Web Sites Start To Pay Their Way

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

In a unique arrangement, Duke gives his MIS consultant, Alexis Rocherolle, a commission on Web banners that Rocherolle sells. Rocherolle, director of online development for Triathlete, is president of WebSPIN Technologies Inc., a Web development company headquartered in La Jolla, California.

Duke is confident that the site is profitable. Revenues include advertising (under $10,000 per month, compared to print ads at $130,000 per month) and subscription generation (on average, 11 per day, many of which are from international readers and can be charged at a premium, according to Duke). The site also generates intangible savings for the print title in areas such as customer service and renewals.

What does it all amount to? Duke admits that it would be difficult to quantify: "It would cost me more than it's worth to sit down and put a pencil to it. I just know that I'm bringing in revenue, I'm providing service, I'm getting interaction, and I'm getting readers. At the end of the day, more dollars are coming in than are going out."

Advertising and content

AdAge.com's main profit-driver is an old friend--advertising. Web ads, mainly banners and sponsorships, account for 80 percent of the Web site's revenue today. Vice president/publisher Edward R. Erhardt says Web ad revenues approach $1 million annually. "We're able to get a lot of advertising revenue, primarily aimed at the daily news environments because the news is fresh," he says.

Erhardt is betting--and winning--that timely content is still king. "The only way that [Web advertising] will continue to grow is if the publishers deliver a product of news and information that the target audience can't get anywhere else," he says. The site hosts three news "desks," all with material unavailable in the printed magazines. There is Daily Deadline, with short blurbs of industry news; Interactive Daily. with news and links for more information; and International Daily, which provides expanded stories about events abroad.

Content for the Web site comes from staffers who have been writing for the company's fax and Daily World Wire services. They now write and disseminate roughly 90 items daily. "About 30 of them are up on the Web, 20 are on the fax, and 60 of them are on the World Wire," says Erhardt.

World Wire is an e-mail service that corporate clients subscribe to on a proprietary basis. The subscriptions are sold in site licenses and can cost upwards of $10,000. Subscription revenues from World Wire are considered part of AdAge.com's total revenue base and count as the site's second most important profit driver, according to the company.

The site has a wide range of ad deals, including an "area anchor sponsorship" that gives a client constant presence in a particular area for a specific amount of time--monthly, quarterly or annually. Anchors, including clients like DoubleClick and WebConnect, account for approximately 15 to 20 percent of the site's ad revenue. Rates for banner rotations vary, depending on which pages they are positioned on, and how much the advertiser spends on print advertising.