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Jan 18, 2002
Case Study

How Bankrate Kept Online Ad Revenues Steady Despite the Economy

SUMMARY: Here's an inspirational story for everyone who's trying to sell ads online these days.When Elizabeth DeMarse joined in mid-2000, the Company was bleeding millions and then the ad sales marketplace fell apart. Hear how she turned things around. (Plus she's got a happy-ending Sept 11th story.)

You name the publishing trend, and Bankrate's been at the forefront of it. The Company [OTC BB: RATE.OB] was founded as a print newsletter publisher in 1978, just as the first wave of affordable PCs were about to inspire hundreds of do-it-yourself newsletter publishers launch.

In 1993, the original founder retired, selling the company to Peter Morse, one of the many investors who were swarming over the newsletter industry in those days. By 1995, Morse had a vision -- why not put the Bankrate's content on the Web for free?

At the time, almost no print newsletter publishers wanted to offer free content for fear it would cannibalize the subscription revenues they depended on. Morse went ahead anyway.

Bankrate had been pulling in one-two million a year in print subscription revenues. When it IPOed three years later, the Company raised $40 million.

Dazzled by their success, the management team followed the then common wisdom and broadened the Company's content focus by investing in a series of acquisitions and launches (a Spanish-language site, a TV show, a magazine, etc.), changing its name to, and spending $18 million on a TV ad campaign.

Suddenly it was late 1999, and the dot-com meltdown began.

The management team went shopping for a new CEO. They needed someone who both understood the Internet, and had serious business experience helping media companies grow in any and all economic climates. They tapped Elizabeth DeMarse who'd been on the management team that grew Bloomberg from $50 million to $1.5 billion in revenues.

DeMarse was just finishing up a stint launching a new division for another formerly small print publishing company, Hoovers. She says, "I couldn't believe it when I got the call. Bankrate is such a fabulous brand name. It was a competitor to Bloomberg, I'd watched it for an awfully long time. I was thrilled."

The stock market took a serious turn for the worse in mid-April 2000. Bankrate was bleeding millions in cash. Two weeks later DeMarse started at her new job as Bankrate President and CEO.


DeMarse notes her job had an element of simplicity at first, simply because she was new. She explains, "When you come from the outside looking in at what needs to be done, it's very obvious. You see things with great clarity, and internal politics are not an issue. I could take fast action and be very firm in my position."

And that she did. DeMarse slammed three of the recently acquired properties, which weren't profitable, back on the market. In almost every case she made back what the company had paid for them. (She says in retrospect, "I can't believe we were able to sell them! I didn't know how different the business environment was becoming.") She also discontinued the TV show and print magazine. The Company had been renamed Bankrate, Inc. in late 1999 when the management team began reaching for a new focus, now she was going to make that focus a reality.

DeMarse also stanched the Company's bleeding by rapidly bringing staffing levels back down to 110 from the post IPO high of 270; by "dramatically cutting" advertising, marketing and PR spending; and by cutting or renegotiating every contract the Company had. She says, "It was a very fast turn around. We were losing about $5 million the first quarter of 2000, and cash flow was neutral by quarter four."

Next she had to grow revenues, in a marketplace where ad sales were plunging.

1. Investing in People

Despite the fact that she'd just saved the day by chopping 160 jobs, as ad sales became more challenging, DeMarse started hiring again. She explains, "I'm a contrarian. We increased the size of the ad sales team by 50% in December 2000-January 2001. It's a huge mistake not to in a bad market. You need more people -- it's obvious."

She also invested in serious sales training, bringing in consultant Janet Ryan of Ryan/Whiteman in May. "She was fabulous."

2. Avoiding the Pay Per Acquisition (PPA) Model

If you want to see DeMarse get really passionate, ask her about the PPA model. "We're fighting that battle all the time!" She exclaims, "Forrester says we should get a cut on every transaction that goes through the site. The bank thinks, 'We only want to pay on the business that we say we've gotten from you.' Some leaders in consumer banks say, 'I will only do PPA deals.'

"We have to combat that. I'm not interested in supply chain integration. I don't believe in putting my revenue stream in my customer's hand. It makes no sense and it's extremely dangerous as a company." After all, no matter how great a job you do as a marketer sending qualified sales leads to your advertisers, they can still fumble the close -- or not have the systems in place to count sales properly.

So, DeMarse's sales team works hard to help clients measure campaign ROI. "We work with them very closely to make sure they are doing the best job they can to measure results."

3. Capitalizing on Events

Bankrate's editorial team worked with sales to create a series of "FedWatch" specials, whenever there were interest rate cuts.

DeMarse says, "You know when the Fed is meeting, so you do have some advance notice. We try and set it up weeks ahead of time. We've gotten better at that since we invented FedWatch earlier in the year. I think we had pre-sold the December call by early November. It's a dynamic process of introducing new products, educating advertisers about them, and finally they look forward to them."

4. Focusing on Quality of Traffic

When DeMarse cut the vast majority of advertising, marketing and PR expenditures in mid-2000, she was scared that site traffic might dry up as a result. But, she also realized the only traffic that was really needed was traffic that would click on advertisers ads, and then turn into great sales prospects. It wasn't about investing in quantity - it was about quality.

She says, "Now we study the quality of our traffic very carefully. We look at their click through rates, and which sites send us traffic that click through to advertisers. We cut back partnerships with big people with lots of traffic because that particular audience was not in what we call transaction mode.

"The best example is: I don't want to be on the front page of Altavista because too many teens are there. I do want to be in AOL Personal Finance because they are ready to be very serious about interacting with our materials."

5. Partner Evangelism

Next the marketing department switched focus from acquiring new traffic partners, to "partner evangelism" with the sites sending them the highest quality traffic. DeMarse says, "We have a team of people who do nothing but deal with existing partners on a very intense daily basis."

Which came in handy on September 11th. DeMarse tells the story, "Of course our traffic plummeted on that Tuesday. We immediately got on the phone with partners to ask what help they needed. As you can imagine, it was pandemonium at the portals. They needed relevant editorial as soon as possible. So, we had our news staff writing stories focusing on attack-related finance -- what to take with you if you're in a fire, what are your most valuable documents . By the next day they had generated 20 stories that we put in our partner's sites. By Friday we were up to normal traffic levels."

(Note, according to comScore, the average non-news consumer site took as long as six weeks to recover completely.)

Then the sales team swung into action. "They literally called every single one of our 400 advertisers advising them that we were still in business, still getting traffic, and their ads were still being viewed."


In 2001, Bankrate added more than 100 new advertisers and held online ad sales revenues steady in a time when that was a nearly impossible feat.

Despite cutting marketing, traffic more than doubled and the site, now averaging three million unique visitors per month, is now the #1 most visited in its niche.

The Company isn't profitable quite yet. But DeMarse was able to take it from losing $5 million a quarter to a negative balance of just $300,000 for the last reported quarter. As the economy picks up, she's confident this will tip into the black. In the meantime, thanks to cost cutting and selling off acquisitions in the nick of time, Bankrate now has more than $7 million in the bank to keep it going strong.

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Janet Ryan
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