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May 01, 2003
Case Study

How to Succeed by Turning Down Banner Ads -- RetailWire's Unusual Content & Sponsorship Model

SUMMARY: This Case Study is a must-read for everyone involved in trade or business news publishing. You will learn how three entrepreneurs invented a new kind of info service that their readers and their advertisers love. It does involve getting up at an insanely early hour of the morning though. (That is a theme for this week's issue of SherpaWeekly!)

After working for Progressive Grocer magazine for more than 14 years, Al McClain quit his job in 1997 to reach for the brass ring.

"I thought, if I'm ever going to get out and be an entrepreneur, I need to do it now."

Together with two friends, editor Rick Moss and operations expert Santi Briglia, McClain founded an online publishing company to compete with the trade press which they felt was bogged down in the old fashioned print world. The new site, IdeaBeat, contained everything retail professionals could ever hope for in a professional info site, including daily news, feature articles, commentaries, audios, you name it.

By 2001 the party was over. IdeaBeat was too big an idea for a shrinking economy. "We were extremely comprehensive, which tends to drive your costs up, and your revenues don't come in as fast."

Undaunted, McClain and his partners picked themselves up, dusted themselves off, and started all over again.

They still saw a need in the marketplace that needed to be filled. They just had to figure out how to create a business news site that provided plenty of value to visitors and sponsors without a big staff or a big budget.


First the team reviewed the competition (and there was plenty of it) looking for needs that were not filled. Whatever they were going to do, it had to be as unique as possible. That meant cutting away extras such as classifieds that lots of other publications had already.

"If it's not exclusive to our site, it must at least be something we can be known for," they vowed. Which meant typical trade news coverage was also out.

"News is a commodity," says McClain. "In retailing, you can get your news from 100 different sources. To be the news leader would be very difficult. We opted to differentiate."

They invented news coverage with a valuable twist: The RetailWire BrainTrust Discussion Boards.

Here is how it works:

First the partners approached the smartest industry executives, analysts and consultants they knew and asked them to join a 'BrainTrust.' "The toughest thing is recruiting the first one. Once you get past the first five it starts to take on a head of steam. People say, 'Oh if so and so is doing it, then maybe I will too.'"

Members get a certain amount of fame and glory, plus the opportunity to post a hotlinked bio on the RetailWire site, as well as occasional links to any white papers they have written.

Then each business morning at 4 A.M. ET, RetailWire's editors begin to scan the Net for the latest trade news.

By 6 A.M., they begins to cull the pile, sorting by what is really going to affect RetailWire reader's jobs, and leaving the PR fluff on the cutting room floor. Then they email out a neatly written summary of each story that makes the final cut to the BrainTrust panelists who have under an hour to respond.

Each Brain Trust member skims that email looking for items that particularly relate to their area of expertise. If they find something they can make a particularly useful comment about or give insightful analysis on, they whip it up in an email that is sent back to RetailWire.

Editors review each comment carefully, again culling the fluff (and anything remotely self-serving). After posting the winning comments to the site's discussion boards, they send out a daily email newsletter to all registered site members. (Link to sample issue below.)

The subject line always starts with the word "Discussions" so you can spot it in your in-box easily, and then lists a tempting topic-of-the-day. For example:

Discussions: Rebuilding Home Depot; eRecommendations
Discussions: Rethinking Biz Models; Bag Taxes
Discussions: Fears of Deflation...

To entice the maximum number of readers back to the site to read and participate in the discussions, each issue starts with this reminder headline:

Welcome [name]. RetailWire now has AUTOMATED LOGIN!
Your login info will be stored for your next visit!

McClain explains, "We experimented with a number of registration processes. Now we have the best of both worlds. We register subscriptions to give much more detailed reports than any of our competitors, but our automatic login system lets you in as long as you don't erase cookies. People used to squawk and complain about having to type their user name and password each time they visited. Now 95% of the problem has gone away."

Readers are invited to contribute comments to the discussion. However, unlike most Web boards, nothing goes live on RetailWire unless an editor has approved it. No dull "me-too" remarks, and certainly nothing salesy is allowed.

"We have ground rules," explains McClain. "Everything on the site is edited. There is a real human being looking over information when it comes in. You can't be pushing a certain point of view or products. You can explain them, but you can't be selling."

When it came time to attract sponsors to the site, the team decided to lay the similar ground rules. They would not post ads simply for the sake of income. Every ad had to bring value to the site.

Which meant for the most part no typical ads such as banners.

"We turn down sponsors on a regular basis who want to buy CPM or just want to run banners," says McClain.

Instead the team developed a packaged sponsorship advertorial deal, which is sold by the month. The editorial team works with the sponsor to create custom content, often research data, that is truly interesting and useful for readers. They usually couple this with a contest or giveaway offer to entice readers to give their contact details to the sponsor. (No individual reader data is ever revealed to a sponsor unless that reader gives specific permission at the time.)

McClain explains the thinking behind these custom sponsorships, "Advertorial is stronger than advertising. It takes more work. If we just took banner ads from say Campbell's Soup's agency that said, 'Campbell's Soups Sell More' and all it did was link back to their site and it doesn't go into any depth, it doesn't make either of us look good."

"If we are positioning them as the 'Meal on the Go Experts' and we do the writing and creative, it allows us to make the sponsors look good. It is connecting our reputation with theirs." (Link to sample of advertorial below.)

Every time a RetailWire member registers to look at the sponsored content, that sales lead is automatically forwarded to the sponsor. Plus, once a month the sponsor is emailed a round-up report on traffic and views of their content.

However, McClain cannily takes the extra step. He personally prints out each sponsor's sales leads every couple of weeks and mails them off via postal "snail" mail with a quick handwritten cover note.

Why this duplicate effort when everything has already been emailed? "I find in our old fashioned world, a lot of time sponsors don't look at something until they get a hard copy."


After just 14 months in business, RetailWire's satisfied sponsors include Campbell's Soup, AC Neilsen, The National Grocers Association and Sara Lee Foods.

"We're not looking to take over the world with this thing," admits McClain. Although it is certainly a nice little business for three entrepreneurs who always dreamed of leaving the corporate world.

The BrainTrust now has almost 70 members, including a half dozen competing trade magazine editors. "The more enlightened publications agreed to be in the BrainTrust," says McClain. "We've got our own mission, we're not direct competitors. It gives them exposure and brings our readers the best analysis."

Roughly half of new visitors to RetailWire's home page wind up filling out the registration form which requires answers to some fairly detailed company and job responsibility questions.

This means that RetailWire's readership, while healthy, is still lower than that of a traditional magazine in the field (so far anyway).

McClain has no problem with this at all. "Unlike trade magazines, you know we're delivering. We weed out people who come and go without registering. It's a good thing to just send to people who have the most interest, it means they are really engaged as opposed to shot gunning an issue out to 50,000 people who may not be paying any attention to it."

McClain does not know if his business model will work for anyone else, but says it is a great barrier to competition in his own niche. Having business partners with 15+ years of experience working together in the field does not hurt either.

"There's a lot of work involved in putting the format together, and it doesn't fit anyone's template of how to run an online publication. Competitors can't make an exact copy."

Link to samples of a newsletter and a Campbell's advertorial:
See Also:

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