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Nov 04, 2003
Case Study

How Economy.com Turned an Unprofitable Spin-0ff Site into a $1.3M Cash Cow

SUMMARY: High-end consulting and research firm Economy.com also runs a little side-kick site Dismal.com. At first it was simply a promotional vehicle that relied on ad revenue to cover hosting costs. Then the team began to wonder, "Could we actually sell subscriptions to this?"

Best lesson from this Case Study: If you offer several options to buyers, *always* pre-check the option you want them to pick. This one tactic has gotten Dismal.com an unusually high percent of longer-term (more profitable) accounts.
CHALLENGE

For a while, Economy.com seemed to have a winner on its hands. Its ad-supported spin-off Dismal.com, which publishes economic information for business decision makers, was attracting more than 220K unique visitors a month, generating a nice image boost for Economy.com's high-end consulting and research business.

With its content written entirely by analysts already on Economy.com's staff, the site wasn't expensive to produce.

Still, with the Web advertising market on the skids, by 2001 waning sponsorship revenues weren't covering the site's expenses, particularly hosting costs, says Senior Product Manager David Pogemiller.

Pogemiller knew the site had an eager audience. The question was how to turn them into paying content customers.

"We are a relatively small company, and we don't have a ton of resources to devote to the marketing the site," Pogemiller says. "The question is how you sell people on the idea that this is needed."

CAMPAIGN

In November 2001, Economy.com switched Dismal.com to a for-pay model offering multiple subscription levels. To convert visitors to paid members, Dismal.com tested three tried-and-true e-content sales tactics:

-> #1. Put everything behind a paid barrier

While many subscription sites give away a selection of content in the hopes of attracting visitors, just like WSJ.com Dismal.com slammed a paid barrier up for everything beyond the home page.

"We did some research and found that a mix of free and paid just doesn't really work that well," Pogemiller says. "It can be confusing to potential and existing subscribers and that it can dilute the value of your subscription offering."

Economy.com has packed Dismal.com's front page with up-to-the- minute headlines from within the site, in a compact, newsy fashion which emphasizes the richness of its resources. When visitors try to click through to an article, they get a barrier page letting them know that the articles are only for subscribers.

To go any further, visitors must agree to a 14-day membership trial. Dismal.com tested requiring a credit card up-front for the trial and not doing so.

The site does offer non-buyers the option to receive a daily headlines email newsletter, but when they click to read a story, they slam into that paid barrier again.

-> #2. Build credibility throughout the site

Dismal.com uses several tactics to make users feel confident about signing up for the trial:

a. Dismal.com cites its 'Best Economics Site on the Web' award from Barron's in highly visible position on the top of the home page.

b. The site is liberally coated with testimonials from named subscribers. The testimonials are used not only to build general credibility, but also to help convert trials sales: for example, the left-hand column of the order form page includes praise from three current members.

c. The site's offer 'submit' buttons are copywritten to include action-oriented, messages. While Dismal.com leaves the buttons a regulation grey, the submit message changes depending on where the user has landed. For example, the newsletter subscription button reads 'Sign me up!'

d. Dismal.com offers a wealth of contact us information everywhere possible to underscore the fact that there are real people behind this site. There are phone numbers and the hours of operation, a street address, and a livehelp link.

Reassuring visitors helps Dismal.com not only attract trials, but convert them too, Pogemiller says. "Obviously potential subscribers are more comfortable subscribing when they see the review from Barron's, but also current subscribers are reassured about their investment when they see it," he notes.

-> #3. Encourage longer term subscriptions

To reach the broadest cross section of its audience, Dismal.com offers users a flexible subscriptions menu designed to address the needs of both individuals and corporate buyers. Individual subscription options include:

o 30-day without auto-renew ($39.95)
o monthly with autorenew ($29.95)
o annual ($295)
o two-year ($495)

In addition, companies can buy a ten-seat annual subscription for $1895, and annual site license for up to 500 users for corporate buyers for $3995.

On the order form, however, Dismal.com has already pre-checked the 'one year' option to encourage its use.

"Our traditional client base subscribes in year-long increments so it wasn't even a thought for us," Pogemiller says. "Also, I think that the nature of our site and its content very much lends itself to a year-long subscription."



RESULTS

Over the two years it has been charging for access Dismal.com has grown into an estimated $1.3M per year business, according to ContentBiz calculations, with over 4000 subscribers. And while Economy.com won't reveal its costs for Dismal.com, with no dedicated staff members, Dismal.com is almost certainly a highly profitable venture.

Subscriptions break down as follows:

Sub type % of Total Subs
~~~~~~~~~~~~~~~~~
30-day access 1%
Monthly 17%
One-year subscription 65%
Two-year subscription 16%
10 user licenses 1%
Site license 1%
~~~~~~~~~~~~~~~~~~

As every other site we've talked to has said, Dismal.com's trials requiring a card up-front converted dramatically better at 60%, than no-card-required trials which only converted at 5-10%.

Although only 1% of Dismal.com's newsletter readers have signed up for 14-day trials, they convert to buyers at 74% -- a higher rate than average.

Thanks to excellent content and autorenewals for all but the group subs, Dismal.com's renewal rates have run high:

Monthly 90% per month - equaling 31% still on after 12 months
One-year 75%
10-user licenses 87%
Site license 91%

Despite the site's profitability, Pogemiller is far from satisfied. "Dismal.com is doing very well, but we still think there's a huge untapped market," he says. "We think just about any business can use this information.

http://www.dismal.com
See Also:

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