Going “All-In”

By Bill Mickey
Friday, August 29, 2008

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Publishers tend to have their own unique strategies for building audience and business online. Most meander among fee-based subscription sites and traditional advertising models. Some rely on commerce for yet another revenue stream. Rodale, publisher of the vaunted Men’s and Women’s Health brands, Prevention, Best Life, and the running and bicycling titles, among others, has been quietly building a digital division that relies on all three of those revenue components. And, according to Jim Berra, Rodale Interactive’s senior vice president and general manager, business development springs from a close watch on audience development metrics and their content and buying habits. So far, each revenue stream is approaching a third, a third and a third of overall online revenue pie.

CM: Every publisher has their own online strategies, describe yours.
Jim Berra: Our strategy is an all-in approach to building a digital business focused almost exclusively on our brands. When I say all-in that’s obviously ad-supported, but as important are commerce and premium content, and services-based models as well. So we’re really running three revenue streams off of our digital platform. The ad-supported one, which is common; commerce, which is inclusive of books, DVDs, magazines and other people’s products; and premium services, which is a monthly fee, largely in the weight management category, and being created out of our brands like Men’s Health, Prevention and Women’s Health.

CM: What’s the revenue breakdown for those three categories?
Berra: Today, 36 percent of our revenue in digital is coming from advertising, 28 percent is coming from premium and subscription services, and the balance is commerce.

This year, commerce is our fastest growing. As we start to reverse engineer the development of our products to see what’s working online, I think that business will continue to grow extremely rapidly. For example, the lion’s share of our traffic on Prevention.com aggregates in nutrition and fitness. So creating books, DVDs and other products that play to that interest and subject matter is where we have the most opportunity for commerce.

CM: Are your sites run as separate entities, or do you group them in any way?
Berra: From an editorial and product development standpoint, they’re running on a brand-by-brand basis. We do share publishing infrastructure, reporting infrastructure and ad serving. So there are some matrixed components within IT and ad operations and marketing. But the site strategies and where we spend our next dollar is really at the brand level.

CM: How do you approach the development of your online platform?
Berra: Whether you’re doing the work in digital or offline, it is the intersection of the brand and the consumer that’s going to drive how you prioritize and align investments. What I’ve been most interested in is understanding how our customers use our sites. And then we talk about reverse engineering back to what opportunities that creates for Rodale overall. It’s born out of what consumers are doing, what content they are naturally gravitating toward, and how you both improve that experience for them within the Web site and open up other revenue streams that are akin to that subject matter.

CM: What are your top priorities in building online in an audience context?
Berra: Product is first and foremost—building out a more thoughtful suite of products that can begin to play to where our audience tends to gravitate online is critical, tighter integration of our commerce within our overall sites, and elevating our marketing capabilities within digital. Those are the primary pillars of our go-forward strategy.

CM: What do you need to do with your marketing?
Berra: That’s everything from getting more granular in terms of our testing and creative development. It’s looking for smart partnerships and ways to distribute our products that currently don’t exist today. And it’s traditional marketing—bundling offers, thinking about the consumer and their needs to be smart about the messages you put in front of them. I just think there’s a level of granularity and testing that as we continue to resource that opens up that capability.

CM: What are your digital revenues in relation to the other product platforms?
Berra: Our digital revenues overall are 10 percent. And last year, they were 8.2 percent, which is about 20 percent growth. I think we should approach 20 percent [overall] in the next 24 months. That would certainly be my goal—and within the range as our audience continues to grow 50-70 percent across the network of sites.
We could continue to be smarter about audience growth and then have a broader array of products more thoughtfully positioned and marketed. That’s a pretty compelling recipe for growth.

CM: Talk about your audience growth. How are you achieving that?
Berra: We’ve been very aggressive in building out a network of content syndication partners. We’re working with all the major portals and a few of the more pure-play health players like WebMD. So we’re syndicating our content to where we think it is most appropriate to garner audience and traffic. There’s related links and brand attributions that go along with the article content.

We’ve also done a lot of work with SEO, which is a combination of technical and editorial. And we’ve been better about magazine integration and communicating the benefit and extending the conversation from offline to online through promotions and programs and editorial initiatives that play in both mediums.

We’ve grown uniques north of 70 percent and page views have nearly doubled. And it’s been a combination of aggressively ramping up syndication, being more thoughtful about how we present our content so that the Googles and others of the world rank us higher, and then building some good editorial platforms.

CM: Describe how your commerce metrics fit into the measurement pie.
Berra: That metric and measurement is the lens through which we’re viewing the development and investment in our sites and audience. So a great example is a nutrition channel on Women’s Health, Prevention or Men’s Health, and it is an all-in measurement, so with strong advertiser demand, we have a healthy lineup of cookbooks and weight management solutions, as well as online-based subscription products. So for us, building audience into nutrition and creating a more relevant user experience can benefit all three of those revenue streams. So if we’re prioritizing capital investment, marketing investment, nutrition is going to be at the top of the list for Rodale vis-á-vis a channel like style or beauty where we’re obviously not in the apparel industry and we don’t publish a lot of books in that space, so our opportunities for monetization are certainly in the advertising camp, but they don’t necessarily fall into the other two realms.

CM: How would you describe future growth for Rodale’s digital operation? Will there be any bolt-on acquisitions, or more of an organic approach?
Berra: Right now, we’re more organic. We’re always keeping our eyes and ears open, but at this point, we’re pretty much invested in our brands and heads down in terms of growing each one of them within the digital space. We recognize that the all-in business that we want to build begins with how strong the relationship is between our consumer and our brand online. If we were purely going for audience growth to monetize via advertising, maybe rolling everything up into a health portal, it would have been a more viable route to take because you would have had all genders, a ton of demos represented and it would be an environment that would be pretty open to advertisers. But for Rodale, the value that we create across our lines of business is really at the brand level, so if we didn’t build a compelling audience relationship online with Men’s Health, Prevention, and Runner’s World, we would be dead in the water.