The Industry Click, Intertec Integration

Folio: The Magazine for Magazine Management, April, 2001 by Sarah Gonser, Tim Andrews

MARKET SHIFTS ALLOWED INTERTEC CEO TIM ANDREWS TO FOLLOW HIS INTEGRATION INTUITION AND SCRAP PLANS FOR A STAND-ALONE WEB COMPANY.

Last year, before dot-com became a bad word, b-to-b publishers were bullish about the Web. Most of the major players spent freely to launch vertical online communities and e-procurement sites that were intended not only to build their businesses, but to guard against new online-only competition. And to cash in on inflated Internet company valuations, the Web businesses were designed to be separate from the parent company, but to leverage its print brands, market relationships and content. Revenue from these virtual markets, it was thought, would flow from advertising, transaction fees and storefronts.

But the Internet landscape looked very different 12 months ago. Last April's market correction, followed by the dot-com free fall and the downturn in the economy, has convinced more than one publisher to reassess the VOC business model. That's not to say that they are retrenching entirely--just rethinking.

In fact, at least two major b-to-b publishers-- Intertec and Advanstar--announced plans in March to pull Internet businesses back into the parent company. The thinking now, says Intertec CEO Tim Andrews, is that the success of the Web lies in it being tightly woven into all the brands of a traditional publishing company. Then, and only then, will publishers be able to provide the integrated marketing packages that advertisers want, and the breadth of editorial content that readers expect. Therefore, says Andrews, IndustryClick will now be run as just another segment of the Overland Park, Kansas-based b-to-b publishing company.

And while the compass of this business has definitely changed direction, Andrews (who prior to being named chief executive of Intertec was president and CEO of IndustryClick, and prior to that president and CEO of Dow Jones Reuters Business Interactive) says he remains bullish about the Web.

Here Andrews shares his views with FOLIO: (which was formerly owned by Intertec, but is now part of Primedia's Media Central) about why IndustryClick is stronger as an Intertec component than as a stand-alone Web company, and why market shifts have made integration a revered word among those publishers who want to profit from the Web.

Q: What prompted you to roll IndustryClick back into Intertec?

A: It was the right thing to do. I have long thought, even before the market correction last spring, that the way to generate the best products and the most revenue for this company in the b-to-b space is to integrate as thoroughly and as deeply as we can between IndustryClick and Intertec. It never made sense to me, even when the stock market was raging, to build out separate editorial, sales and marketing teams, simply to provide different delivery channels and a different way for our advertisers to reach our readers.

Q: So why didn't integration happen earlier?

A: The view was that we should have separate organizations and fast revenue growth. That's what was being rewarded by the market, so it made sense in that kind of situation to have a separate effort to drive revenues as fast as possible. Obviously, we want to do that here as well. But what the world is saying these days is that profitable revenue growth is what makes sense--which really is what 11 thought all along--and the most logical way to do that is through integration.

Q: When your intention is to take a company public, you set it up differently. Do you have to change the structure of Industry Click now that you're pulling it into Intertec?

A: Part of the point here is to eliminate duplication of effort.

(Note: Andrews announced in March the layoff of 140 Intertec employees and 20 Industry Click employees--all efforts on his part, he says, to streamline the company and eliminate bureaucracy.)

Q: Advanstar announced a similar restructuring of its Internet units recently--a decision to pull online functions into the parent company. What can you say about why publishers are making this move now?

A: I think that publishers, seeing the market now, realize that integrated organizations are the way to go. In our case, I undertook a pretty large examination of both Intertec and IndustryClick. The Intertec examination was driven by my new job as CEO; the IndustryClick examination was driven not only by that, but also by our acquisition of About and our challenge to figure out how to integrate the About business model, technologies and traffic into what we're doing on the Web. So it was really those three things for us. But for others, I think it's probably a realization that revenue growth is going to come more slowly than they might have expected. And there's a real logic to using your existing experts in the industries you serve in both forms of distribution, both print and on the Web.

Q: So why didn't they integrate from the start??

A: I think it was a bit of an expectation that people might not have the skills to do the Web, or the time to do the Web, as well as the traditional work they'd been doing. It was also driven by the market, which was a market that was saying that separate organizations were okay, and we'll fund these separate organizations, and you'll be able to drive value by doing it.