The Online Reading Room - online magazines having marketing troubles - Statistical Data Included

American Demographics, June 1, 2001

General-interest online mags face a fundamental challenge: Their content is not well-suited to the Web.

Most analysts predict a major shakeout, as consumers determine which sites are worth their dollar.

At the same time that its stock value dipped below 50 cents a share in January, Salon.com reported its highest traffic month ever. According to Jupiter Media Metrix, an online measurement service, the 7-year-old online magazine reported a whopping 51 million page views for the month of January.

While Internet audience measurements are arguably unreliable, there is no question that online magazines attract a significant number of eyeballs each month. Even as financial woes and layoffs continue to plague content-based Web sites, one group - readers - has remained loyal throughout. Unfortunately, their readers don't pay - yet. "Most of these magazines have loyal readers, but they're not profitable businesses," says Jupiter Media Metrix analyst Robert Hertzberg. "They'll either need to develop an offline component or figure out how to capitalize on their readers online."

Readership is one of the few solid indicators of potential value these sites have, and the online magazine reader represents a desirable target for marketers. Research indicates that online readers are affluent, educated, and tech-savvy - the elite influentials and opinion leaders of the Internet. Feed magazine refers to its readers as "the new Technology Influencers." Salon calls its users "Cultural Creatives" and "The Thinking Public." Precisely the kind of consumer advertisers want to reach.

Online magazine readers tend to be avid consumers of a wide range of media and early adopters of all kinds of technology. According to @plan, the online audience-research arm of Diameter (a recently created online media-research service launched by DoubleClick), 65 percent of Microsoft's Slate readers have been online for more than three years, as have 54 percent of visitors to TheStreet.com. Salon boasts that 67 percent of its users listen to audio on the Web and 61 percent use online video.

These online readers are also Internet shoppers. According to @plan, 93 percent of TheStreet.com readers shop on the Web - 70 percent for travel products and services and 52 percent for cars. High online shopping patterns also hold for Slate: 93 percent of its visitors have shopped on the Net in the past six months, and 75 percent have transacted online. An @plan analysis of online shopping over the past six months shows that Salon.com readers are 189 percent more likely than the average online user to purchase computer software online. They are also 131 percent more likely to buy movie videos and DVDs online and 102 percent more likely to order up home electronics.

On a number of issues, online magazine readership appears to rival those of the most prestigious print magazines. Salon readers appear to be better educated than The New Yorker's: 79 percent are college grads, compared with 54 percent at the latter, according to @plan and MRI data, respectively. Slate beats out The New Yorker in terms of its readers' average household income ($83,126 vs. $77,033), with Salon not far behind ($71,300). TheStreet.com (average household income of $100,286) similarly outstrips Forbes ($84,097). The skew isn't surprising, given that these sites gear themselves to the highly educated with content that is often unapologetically highbrow. As Patrick Hurley, Salon's senior vice president of business operations, puts it: "We're smart and topical like The Washington Post, but also opinionated, literate, and thought-provoking like The New York Times Book Review...like public radio with a libido."

The attractive profiles of online readers transcend the traditional upscale skew of Web users. Online magazine readers are significantly more affluent than the general Internet population. According to Jupiter Media Metrix, 28 percent of TheStreet.com readers, 26 percent of Salon.com readers, and 33 percent of visitors to The Onion have household incomes above $100,000, compared with 19 percent of Internet users overall. Readers of TheStreet.com are more than twice as likely as the average Internet user to own an investment portfolio worth more than $250,000, and are twice as likely as the average Internet user to earn more than $150,000 a year.

Such readers are both passionate and loyal. These sites have tremendous, mostly untracked, pass-along value. The Onion famously snowballed into success after users e-mailed its satirical news reports around the Internet. (Recipients were often unaware they were reading a spoof.) Salon notes that between 250,000 and 350,000 articles are e-mailed every month using the "E-mail this article" feature, and that's not including the number of times users simply paste an article's URL into an e-mail, a common online practice. "These Web sites typically offer original content and a unique point of view, and they speak to an audience that's very passionate about what the sites have to say, and that's always intriguing," explains Fran Powell, managing director and chief strategy officer of @tmosphere Interactive, the digital arm of BBDO Worldwide. "They could work well for a range of products - books, wireless technology, movies, electronics, computers."