Complex Networks: How To Build A Cultural Phenomenon (& actually profitable media business)

Complex Networks captures the imagination of Gen Z and Millenials like no other media company.

Starting life as a twice monthly magazine from fashion designer Marc Ecko in 2002, it has gone on to become a kingpin of digital media doing $200 million in revenue and achieving a cult like status amongst its followers.

Complex is a company where I just lap up the content. So this week I wanted to take a look at what makes it not just a cultural phenomenon but also the envy of most profitability seeking media businesses.

Content is king

Back in 2002, Ecko wanted to create a home for hip-hop and streetwear culture. Complex magazine would offer articles and news alongside a Japanese style product guide. Readers could check news articles and stories, then browse product.

It was a winning formula.

What’s interesting, is how this concept has held so true almost 20 years later in the fashion sites, YouTube channels and events that Complex produces.

‘Sneaker Shopping’ is an interview show conducted in a sneaker store. Snoop Dog or some other pop culture guest will tell us their life story through sneaker choices, update on latest projects and then pick out some items to purchase. In many ways it’s the original magazine in video format.

The viewer is compelled to hang around for the show’s pay-off: the crazy amount of money inevitably spent by the guest on new kicks.

An even better climax awaits anyone watching Complex’s ‘Hot Ones’. A celebrity with something to plug is interviewed over the course of 10 chicken wings doused in hot sauce.

The questions and wings are designed to increase in relative difficulty over the course of the interview. Progressively the heat takes over wing by wing, and all media training and personal barriers break down.

We are left with a mouth burnt interviewee, often in some pain and sweating profusely, giving more genuine reactions to questions that you would ever normally see on late night tv.

Nine million people are subscribed for this funny, raw and one of a kind show.

The Convergence Consumer

Complex’s targets audiences whose identity is closely tied to a series of overlapping vertical interests not just just their age, race and gender. They challenge the view of advertisers who structure their approach around broad demographics at scale.

Sneaker Heads + Hot Sauce Heads + HipHop Heads = Cult Like Following.

Ecko get’s culture and the strength of feeling people have towards the niche interests that make up their identities and popular culture:

“Our thesis was antithetical to that (of traditional ad agencies): We said that if you took those topics in aggregate and cross-pollinated them, you’d create something much bigger and more intellectually honest profile of what American popular culture actually is,”

Complex calls this the “convergence consumer,”.

Whilst the network’s has an uncanny ability to capture audiences imagination, there is also always a clear commercial appeal to the content they produce.

CEO Rich Antoniello has led that focus. Whilst other brands like Buzzfeed and Vice have raised huge sums at eye bulging valuations, Complex has focused on organic growth, with a few small funding rounds that helped increase profitability.

Commercial strength

Owing to its strength as a publisher, brands are prepared to go deep with Complex. The business creates ongoing campaigns or branded content hubs with brands like Levis, Adidas and Coca Cola rather than competing for one-off transactions.

Reach on its portfolio of websites, Facebook pages and Youtube channels is responsible for the majority of advertising revenue as you would expect from a media business.

But diversification has become the game since 2016 when the company was sold to Verizon and Hearst. Antoniello has overseen a change from a position at that time where 98% of revenue was advertising-related, to a much more comfortable 48% in 2019.

Licensing

Show’s like Sneaker Shopping have been able to cover their production costs natively on Youtube and then turn a profit through licensing to TV networks and spin offs. Over 16 Complex shows are headed for Hulu and Netflix. Many are licensed to foreign markets. Hot Ones is just as successful when adapted and localised for Malaysian TV.

E-Commerce

In E-commerce, Hot One’s is responsible for $15 million in sales of hot sauce per year. This doesn’t include other merchandise like clothing which we know viewers also lap up. Today online product sales represent 15% of Complex’s revenue but the potential is scary.

It has been reported that the development of a sneaker trading platform is well underway, alongside a ‘Complex Store’ which will drop exclusive clothing collaborations with fashion brands.

Events

ComplexCon is an annual all singing and dancing event created for the cult of Complex. Taking place over two days with music headliners, pop-up stores and entertainment. The festival had over 85,000 attendees in 2019 with tickets starting at $55 per person.

Vendors attend on an invite only basis to preserve authenticity and reportedly sell more than $25 million of products over the weekend.

With sponsorship and food sales on top of this, ComplexCon is a money making machine.

Quality wins out

I think an overriding lesson of Complex’s success is its ability to maintain authenticity in its purpose and the content is creates. This is reciprocated in the loyalty of its fans.

Complex takes, what could be seen as niche interests (as small as Sneaker Heads and as large as hip hop) seriously. Those core audiences then doubly repay their enthusiasm because they are underserved by the media industry.

What’s more, these ‘niche interests’ reveal they have much bigger audiences than might be expected and with awesome execution, pull in lots more for the pure entertainment value.

Being highly produced, the content stands out online.

It is telling that Complex is ran with a commercial mantra which is purer than its rivals who have raised considerable amounts of cash.

Because of that, it is chasing not just big audiences and reach, but highly engaged and loyal fans who in turn enable a healthy, diversified business through e-commerce, events and licensing revenues.

That’s what makes Complex both a cultural phenomenon and a profitable media business.

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This post was originally written for the Digital Evolution newsletter.

Check it out here: https://digitalevolution.substack.com/welcome

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