Building Brics Out Of Clicks
Jennifer F. Steil
A number of dot.com publishers are looking to expand their brands and find a proven revenue source in the not.com domain.
A FEW YEARS AGO, EVERY MAGAZINE WAS scrambling to create a Web site, desperate for an entrance ramp to the information superhighway. Now, several Web-only publications are heading the opposite way, building bricks from their clicks.
Recent Web-sprung glossies eBay Magazine and Yahoo! Internet Life are being joined by a stream of newer launches, among them SPACE.com ILLUSTRATED, E*Trade: The Magazine and Ziff Davis’ Expedia Travels. In late May, Travelocity.com, the travel-bookings Web site, announced that it is launching a 250,000-circulation bimonthly magazine, describing it as a logical extension of the Web operation.
Although the business models of the new Web-spawned magazines vary, the companies are finding advantages to launching a print product in support of a known Internet brand. An online presence can save money on direct mail, for starters, as publishers have the opportunity to market the print product on the Web–and then drive print readers back to the Web site. Even more fundamental, while most publishers are still searching for ways to make their online properties profitable, print is a proven revenue source.
Some traditional publishers are merely licensing known Internet names to gain visibility and a Web promotion partner.
Yahoo! Internet Life pioneered the idea of translating a popular online brand to a print property, although the magazine is not in any way editorially associated with the popular Web portal and directory.
“Before we launched, there were a number of titles out there, with the words Net Guide or Internet in the title,” says Barry Golson, editor in chief of Yahoo! Internet Lift. “I thought it was important that our magazine have a really distinctive brand, one with trust on the Internet, and Yahoo! fit the bill perfectly.”
Yahoo! Internet Life has a licensing deal with Yahoo! that allows the magazine to have links on the search engine offering subscriptions to the magazine.
“That has driven a lot of our subscription growth,” Golson says. “It’s a terrific advantage.
What’s particularly interesting about Yahoo! Internet Life is that although the magazine has its own Web site that offers the entire contents of the print magazine for free, 900,000 people are still willing to pay for a subscription to the ink on paper version.
“It’s interesting and amazing,” says Golson. “It shows that people want information in different ways. It’s a testament to the power of print, which is still the most portable medium. You can take it to the hammock with you.”
Yahoo! Internet Life has grown its audience 326 percent, from a total paid circulation of 175,235 in December 1996 to 747,279 in December 1999. And it expects to to reach the 1 million mark this September. Advertising pages and revenue also continue to soar: ad pages for the first four months of the year are up 42.2 percent over the same period last year, from 260 pages to 369, and ad revenue totaled $17.8 million, up 134.3 percent from $7.6 million in 1999.
Yahoo!’s overwhelming success has given Ziff Davis Media every reason to believe in the potential of its next clicks-to-bricks project: Expedia Travels.
Expedia Travels, scheduled for a November launch, is the product of a similar licensing agreement. Like Yahoo! Internet Life, it will have unique content, and have no editorial connection to Expedia.com, the Web site that gave it its name. This licensing formula, says Gary Walther, editor in chief of Expedia Travels, has proven itself. “Ziff Davis has always been interested in technology, and they quite rightly saw that the Internet was a piece of technology that was spawning a lifestyle,” he says. “So they launched Yahoo! Internet Life. That was putting their toe in the water, and it worked.”
Aside from pornography, travel is the largest e-commerce category on the Web, Walther says. Ziff Davis saw a partnership with Expedia.com as the perfect way to tap into this mammoth market.
Expedia Travels will be designed for people who use the Internet to research and book travel, referring readers to travel sites–including Expedia.com when appropriate, Walther says. “The agreement is great for Expedia.com because their name is in the title, and it promotes the Internet as a means of booking travel,” Walther says. “And it’s great for Ziff Davis, because we can promote the magazine on the Expedia.com site and gain subscriptions that will save us money on direct mail.”
Expedia Travels will be a bimonthly for the first five issues, and then switch to a monthly frequency in September 2001. It will claim an initial ratebase of 200,000 and executive vice president/publishing director Scott Crystal expects to increase that ratebase to 300,000 with the March/April issue, to 400,000 for the July/August issue and to half a million by January 2001.
Crystal estimates that the ad page count for the launch issue will be about 70, but expects that number to increase quickly. “We have the opportunity to expand ad pages from traditional travel advertising categories to include technology and business travel items such as laptops,” he says. “The lifestyle is of a very affluent, educated, young individual.”
MEANT TO BE MULTIMEDIA
Some dot.coms now delving into print have always yearned to be a paper product, but didn’t have the cash. Such is the case for Nerve.com, “a smart, honest magazine on sex” for women and men launched in June 1997 from a one-bedroom Manhattan apartment.
“We’ve always had print dreams, but not print funding,” says executive editor/vice president of content overall, Jack Murnighan. “It’s striking to me that it’s taken so long for people to use the Web as an incubator for print magazines,” Murnighan says.
Nerve.com’s print incarnation, Nerve, was launched in May, with an initial print run of 50,000.
Murnighan describes both Nerve.com and Nerve as cultural intervention. “It’s a reply to a cultural need, not a Web-exclusive need. There hasn’t been a smart sex magazine for men and women ever,” he says. “Nerve.com was never about being a Web magazine. It was about being an open forum for smart, open discussion of sex for both genders,” Murnighan says.
The company is saving the money it would have spent on an aggressive direct mail campaign by marketing to its 800,000 regular Web visitors. “The Web allowed us to reach part of our audience. Once we did that, the Web itself became the advertising vehicle for the print magazine,” says Murnighan.
Now that Nerve.com Inc. has experience with both mediums, Murnighan says he plans to capitalize on the advantages that they each offer. “Print is nicer to hold, nicer to stroke and to take to bed,” he says. It’s also easier to read offline, and the photography looks incomparably better in print. “A magazine has a narrative,” Murnighan says. “Which is not germane to the nature of the Web.”
However, the Web does offer distribution ease and interactivity. For example, Nerve.com has the Nerve Center, “a community of thoughtful hedonists,” which includes personals, chats, boards, email and daily polls. Plus, readers can give instant feedback on the site’s contents.
Nerve.com and Nerve share a staff and most of the writing is outsourced to freelancers, however, 80 to 90 percent of Nerve’s content is unique to the magazine. Because readers actually pay for Nerve, the magazine is used to showcase certain photos and articles, says Murnighan.
GARDEN.COM GOES FOR THE GREEN
Founded in December of 1995, garden.com is a commerce site that derives the majority of its income from selling products. In the spring of 1999, the Web-only company decided to expand its garden sales into the printed world with the launch of Garden Escape.
The primary purpose of the quarterly magazine is brand-building, says Doug Jimerson, vice president/editor in chief of garden.com and Garden Escape. “We thought it would be a good avenue to attract another customer base that might not be aware of the depth and breadth of garden.com’s offerings,” he says.
Unlike a vast number of Web startups that are searching for an effective e-commerce business model, Garden.com Inc. appears to have found the right tools to sell in a lucrative market. The company’s revenue for the third quarter of fiscal 2000 reached $3.2 million, an increase of 236 percent over revenue of $939,000 for the same quarter in fiscal year 1999. (The company reported a third quarter net loss of $l1.4 million, or $.65 loss per share, compared to a net loss of $5.4 million, or $5 net loss per share, for the same period last year.)
Gross margin increased to 30 percent during the third quarter, compared to a gross margin of 18 percent for the same quarter of the previous year. The company attributes the increase to increased order volume, increased efficiencies in order fulfillment and an increase in advertising sales as a percentage of total revenue. Only about 10 percent of its income is derived from advertising.
Garden.com’s audience is quickly expanding–the site currently has 1.1 million online members, an increase of about 130 percent over 471,000 in the same quarter last year. Plus, its customer base is fairly loyal–repeat customer orders represented 42 percent of orders during the third quarter, up from 38 percent in the same quarter of the previous year.
The hope is that the print version will help fuel garden.com’s growth, and perhaps more importantly, serve as another sales outlet. While the 100- to 125-page magazine maintains a 50:50 ad/edit ratio, it reserves all but 15 of its ad pages for garden.com products. “Right now we find it more effective to carry our own advertising and sell products than to bring in outside advertisers,” says Joel Toner, vice president of media development. “But as we expand our editorial franchise, we’ll probably be expanding outside advertising. We’re an Internet/commerce magazine. It’s a different publishing model.”
It’s a model that appears to have potential: the test issue of Garden Escape, which launched at newsstands in spring 1999 with an initial print run of 350,000, sold out completed. The company immediately planned the release of a fall issue and the magazine became quarterly in January. Toner hopes to have a half million paid members of Garden Escape within 24 months.
But perhaps even more immpresive is the fact the per issue, Garden Escape is already profitable from its product sales, Toner says. “After the features are written, we commerce-enable that editorial with products,” he explains. Almost every product mentioned in editorial can be purchased on the Web. So, after reading an article on roses, a reader can browse through four pages of rose-growing-related products, such as pruning shears and rose varieties.
“It’s a very unique property, and unlike any other special interest property,” says Toner. “Each issue can be profitable, given that it’s put in the hands of gardeners.”
In fact, any Web site on a topic with practical uses–such as cooking, remodeling, crafting, investment and parenting–has a pretty good chance of transferring well to print, Jimerson says. “There is a constant need for information on home and family,” he says. “It’s about topic–your core competency. We’re experts in gardening. If we hook someone, they’ll be interested in print as well.”
The printed version can offer more depth, Jimerson says. Online, the content is more subdivided. “Nobody reads more than two pages on a Web site,” he says. “In a print magazine there’s more room for expansion.”
The big difference, though, is how the material is presented. Online, no one reads sequentially; people self-edit. Therefore, an editor’s job is to write a lead paragraph and let the users go where they want, Jimerson says. “You’re slicing and dicing a traditional story. If you’re an experienced rose gardener you want to skip how to grow them and look at new varieties,” he adds. “You want to get in quick and get information. But on a rainy afternoon, you might be more likely to pick up a magazine.”
SEEKING PROPULSION FROM PRINT
SPACE.com has a similar plan on the launch pad for this fall. The year-old outer space site plans to issue SPACE.com ILLUSTRATED, which will allow the company to serve a broader audience and to publish a higher quality of space photography, says Lou Dobbs, chairman and chief executive officer of SPACE.com.
“We had the opportunity to be a first mover on the Web, and felt it was important to seize that advantage and begin driving brand extensions,” Dobbs says. “We are first and foremost an Internet company, but we have brand extensions planned in print, television and radio.”
SPACE.com has a half million unique visitors a month, up from about 100,000 a year ago.
By first launching on the Web, SPACE.com was able to perform some fundamental market research through interaction with its audience online. “What our audience is suggesting is that they are highly intelligent, well educated and avid readers, as well as Web users,” Dobbs says. And therefore, Dobbs believes there is tremendous kinship between Web users and magazine readers. “Our users are interested in knowledge. Curious-minded, forward-thinking users all tend to be voracious readers.”
SPACE.com ILLUSTRATED will launch as a bimonthly with a print run of 150,000 and about 15 ad pages, Dobbs says. He hopes to double the ad pages over the next year and expects the magazine to become a monthly by January 2001.
And although the Web site has yet to make a profit, Dobbs is confident that the magazine will achieve profitability in two years. “Every brand extension we create is directed toward increasing revenue and achieving profitability,” he says.
The editorial in the print magazine will be different from, but related to, content on the Web content. The magazine will predictably include broader, longer features, while breaking news will stay online.
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