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MarketingSherpa Email Summit 2015 - SAVE $700 - VIP PRICING ENDS THURSDAY
Jun 04, 2003
Case Study

How to Make a Niche Community Site Profitable; Plus 4 Ways to Market CD ROMs to Your Members

SUMMARY: If you market to mothers of young children, you will find some fascinating insights into the demographic in this story.

Also, if you have ever dreamed of quitting your corporate job and starting your own online publishing company for profit, you will be inspired by this story of a husband and wife team who are living the entrepreneurial life-style in Austin Texas.

P.S: Be sure to click on the link to creative samples at the end of Case Study, because their clean design is really lovely.
CHALLENGE

Unless you have had your head in a cave for the past five years, you will know that creative scrapbooking is the hottest hobby among North American women.

Andrea Steed of Austin Texas was swept up by scrapbooking fervor right after she married her husband Ben in the late 1990s, and decided to get really creative with her wedding albums. She looked for inspiration and tips online, but could not find much.

At the time Ben was a Web developer working for a non-profit site. The site was great, but cash flow was lousy. He had the feeling his job would not be around the long. The young couple began to kick around an idea: Why not support themselves by launching a really useful site for scrapbookers?

Ben says, "We knew it wouldn't take off unless there was a community aspect to it. It's a different kind of traffic. People are really involved, returning time and time and time again for advice, counseling and to see what other people think. We wanted to be the gatekeeper of a community so all links would point back to us."

He adds, "But at the same time I didn't want to be another run-of-the-mill community site with ten million of the same ads."

In January 2002, Andrea heard that a girlfriend of hers, who ran a small scrapbooking site as a hobby, was about to shut it down. The Steeds decided to purchase the site for a small sum and try to turn it into a going concern so they could quit their day jobs.

Now they just had to make it pay off.

CAMPAIGN

First Ben and Andrea reviewed their acquisition's assets.

It did not have loads of traffic, nor was the site designed up to Ben's highly professional standards (frankly few sites are). The Steeds decided it was not worth keeping the old site going, except as a traffic referral to an all-new one they decided to build at a different URL.

On the other hand, the site had about 1,000 photos in a gallery of scrapbooking ideas. Some photos came from manufacturers promoting scrapbooking products, but often the most inspirational photos came from a talented group of volunteer designers. These designers agreed to produced at least five new layouts per month in exchange for a bit of personal fame and new product samples from the manufacturers.

The Steeds figured that this constantly growing gallery was the killer app in the marketplace. They signed up even more designers (they now have a total of 25 volunteers).

Plus Ben built more functionality into the gallery. In exchange for registering (at no cost) visitors could not only view inspirational samples, they could also upload photos of their own scrapbook work and easily email their friends links to go look at them.

While he built the new site (which took just under four months), Ben did not want to divert energy keeping the old one going. He put a single page placeholder up where the old site had been. It simply asked visitors to enter their email address if they wanted to be notified when the all-new site with a new URL and brand launched shortly.

The new site, ScrapJazz.com launched April 1, 2002 featuring message boards, the gallery, and a monthly HTML email newsletter for members (link to sample below).

The Steeds sold two different sponsorships to support it:

1. Sponsorships to manufacturers

Makers of scrapbooking materials could get their new products featured in the monthly Spotlights section which dominates the ScrapJazz home page. Each spotlight includes links to:

- At least five photos in the gallery featuring the product in use by the volunteer design team
- An overview page with sales copy written by the maker
- A link to the maker's Web site

Because this is a passionate niche market, these sponsorships are perceived as highly valued content (rather than unwanted ads) by visitors.

"We're catering to the advanced scrapbookers, and the one thing the majority want is something different every month. They are never satisfied with the same scrapbook, they are constantly wanting to try something new," explains Ben.

For the first couple of months, the Steeds sold the sponsorships at rock-bottom prices because they were not sure how much traffic to promise. Then as the site proved itself, they have been slowly raising the price by about 10% per month, each month.

They use the facts that manufacturer sponsorships are limited to just four per month and that the site publishes much more quickly than similar spots in magazines, to convince sponsors to sign up.

2. Sponsorships to e-retailers

Although most community-sites are actually run as offshoots of an eretailer, the Steeds did not want to go into the eretail business themselves. They did not want to deal with shipping, warehousing, customer service and all the other hassles of being a store.

In the spirit of keeping things simple, the Steeds decided to focus on content and community, and to send shoppers over to a single separate eretail partner. The deal was the store would pay a steady flat monthly fee, plus 10% of all sales on traffic ScrapJazz sent it.

However, when the Steeds sat down to evaluate performance at their one-year mark this April 1st, the biggest content improvement they decided the site needed was more eretail partners. Now they run the program more along the lines of the manufacturing sponsorships; there are four featured stores per month.

Ben explains, "We knew our users would be a lot more satisfied with options. What these people really like is choice. They'll be willing to look at each months' four stores and see how they compare to their favorite store. It increases the reason for visitors to come back to our Web site so much more."

However, in these economic times, most sites can not exist on sponsorships alone. The Steeds decided to create a new content product to sell to their visitors: A $29 CD ROM featuring videos of various scrapbooking techniques.

"We ran a survey and asked them what they craved most, and we mentioned instructional videos and people heavily chose that option."

Ben had noticed site traffic always dramatically peaked just after the hour of noon in each time zone, and then again after 9 P.M. at night. He and Andrea put their heads together and figured out that site traffic was dictated by childrens' naptimes and bedtimes.

Mothers were putting their kids to bed, and running over to turn on the family computer to spend a few quality moments with their scrapbooking buddies.

The Steeds focused their sales copy for the new CD ROM on the busy mother. One ad headline reads:

Become a master of 14
popular scrapbook techniques.
(And do it while the kids are sleeping.)

They launched the CD ROM in March 2003 with its own ecommerce Web site, ScrapTutor.com, which links to and shares a common design-sensibility with ScrapJazz.

Aside from running ads, banners and links to ScrapTutor all over the ScrapJazz site and newsletter (see sample issue below), the Steeds also came up with four marketing tactics:

Tactic #1. Launching an additional email newsletter

As mentioned above, ScrapJazz already had a monthly newsletter. Its focus was in driving site traffic and highlighting site content. The Steeds decided if CD ROM sales worked out, it would be the first building block in a paid educational content division for them.

They decided that required a separate newsletter, one that pushed the ScrapTutor.com brand as an educational resource in and of itself. Each weekly issue features tips from Andrea on a scrapbooking topic. (Link to sample below.)

Interestingly, although the ScrapJazz newsletter features big ads for the CD ROM, the ScrapTutor newsletter is much lower-key. Instead of ads, it appears to be 100% useful content, with a few unobtrusive links to the ScrapTutor ecommerce site.

The Steeds decided against sending their registered site member list the new newsletter because those people had not asked to get it. Instead, they began to run marketing campaigns for the newsletter on the ScrapJazz site.

Cleverly, if a registered user was on the site, the Tutor newsletter offer box showed up with that member's email address already filled in. All the member had to do was click on submit to join the list.

Tactic #2. Contests

The Steeds tried to take advantage of the viral nature of the community to allow members to send friends links to contests to win a no-cost copy of the $29 CD ROM.

Tactic #3. One-week-only discount offer

The Steeds offered a 30% off discount during the first week of May in honor of National Scrapbooking Day on May 3rd. The CD ROM had been heavily promoted to site members for the past 60 days already, so they were not sure how popular the offer would be. On the other hand, they were well aware that their demographic is known to be very careful with money.

"These are the women who clip coupons to save a penny on a gallon of milk," notes Ben.

Tactic #4. Real-world club gathering giveaways

The Steeds are frequently approached by real-world scrapbooking clubs, known as "crop" clubs, who want them to donate merchandise as a promotion. Before they had not had anything to donate, but now with the CD ROM in hand, Andrea began a special Crop offer.

If a crop with 25 or more members approached ScrapTutor.com asking for a donated products, Andrea would send them one no-cost copy of the CD ROM to give out at their next get together, plus a stack of flyers with discount coupons to hand out as well. (Link to flyer art below.)

"It's kind of like an old fashioned quilting bee," notes Ben. "Instead of getting together to work on quilts, they work on scrapbooks. They will often stay at these things for up to 12 hours. It's prime time advertising for us. They really do talk about the CD ROM, our site, and the offer."

On one hand, it might not seem worth the work to provide special packets for small local groups across America, until you consider that what the Steeds are growing is a brand that over time may dominate a large hobby marketplace.

The goal is to become the beloved resource for the community;with support springing from a grassroots level.



RESULTS

"We've been among the few people who haven't suffered from the economy," says Ben. "It's been amazing. It's gone well for us." He and Andrea are now able to work full-time on the Web business from home, plus they have enough personal time left over to pursue other interests.

About 25% of site revenues come from manufacturing sponsors, 25% from eretail sponsors, and a solid 50% from the CD ROM. The nice thing is the flat-fee sponsorships provide a steady income that the Steeds can count on month-to-month. (In fact some sponsorships are sold out through December.) Then CD ROM sales are rich thick icing on top of that.

More details:

- 33% of old site visitors who signed up for a notification email wound up becoming registered members in the new site within 48 hours of the site launching. Although the Steeds really had not expected the traffic, it made a great springboard.

- From there, the new site's traffic spiraled virally far beyond the Steeds' expectations.

Ben says, "It's so viral it's unbelievable. My jaw dropped. When they found out they could upload layouts to the gallery, they cottoned onto it really quick. It [virally] hit all the email lists and message boards in every state and local community and everyone popped onto this thing."

- The design gallery now has more than 40,000 layouts in it, which is not only a great resource but also a clear barrier to competition.

- Adding a registered member's email address into the "subscribe" box, to get folks to sign up for the second list, proved hugely successful. An average of 44% of members seeing the offer on the site with their name already filled in went ahead and clicked "submit" to join.

- Typically 2% of email newsletter recipients purchase the CD ROM. Now, as Ben says, it is a numbers game, getting more enthusiastic hobbyists to sign up for the newsletter, and so on.

- During the 30% off discount week in May, CD ROM sales tripled compared to an average week's sales.

- On average about 10% of Crop attendees will redeem the printed discount coupon for the CD ROM. Of course a certain percent above that already own it.

Ben reflects that he still can not quite believe he is now making a healthy living by being, "in charge of a site for thousands of women who are mostly older than me." It is not the life he planned, but it is a life he has got huge passion for.

Passion is what really counts.

Link to samples of ScrapJazz newsletters and print flyers:
http://www.marketingsherpa.com/sj/ad.html

http://www.scrapjazz.com

http://www.scraptutor.com

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