TradeTheMarkets, an independent online publisher of investment advice for experienced at-home investors, has built a highly profitable three-legged revenue stream all based around its reputation for hype-free honesty. The site’s business model should encourage those sites relying on subscription revenues alone to expand. This Case Study is based on an exclusive interview with co-founder John Carter.
Co-founders John Carter and Hubert Senters launched the company in 1999 to publish their unique brand of honest advisories for experienced personal investors who are fairly heavy traders. “We don’t really cater to beginning traders, and that’s a big market. We’re focused more on people that have been trading for years; they get frustrated and then come to us. They’re willing to follow a game plan and take the long approach. It’s a lifestyle choice,” said Carter.
“We’re just very realistic about what it means to be a discretionary trader,” Carter explained. “In our videos we talk about our winners and our losers. I think people like to see that this is real life. We don’t make outrageous promises. We’re very realistic about what you can achieve.” Carter spends about an hour a day, five days a week shooting video newsletters as flash files that are uploaded to the website. “It’s forward looking … Video lets you communicate more effectively, and people get to know you better.”
Membership site content includes:
1. A members-only video newsletter sent every night after the close of the U.S. stock market. A typical video runs 10-20 minutes with Carter and/or Senters giving their personal, on-camera view of that day’s events, as well as advice for the next day.
2. A 24-hour, live streamed view of the PC screen Carter uses for his own trading, so users can see what actions he takes in real time.
3. Access to members-only site content such as expert blogs, live chat rooms, archived videos, discussion forums, a downloads library, and an image gallery.
In a marketplace largely dominated by “how to get rich” advisory brands, TradeTheMarkets.com’s brand of realism is highly resonant, even in a down economy. “In the beginning of 2008, we told people to get completely out of stocks. Most subscribers who’d been around awhile did listen to us. Others didn’t. When November came around … there were some cancellations, but nothing out of the ordinary,” said Carter. The company’s 2008 revenues grew 30%; 2009 revenues are projected to grow 40-55%. The company currently has three major streams–none of which are advertising or sponsorship-based:
Memberships and Reports
House-brand subscription memberships and reports bring in roughly $1.5 million. An estimated 11,000 customers are TradeTheMarket.com premium members at $119 per month (marketed as a discount offer from the “regular” $204 price). In addition to special content, members also get discounts on branded information offerings such as the TTM Journal, which costs for $67 for members and $97 for non-members.
House-brand ticketed events bring in seven figures per year. Carter finds pricing “a weird phenomenon. We can do a week-long seminar for free, but if we charge $5,000, people think it’s great. There seems to be something about paying more that makes people value it more. So we don’t negotiate our prices.”
1. In-person seminars: The company holds two seminar events per year, each limited to 70 attendees only. These seminars last for five days and are ticketed at $5,000 per attendee. Potential gross: $350,000 each.
2. Three-day mentorship: Up to five attendees sit at consoles in Carter’s own trading room with him. Non-members pay $3,500 per day; members pay $2,500 per day. Potential gross: $375,000-$525,000.
3. Week-long one-on-one mentorships: These opportunities for applicants with previous trading experience go for $5,000 per day with Carter, $4,000 per day with Senters, or $8,000 per day with both Carter and Senters. Potential gross: $20,000-40,000 per mentorship.
4. Webinars: Three-day-long virtual events are priced at $400 per ticket.
5. Virtual, live workshops: Attendees watch online trades made by company experts for two days from 9:30 am-4:30 pm. Afterwards, they receive a digital video of the days via DVD or online download. An average of 300 attendees per workshop pay $497 (members) or $997 (non-members).
6. Canned versions (CDs and DVDs) of various previously held seminars and workshops are also available at prices ranging from $295-$2,495.
Services to Other Financial Advisory Publishers
Carter got the idea of helping other independent publishers from his own start-up experiences. “The biggest mistake we made early on was we tried to do everything ourselves,” he explained. “Every time we hire a new person our business expands.” When they hit $30,000 per month in revenue, Carter and Senters hired an operations administrator to cover customer service, emails, answering the phone, and other duties, so they could focus on creating content, “which is what makes money.” Now they cover this fixed cost by, in effect, renting their operations department out to handle the same functions for other publishers. “We take [other independent publishers] to the next level. If somebody is so overwhelmed by customer service issues that they can’t handle it, we take that off their plate so they can build their content and build their business model. We take 50-75% of incremental revenue from new growth,” said Carter. These joint ventures can be tricky. “We should have spent more time researching to weed people out. Always ask for someone’s business reference over the last 10 years. If they’re reluctant, there’s probably a reason. Always get a lawyer to look at stuff. Anybody that you talk to on the phone, if they’re tough to work with, they’ll be 10 times tougher to work with after they sign an agreement.”
In keeping with its uber-honest, non-sales-y branding, the company’s marketing is not aggressive. After a few print ad tests bombed early on, Carter pulled back almost completely from advertising, preferring to concentrate on publicity such as planting articles in other media and public speaking gigs in combination with search engine optimization and an on-site offer for a free, daily video newsletter. The free video newsletter is a shorter (one-to-two minute) version of the premium video newsletter and also contains low-key informational messages about the company’s range of events. Currently 55,000 consumers are signed up to receive the free newsletter. According to Carter, “within six months [of sign up], the average user buys $1,000 worth of products.” An estimated 20% of free newsletter subscribers ultimately convert to paid membership. Free newsletter opt-ins are not sent any other types of emailed offers. Carter does not think broadcast autoresponders pushing products will further his cause. He relies on the branded content itself as his conversion tool. The site offers a paid 14-day membership trial for $5, which automatically converts to the $119 monthly membership if the consumer doesn’t cancel. In keeping with his premium brand, Carter does not offer completely free trials.
Technology and Vendors Used
Membergate: a full-service platform for subscription websites. “We ended up with Membergate after discarding two other software providers. We’d spent $100,000 paying developers to build websites the way we wanted, but none of them could handle multiple subscriptions. Canceling was a problem. We couldn’t get credit cards lined up, but Membergate did that well.” http://www.membergate.com
Camtasia Online software: Video and screen recording software. http://www.techsmith.com/camtasia.asp
About John Carter
Carter’s father was a broker. By the age of 19 Carter was trading heavily. After college, Carter worked as a “sort of financial analyst” for four or five years in Corporate America. Although he liked the job, he wasn’t passionate about it. When he’d been trading for about 10 years, he “started to miss interacting with people,” so started his own trading business by hiring a firm to put up a simple website and developing his first newsletter. These days, Carter chooses to work from home, blending his business beliefs with his private life. His videos are shot informally–if his kids walk in, he just keeps going. “We’re just regular guys trading. We don’t try to be gurus and we don’t over-promise,” he said.
Subscription Site Insider’s Analysis
TradeTheMarkets.com has flourished in an incredibly competitive marketplace by strictly defining both its niche-audience and its brand, and then surrounding the niche with a broad array of offerings. Carter and Senters prove that a deeply focused brand can perhaps be more profitable than a broader one. We also like their extensive use of video, which gives a personal one-on-one feeling to their content. Lastly, we think other one-or-two-person membership sites should take heed of TradeTheMarkets.com’s investment in support staff. You can’t make great, must-buy content is you’re spending all day long distracted by admin–as all too many site owners are. As for growth, while we respect TradeTheMarkets.com’s low-key, no-hype marketing approach, we strongly suspect the brand could get far more aggressive with its outreach without losing the honest tone that defines it. It’s time for this company to hire a full-time marketer experienced in measured, branded, direct response tactics.