For the past few years most consumer publishers, besides a very few, have had to rely on the ad-based business model to make money online. For-fee content was just too hard a sell in a for-free world. But Consumer Reports, which has been famous for not accepting ads since it was founded in 1936, had no option but to find a way to get people to pay for content online. John Sateja, GM of Consumer Reports Online (CRO) told us how they've met the challenge.
First of all Consumer Reports decided to make a clear distinction between the content available online and that in the magazine. As Sateja explains, "Online is really more of a research tool. There are at least 4 years of archives from the magazine, plus the ability to search for information directly on all different products. We also have unique content such as our ratings for online shopping sites." This archived information is easily searchable in the manner an online encyclopedia would be. Except when visitors start to search, they are invited to pay $3.95 per month (or $24 annually) to become members before they can get results.
Such is the power of Consumer Reports brand name that about 40% of their new visitors are people who typed the name into a search engine or directly into their browser to see what's there. (The non-profit, which uses a .org URL, also bought the .com version and automatically redirects all traffic from it.) This fame is lucky, because as Sateja says, "We don't have a very large marketing budget." The organization spends $20 million a year on research and only $1 million a year on marketing and PR.
PR has been major component in the Consumer Reports Online traffic-driving tactics. Sateja says, "Our PR firm Middleberg gets us in the press quite a lot. For example NBC Nightly News will regularly have Consumer Reports people talking about testing various products."
The organization has tested banners on content-specific sites such as "CarTalk", keyword buys on search engines and run-of- web campaigns through Flycast. They are also currently running a series of pre-recorded radio spots created by a small local agency, that focus on product ratings for the holiday shopping season and emphasize the ".org" URL.
Once visitors are converted to paying site subscribers, Sateja's team only sends accounts a single emailed renewal notice. He says, "Most print magazines have impressive long renewal series. We've decided we won't be that aggressive online. We're trying not to blitz online customers. I think the whole Web environment is much more sensitive to marketing campaigns than traditional media. So we are being very cautious about how we use email with our current subscriber base." Consumer Reports Online does offer an auto-renew option to new subscribers, but also sends these folks an email alert before the renewal takes place.
As of November 1st 2000, Consumer Reports Online boasted 494,000 paid subscribers, about 2/3 of whom choose the annual subscription option over the monthly offer. While Sateja isn't able to cite specifics, he does say, "We're quite pleased with our renewal rates."
Calming early fears of print cannibalization, Consumer Reports Online has a substantially younger demographic than the magazine does which accounts for the fact that only about 25% of online subscribers overlap with Consumer Reports' 4.2 million print subscribers. Sateja says, "Our median age for the magazine is mid-50s and for the Web site it's early 40s."
While Consumer Reports Online got a "reasonable click through" from its banner tests, Sateja says, "that traffic didn't seem to convert into subscriptions which is our marketing goal." As a result, the site ceased banner advertising over a year ago. On the other hand, so much traffic is coming from search engines, that the site is now in the process of an optimization program.
NEXT: Sateja admitted his personal goal is to get subscriptions up to the million mark. Given that they've risen by 30% since he joined the organization earlier this year, we have little doubt he'll succeed.
He is exploring opportunities in the wireless marketplace, but again these would be limited to non-ad based models, "We have to figure out that business model." Sateja is also keen on adding streaming video, "We already video things like auto- tests so we may as well figure out how to use that content and deliver it."
Most interestingly, Sateja has just signed a content distribution deal with CNET Networks that he hopes to repeat elsewhere. CNET's Computers.com and mySimon.com visitors can access summaries of Consumer Reports Guidebooks for free. Later they'll be entice to purchase digitally downloadable complete guides after they read the summaries. Qpass is enabling the transactions. Sateja says, "We're trying to accelerate our business development initiatives to establish relationships with other high profile companies online where consumers shop. They'll see Consumer Reports content and buy our ratings on a pay-per-view basis."
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