Olivier Taupin on Vertical Markets

How to generate revenue from Vertical Markets

By Sharon A.M. MacLean who invites your comments following this blog.  You can also find more modern marketing strategies for business here.  bit.ly/1JuaV8k 

Vertical markets are irresistible for their direct connections. In the world of print publishing, some of our most successful editions came from creating special publications tightly focused on a specific industry.

Investopedia defines vertical markets this way: A group of companies that serve each other’s specialized needs and that do not serve a broader market. For example, a company that manufactures furniture would belong to a vertical market while a company that sells furniture  would be described as a horizontal market for its various target audiences.

Niche groups have been around from the time of trade magazines. The 21st century version of trade magazines is the vertical network. Of course, networks are much less expensive to operate than printing and distributing paper to reach industry members. I can tell you it’s a tantalising business model for former print publishers.

How to generate revenue in social networks

Yes, there’s money to be made in these social networks. Think about LinkedIn where brands pay for these opportunities:

  • Sponsorship;
  • Advertising;
  • Profile-matching to help identify potential job candidates.

According to Jon Reed, writing on Diginomica. “Company pages are OK, but it’s the topical groups that spur the most engagement… thousands of members, but more importantly, active, on-topic discussions…”

Brands have always wanted to get their message in front of audiences that align with their mission. Think how pharmaceutical companies have disappeared from mass advertising over recent years. Their names do appear, though, amidst conversations hosted by subject experts and contracted by the pharmaceuticals on matters of great medical concern to their groups. Think diabetes and Pfizer.

There are more than 2 million groups on LinkedIn notes David Sumner Smith of www.NextDimensionMedia.com. The vast majority are very small, with less than 100 members. Just over 200 groups (i.e. 0.01%) have more than 100,000 members. Forty groups have more than 250,000 members, while each of the top 10 have more than 500,000 members.

Sumner Smith and his partner, Olivier Taupin, remain committed to LinkedIn. After all, it was Olivier who founded LinkedIn:HR, the largest professional group on LinkedIn and the largest HR community worldwide with 975,000 members.

Yet, both gentlemen are captivated by the prospects that come with emerging Vertical Networks.

Sumner Smith likes to quote Ben Boyer who says, “LinkedIn groups represent a slight verticalisation of the horizontal network itself by allowing people to populate themselves into these defined buckets.” The managing director of Tenaya Capital couches his comments, though: “They are very different from Vertical Networks.”

Branded Vertical Networks own their IT platforms. They also serve a specific profession by offering tools, resources and information that is practically useful to members of that profession. For example, Spiceworks delivered a network management tool that is now used to manage 170 million hardware devices and more than 10 billion traditional and cloud-based application installations.

Here’s a few more examples.  Avvo.com is a U.S.-based network that connects lawyers to other lawyers, and also enables their customers – individuals or businesses – to obtain speedy online responses to legal questions.

Chef’s Roll is a global culinary community of professional chefs, food authors, and industry professionals. Their website recently posted an opportunity for brand ambassadors to represent their flavour smoke products.

The Alumni Advisory Council for my own alma mater, MacEwan University, is exploring the benefits of building a Vertical Network for graduates. The educational institute could align with potential sponsors who want to get their name in front of future job candidates and clients. Of course, such close alignment between vendor and audience is something that businesses handsomely support.

More ways to generate revenue in Vertical Markets

Sumner Smith describes two more ways for Vertical Networks to generate sales:

  • Revenue sharing of products sold through the network between vendor and network owner;
  • Tools provided by networks to help professionals do their job more easily. “Usually those tools (developed by the network owners) are provided for free,” says Sumner Smith. “But paid extensions can be made available, too.”

Olivier Taupin created a Business Directory of Vertical Professional Networks defining the more high profile Vertical Markets. He says that Academia.edu claims membership growth of 10% per month while Spiceworks states a high-growth revenue category of 20% year on year. Edmodo for educators says it’s averaging 5.5 million new users per year.

Here’s 4 more Vertical Networks

StratasysManufacturer of 3D printers and 3D production systems for office-based rapid prototyping and direct digital manufacturing solutions. It surprised the investment industry, since there were very well known suitors for the acquisition: Adobe and Autodesk.

GrabCAD (now Part of Stratasys)- A mechanical engineering community platform that connects mechanical engineers with manufacturers and product development companies. GrabCAD is leading the open engineering movement, helping engineers get products to market faster by connecting people, content and technology.

Edmodo operates a social network for education in the U.S. It enables teachers, students, and parents to connect, share content, and access homework, grades, and school notices. The company’s network enables teacher-to-teacher resource sharing, global professional development, and networking opportunities.

Doximity Doctors/Physicians Founded: 2010 Launched: March 2011 Headquarters: San Francisco, California Number of Employees: 105 (June 2015) Membership (Registered Users): Over 400,000 verified U.S. physicians (December 2014), which represents more than 50% of US Physicians.

It’s worth your time: Keep your eye on Vertical Networks.

Lifelong communications strategist Sharon MacLean owned and published a traditional print magazine for over 21 years for business people. She is certified in Integrated Online Strategies from the University of San Francisco and the Instant Customer Mastery Certified Professional Program.

15 thoughts on “How to generate revenue from Vertical Markets

    1. Unique keeps content unpredictable–and, I trust, readable, Roz. Like your blog!

      In your case: I’m thinking to figure out how to get in front of those teachers might be an idea — the Edmodo group.

      If their rules are too tight, try another– maybe the academics. The wonderful history and research approach that you’ve developed for your blogs might appeal to them.

      Let me know, if you explore that idea?

      Like

  1. Very interesting. Are you saying that in a vertical market, you only sell to other vendors/retailers, and don’t go after other customers? I’m curious to know how (or if) I should pursue this.

    Liked by 1 person

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