Dynamic Marketing Communiqué

“All hail the KING!” ― How does this company utilize content to help people DISCOVER the world? [Monday: Marketing Marvels]

March 15, 2021

“Content is king.”

This is an often cited quote that originally came from the title of an essay written by Microsoft founder, Bill Gates in 1996.

In the essay, the American business magnate described the future of the Internet as a marketplace for content.

To this day, other brands frequently use the above quote due to an increased focus on different marketing strategies.

Here’s one company that heavily values content marketing…

Discovery, Inc. is an American multinational mass media company headquartered in New York City.

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Established in 1985, the company operates a group of factual and lifestyle television brands, which you probably have encountered as you scan through the list of channels available on your cable box.

You might have even watched a few shows from these channels!

[Factual Television: A genre of non-fiction television programming that documents actual events and people. These types of programs are also marked as “documentary,” “fly on the wall,” “docudrama,” and “reality television.”]

Discovery’s television brands consist of the following:

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  • Discovery Channel (home to “Shark Week,” the network’s annual summer TV event)
  • HGTV (targets audiences who are specifically interested in home-related topics)
  • Food Network (designed for viewers who love watching food-related entertainment shows)
  • TLC (offers real-life stories about families, heartwarming transformations, and milestone moments)
  • Animal Planet (keeps the childhood joy and wonder of animals alive by documenting the creatures’ lives in the wild)
  • Investigation Discovery (one of the world’s leading mystery and suspense network)
  • MotorTrend (features the best of the automotive world as told by top personalities and experts)
  • Travel Channel (targets adventurers who embrace the thrill of exploring different places)
  • OWN (features popular series like “Queen Sugar,” “Iyanla: Fix My Life,” and “Greenleaf”)
  • Eurosport (offers live sports entertainment to millions of fans across Europe and Asia)
  • DMAX (one of the leading men’s factual entertainment channel in Europe and Asia)
  • Discovery Kids (a leading children’s network in Latin America and Asia)
  • TVN (operates a portfolio of lifestyle, entertainment, and news networks in Poland)

Curious about how Discovery manages all these channels and creates interesting and up-to-date content for television viewers?

Just like what we mentioned a while ago, the company focuses on…

Content development!

In its 2019 annual report, Discovery stated this strategy is designed to “increase viewership, maintain innovation and quality leadership, and provide value for network distributors and customers.”

There are 3 production arrangement categories for the company’s content: Produced, Coproduced, and Licensed.

Let’s talk about these classifications one by one.

Produced content pertains to virtual reality shows and short-form videos that third parties or wholly-owned studios develop and produce for Discovery.

Under this classification, the company pays for all development and production costs to retain editorial control and own most or all of the rights to the content.

Meanwhile, coproduced content refers to programs on which Discovery collaborates with third parties either because world-wide rights are not available for acquisition or it is more cost-effective to work with external producers.

Lastly, licensed content consists of films or series that are solely produced and owned by third parties. Discovery doesn’t own any rights to such content―the company only has license to broadcast the shows on its channels.

What else does Discovery utilize to constantly reach its target audience?

The Internet!

If you go to Discovery Channel’s website, you will see various materials that will take you from reading insightful articles to watching attention-grabbing videos.

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The company makes sure its website’s content is always relevant, intriguing, and interesting so online visitors will not only watch, but also share the videos or articles to their personal online communities!

In terms of social media…

Discovery’s marketing programs center on efforts to create content that “attracts attention and encourages readers to share it across their social networks.”

According to Gayle Weiswasser, Discovery’s former Vice President of Social Media Communications in 2012:

“Our philosophy in social media is to use it as a platform that enhances viewing experience and relationship with the viewers.”

Having a wide variety of shows is also one of Discovery’s strengths.

Why?

Whether it’s about hunting down the best wedding dress on TLC, watching animals move in the wild on Animal Planet, or learning new information from Shark Week, there is always something for people to watch.

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Not only that!

Similar to the saying, “More entries, more chances of winning,” offering a variety of shows enables Discovery to expand its worldwide reach and target more groups of viewers.

While there’s a lot of content that the company publishes both on television and online, the materials are not broadcasted without careful thinking… there’s also deliberate planning put into them.

For example: When the company’s marketing team found out that most Facebook users scroll through videos with the sound off, the team had to revamp Discovery’s video content―like adding subtitles―to cater to the preferences of the social media platform’s audience.

In other words, the company does not deliver the same content to different platforms.

If demographics and platforms are different, then expectations of viewers in each platform are also different… so doing a one-size-fits-all marketing approach is not an option for Discovery.

For the company, it’s important to reach the right groups of people with the right message, at the right time.

The bottomline of Discovery’s marketing strategy?

Maximizing ROI is about “getting customization right.”

In the past five years, Discovery, Inc. has recorded revenues of:

  • USD 6.5 billion in 2016
  • USD 6.9 billion in 2017
  • USD 10.5 billion in 2018
  • USD 11.1 billion in 2019
  • USD 10.6 billion in 2020

Thanks to its focus on content and maximizing possible points of interaction with its target audience, Discovery is able to establish itself as one of the leading mass media companies worldwide.

Discovery, Inc.’s Earning Power: Valens Research vs. As-reported numbers

Discovery, Inc. (DISC.A) makes for a great case study that we come back to regularly. One great reason?

The company has proven itself to be a better earning power generator than investors might think.

So, how well has DISC.A been growing its business in the past years?

The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results higher on average than what traditional databases show.

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The blue bars in the chart above represent DISC.A’s earning power (Uniform Return On Assets). DISC.A has seen generally robust profitability levels, with Uniform ROA jumping from 37% in 2008 to 56% in 2012, and continuing to rise to a peak of 102% in 2019. However, due to disruption in the entertainment industry amid COVID-19, Uniform ROA compressed to 86% in 2020.

The global ROA is just 6%.

The orange bars are the company’s as-reported financial information. If you relied on these numbers, you will see a company with terribly understated profitability. As-reported ROA (return on assets, a measure of earning power) only ranged from 5% to 10% in the past thirteen years. Its ROA in 2020 was only at 5%, about seventeen times lower than its Uniform ROA in 2020.

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Its returns have been well above the market.

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The numbers show that DISC.A has been doing well and making a profit.

When it comes to storytelling, the type of platform and expectations of viewers dictate a particular content’s delivery and protocols.

In the case of Discovery, it isn’t just telling stories. The company is also amending those narratives to get the highest level of impact, whether it’s on television or online.

One thing you can learn from Discovery’s marketing strategy?

It’s important to know your target market and how they interact with your brand on several platforms.

By doing so, you’ll be able to promote your business “the Discovery way”―giving customers and prospects more of what they want in ever new and innovative ways.

About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!

Cheers,

Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
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www.valens-research.com