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This article is adapted from a presentation at the 1999 National Electronic Publishing Seminar sponsored by the University of Virginia and the Library of Congress.

Many publishers have been penny wise and pound foolish in developing their presences on the Web. As an advisor to media and information companies making the transition to the Web, I believe there has been too much emphasis on deriving direct revenues from online sales. At the same time, it is clear that most publishers haven't used the Web to leverage the traditional values of their franchise.

The Web presents an unusual environment for companies, especially those — like publishers — that are mostly about buyer-seller relationships. It is an environment in which the buyer usually pays nothing, and the seller usually sells nothing. Publishers who are leery of entering such an environment might, instead, think of the Web as a place that is more about Brand development and Brand loyalty than it is about sales.

Indeed, the Web has been a quiet success for many of America's leading media and information companies. One of my clients, for instance, is the National Football League's interactive-media division. The NFL's TV and endorsement contracts are firmly in place for years at a time, and its games are usually sold out. But the NFL has wisely looked ahead, past the present TV contract and endorsements. It is very conscious of maintaining its value for future generations. The Web has played a tremendous role in this effort.

Over the past several years, the NFL has made SuperBowl.com a major part of one of America's top media properties. Indeed, it is now customary for many Super Bowl fans to go on to the site before, during and after the game to check out statistics, play games, test their knowledge — and have a good time.

The SuperBowl.com Web site — plus the regular season nfl.com Web site — delivers the NFL to their advertisers and customers, and it even makes millions of dollars from advertising and sponsorship deals. But the money is secondary, given the billion-dollar value of the TV contract. What is important is that the NFL has enhanced its brand for its existing customers. It has also made the league hip for a new crop of younger people. As the ad says, "they're on the Internet. And they're never going to get off."

As our experience with the NFL suggests, to think of the Web only as a commerce engine is to miss the potential of this medium. Indeed, we believe that enhancing and extending your brand is more critical at this juncture. In fact, any investment in the Web is an investment in your brand.

Most of my clients understand that. They don't actually care if their efforts are loss leaders. Wall Street doesn't care either. How else could all those Web brands be valued so highly when they are bleeding money?

Of course, brands can lose their value if they don't keep up with the realities of their media. Take the Columbia Record Club as an example. It stayed too long with model that forced their customers to say No if they didn't want on their doorstep every month a CD that they probably would not have ordered. That was a good business for over 20 years, but their customers came to resent the Record Club, its opt-out model, and its so-called "shipping and handling" fees.

When Internet mail order companies came along, offering huge inventories, overnight service, and reasonable costs, the Columbia Record Club was toast. Thanks to CDnow and Amazon.com, a billion-dollar company has been reduced to a customer base that probably still rents their phones from AT&T. Everybody else orders from the new online services. Columbia is trying to recover from its blow; its new "Play" brand offers 12 free CDs with no commitment to buy anything, ever. (They have also changed their name to Columbia House and they have a Web site.) I like that!

Publishers seeking to avoid a similar fate can try to determine what their value proposition is in cyberspace. It can be done by answering four easy questions.

  • Who is your audience?
  • Can you slice and dice your product to attract new audiences?
  • Can you create Contextual Advertising and make it seem natural?
  • Can you sell premium access to specialized services?

Who Is Your Audience?

Many publishers' Web sites don't focus on who will be using the site. To be certain, the Web is a great place to target certain types of customers — but you are not going to get everybody. Figure out who your core audience is, and how loyal they are to your product. Then figure out how you can retain their loyalty — and add new customers — by building a sense of community. You might use newsletters, home pages, e-mail reminders, or affiliate relationships.

As Amazon.com has figured out, community is good for "sticky usage": sustained, frequent returns to the Web site. The company promotes community both by soliciting reviews of their books and records, and by letting people know what other people are buying. For most companies, community will never be a money maker. The issue is whether community has enhanced their brand.

Sometimes, however, it is possible for community to pay for itself. The key is to form partnerships of like-minded companies. The Denver Post, for instance, wanted to build a high-school sports site. Wendy's hamburgers wanted to reach high school students. And high schools wanted access to sophisticated community-publishing tools to build their own sites. So the Denver Post licensed community publishing tools from KOZ.com, a leading provider of such tools. Koz, in turn, trained hundreds of high schools throughout Colorado. And Wendy's paid for the whole thing in return for a link to their big burger site.

"There was a lot of interest in . . . thong underwear."

If your audience is attractive to advertisers, community can also pay for itself with sponsorships. The Family Education Network, for instance, publishes a lot of content for parents and links to high schools. AT&T saw that demographic as a perfect fit, and agreed to sponsor sections of the site. In return, AT&T was allowed to run a promotion for the AT&T Learning Network.

Affiliate deals are a little easier. Amazon.com and Barnes&Noble, for instance, give commissions up to 7 percent if they can pitch a selection of books specifically tailored to your audience. That should be a no-brainer to most site owners.

The affiliate model can be more elaborate. LinkShare, for instance, allows you to get paid by retailers on the Web based on any behavior that retailers think is of value, from sending traffic to their site, to ad clickthroughs, to transactions.

Can You Slice and Dice?

Some publishers probably can rearrange their offerings to attract new customers. Take Billboard Magazine, for instance, the creator of The Top 40 popular-music charts. Billboard has taken The Top 10, and made it freely available to a wide range of sites. It has hooked up with CDnow. Billboard gets commissions from sales that CDnow makes based on prompts from the chart.

Billboard also has arrangements with ticket sellers such as Ticketmaster to link the top recording stars with their concert schedules, and customize them for local online-newspaper sites and city guides like those produced by AOL's Digital City. A local Digital City guide can prompt the sale of concert tickets whenever a Top 10 artist comes to town. That means revenue sharing for all.

Can You Create Contextual Advertising?

WashingtonPost.com has recently started linking to advertisers from certain feature articles. This is very much the wave of the future. Of course, it can go too far. A friend told me that they were thinking of doing contextual advertising with news stories. There was a lot of interest, for instance, in the fancy ties that Monica Lewinsky had purchased for the president. And in Walt Whitman's poetry. And in thong underwear.

Can You Sell Premium Access to Specialized Services?

Many people would pay extra for personalized versions of your services, updated on a regular basis. CBS SportsLine and ESPN Sportszone, for instance, charge extra every month to users who want their full set of statistics. They charge even more for participating in fantasy sports.

Those are the four simple questions that all publishers should ask themselves as they get on the Web. Whatever you do with e-commerce, don't jeopardize the organic relationship you have formed with your customers. What you'd end up with is a ghost town, which is of no use to anybody.


Peter Krasilovsky may be reached by e-mail at Pkrasilovsky@kelseygroup.com.



Peter Krasilovsky is program director for The Kelsey Group (www.kelseygroup.com), a leading Internet research firm based in Princeton, NJ. His strategic research has been used by major media and information firms, including NBC, Discovery, Hearst, the NFL, Bell Atlantic and AT&T. He is often quoted as a cyber pundit in major media outlets, and appears reguarly in that capacity on PBS's Nightly Business Report and on CNET News Radio. He has also worked as research director for a Cable Television think tank, and as a researcher on telephone company technology developments. He may be reached at Pkrasilovsky@kelseygroup.com.


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