publishing partners that let them share content. They are now available on multiple platforms including iOS, Android, Windows, and Windows Phone.
As part of their efforts to increase user engagement, Flipboard also began offering Flipboard Magazines that let users collate feeds from different publishers to create a magazine of their own that they can then share with others. Recently, they introduced the ability to let these magazines share their content, which includes articles, videos, or photos, with a select group of people such as the user’s family and friends. The feature will enable users to document events and share ideas for research with this closed group.
The Flipboard app is available for free to all users. But they are now beginning to monetize their service through advertisement and shopping services. In 2014, they enabled a shopping section for readers that features curated magazines from brands including Levi’s, Cisco, Estee Lauder, and Land Rover. These magazines include articles and images that feature catalog-style sections that can be used to showcase and then sell these products.
They are pushing advertisement revenues through sale of full-page ads, and more recently, video ads. Full-page ads are similar to magazine ads as they neither compete with content nor appear as distractions in the form of links and flashing ads on the page.
Last September, they launched video advertising which lets users see video and audio full page ads for select brands. The advertisements were launched with brand names like Gucci, Lufthansa, and the Chrysler brand.
Flipboard does not disclose any of their financials. They earn revenues by taking a share of the publishers’ ad revenues as well as by selling advertisements. Flipboard does not reveal the percentage that they charge as commission, but brands are willing to share their revenues with them because of impressive statistics. Their research revealed that of those users who look at brand magazines, nearly 10% ended up subscribing to the magazine. Additionally, their magazine-like experience allows them to charge print rates for digital ads which are significantly more expensive than traditional banner ads. They commissioned a study by Nielsen, which revealed that an ad on Flipboard also had higher recall by 80% compared with the same ad being run on other media content including TV and radio. They also have impressive click through rates of 3% across phone and tablet devices.
Flipboard has been venture funded so far with $160.5 million raised from investors including GGV Capital, Insight Venture Partners, Kleiner Perkins Caufield & Byers, Index Ventures, Rizvi Traverse Management, Goldman Sachs, Suhail Rizvi, Comcast Interactive Capital, Jack Dorsey, Ron Conway, Dustin Moskovitz, Peter Currie, and Quincy Smith. Their last round of funding was held in December 2013 when they raised $50 million at an undisclosed valuation. In 2013, the company had been valued at $800 million, and given the added focus on monetization in the recent past, they are likely to have crossed the billion dollar valuation mark.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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