Web Sites Start To Pay Their Way

Folio: The Magazine for Magazine Management, July 15, 1998 by Dzintars Dzilna

THE FLOW OF MONEY between publishers and their Web sites has, for the most part, gone in one direction--from the publisher to the site. Confident that they needed a presence on the Web and that the opportunity to offer readers more information justified the expense, publishers have allowed this one-way current to exist for years. But a Web site is a business property, just like any other, that needs a creative strategy, financial oversight--and a return on that investment. And more and more publishers are recognizing this new reality. Publishers like Hachette Filipacchi Magazines, Cram Communications Inc. (AdAge.com) and Triathlete Group are using innovative strategies to generate real revenues from e-commerce, advertising, and partnerships.

The new marketplace: e-commerce

New York City-based Hachette Filipacchi Magazines is not content to simply create title-related Web sites. This month, the company will announce that it has signed on c2o, the Internet business arm of Dallas-based EDS, to produce and host their current Web sites, as well as provide e-commerce services. While neither party would reveal the exact terms of the agreement, the two revenue streams-advertising and e-commerce--will be proportionately split according to what each company brings to the table. Hachette brings its advertisers, and will garner "more than 50 percent" of total ad revenues on the sites, according to Jim Docherty, president of the company's new media unit. EDS, an information-technology services provider, brings Web-consumer research and implementation, and will get "more than 50 percent" of e-commerce income. Product distribution will be handled through third parties in undisclosed terms.

At the moment, both companies remain tight-lipped about what products will be offered on the sites, which include www.premieremag.com, www.travelholiday.com and www.eatingwell.com. But some marketing prospects stand out: automotive accessories (from www.caranddriver.com and www.roadandtrack.com--which officially launched this month); electronics (Hachette may launch an online presence for its consumer electronics titles later this year); and fashion and beauty (www.ellemag.com). Apparently, the sites have already generated some attention. In May 1997, Elle's site was named Netguide's "Cold site" and in September, the Car and Driver site won USA Today's random poll of Internet surfers for qualities such as usefulness, ease of navigation and visual appearance. EDS is currently analyzing the Web market for Hachette readers in terms of demographics and behavior and expects to launch at least one e-commerce business on Hachette's online presence over the course of the next six months.

How will a magazine company drive sales of car spoilers, stereos and stylish slacks? "Regardless of what type of media that provides the petri dish for these e-commerce initiatives, brands still drive purchasing. And we have those brands in a number of different categories that are active in the commerce arena," explains Docherty. As it moves into commerce, Hachette also pledges to protect those brands: "Regardless of what we do online from a commercial standpoint, in the same way we protect those brands editorially on the advertising side in print, we will continue to do so online too."

Still, the company will have to work out a strategy for keeping out of advertisers' business and avoid directly competing with them. Ideally, a given site could sell all of its advertisers' products online. But until the sites establish themselves, Docherty is not sure what will happen. "We haven't been faced with that yet," he says. "I can't answer that in terms of its impact on our overall advertising."

Hachette has also signed on Corbis Productions, the consumer arm of Corbis Inc. in Bellevue, Washington. Corbis provides digital images on premieremag.com (which is generating about a half-million page views per month) that Web readers can download and send electronic postcards with. Both companies plan to split advertising revenues evenly, although no advertisers had yet been signed at presstime.

Important data

The Web's timeliness and flexibility also allow niche titles to add value for their readers and generate revenues by selling information that hard-core readers can't find anywhere else. Triathlete, of Cardiff by the Sea, California-based Triathlete Group of North America, is using its Web site (triathletemag.com) to provide race results.

"A subscriber is a different animal from the person who buys my magazine on the newsstand," says John Duke, associate publisher of Triathlete (ratebase of 53,000, subscriptions 23,000). "That subscriber has a very niche interest in the sport of triathlon. I can use the site to feed him the information he wants without boring the guy I'm trying to reach on the newsstand, the guy who's a little more horizontal-market based." He estimates that the site gets more than 170,000 page views per month.

Duke is able to keep costs down by having daily content provided by the existing staff, who had been covering races on location for the print version before the site was relaunched in January. He says, "We now arm them with a cellular phone and a digital camera. Immediately following the race, they call in and give a report."