December 14, 2001
"We started in May 1999, and I don't remember the rest of the year," Gene Ely Publisher Media Life Magazine says, "these things are really hard to do." In this Case Study, Ely shares some of the hard lessons he learned about how to run a profitable online publication, including how online editorial is very different from print editorial, how to hire affordable journalists who work well in an online environment, and how to sell B-to-B ads online. If you work for a trade publishing company, or you dream of launching your own content site someday, this is the Case Study for you.
"We started in May 1999, and I don't remember the
rest of the year," Gene Ely Publisher Media Life Magazine says,
"these things are really hard to do."
Ely's a true journalism old-timer (he started as head copy boy at
the Washington Post years ago). The entrepreneurial bug bit him
when he launched Inside Media, a print trade magazine, for Hanson
Publishing in 1989. But he didn't have the then-requisite
millions to launch his own magazine, so he put his dream on hold
until a decade later, when the Internet revolution seemed to make
all things possible.
Ely had several advantages over the majority of online publishing
entrepreneurs. He is a highly experienced journalist, and he knew
his market's needs and desires inside and out. But he had never
sold an online ad in his life, nor did he have any experience whatsoever
with Web sites or writing for email.
The first thing Ely did was to contact publishers who
he knew and admired, such as Joe Hanson, for their advice on the
venture. Ely explains, "If they say, 'Don't do it!', that's the
advisor you want. That's someone who's been through it and knows
exactly how hard it is. I got wonderful advice on how to sell
ads. I credit my advisors with the direction I've gotten. They
were the brains behind much of it."
Media Life Magazine (although it's called a 'magazine' it's
online-only), requires lots of fresh content on a daily basis.
Ely then began to hire reporters to work for him. "I went out and
hired senior people at 60k, 70k, 80k, just like I would have done
in print where you hire the best people you can find. But that
doesn’t work on the Internet. In print it's in the context of a
much larger budget - you're running at $3-5 million a year and
2/3 of the cost are printing and postage, so editorial cost isn't
that big in the picture."
But Ely was starting with an initial investment of just $50,000
from his own personal savings, and editorial was the biggest line
item. He soon realized, "The trick to Internet success is to be
budget conscious. Not to stick with a lot of the conventions of
traditional publishing." So he dumped his expensive staff and
hired a staff of smart, talented kids who were almost all under
25. None of whom had j-school degrees.
Ely says, "I started them at 30k, which is a very good salary.
Not a great salary, but also not the 22k that an editorial
assistant can make in print. I give them bonuses when I can too,
but the biggest thing I can do for young journalists is to help
them. In newspapers you don't get trained. When you're working
with a small group, you're always going back and forth -- it's a
wonderful tutorial process. I give them chances to do something
in journalism that they'd have to wait 3-5 years to do somewhere
Ely hired his team though referrals - friends of friends. He
separated out the true go-getters by asking one simple question,
"Can you work by yourself from home?" He says, "That
automatically weeds out nine tenths of the people you don't want
to hire. Home workers tend to be fairly self-sufficient
personalities in my experience."
At the same time, Ely was discovering that to be successful
online, his publication's editorial voice had to be far more
relevant, targeted and even more personal sounding than print
journalism generally is. In trade magazines, once you get a
reader to agree to receive a magazine for a year, circulation
marketing's job is done. It's harder to win readers with the
plethora of online news sources, and almost impossible to keep
them voluntarily coming back to your site daily.
"You're always trying to connect with readers, to find out how
you can tailor to what they need. It's not corporate journalism.
It's much more related to serving readers. That's not a warm-
fuzzy statement. That's your job."
Ely continues, "People identify with the voice. They have to
understand the voice is real. That's the fundamental aspect of
Internet journalism. There's almost an anonymity to a lot of
print journalism. People from a newspaper background write
according to the conventions of journalism, rather than writing
for the reader."
He also learned an important lesson as a managing editor - that
when it came to Internet journalism it was as important for him
to have regular personal contact with readers as it was for his
reporters. He couldn't remain sheltered behind the editorial
front line. He had to track the true pulse of the marketplace
closely enough to make sure his daily stayed a 'must read'. He
notes, "We get voted on every day." If his daily email edition's
headlines don not convince readers to click through, he loses.
Typically there seem to be two different routes most B-to-B
Internet publishers take on the ad sales route. Group one
focuses on investing in a sales force that rocks. Group two
focuses on investing in must-read editorial. Ely falls in the
He figured if he could get the right eyeballs glued to his site,
that the ad sales would follow. "I want my advertisers to know
we've got a really good strong readership base."
He also decided from day one to charge by the month versus by
CPM. Advertisers were buying into the idea of reaching critical
decision makers in a marketplace, versus reaching zillions of
people. Ely deliberately set his rates to be lower than
comparable print magazines. He says, "That turned out to be a
good idea. Print advertisers didn't know anything about
impressions, but they did understand this ad costs so much a month."
Since launching in May 1999, he hasn not raised rates despite the
fact that his readership has grown. This means established
advertisers reap the benefits of their long-term association with
his site, getting a lower CPM every month.
Ely was able to line up a handful of charter
advertisers, so he has been in the black since the day he launched,
and he proudly says, "We've been in the black ever since."
His multi-month advertisers have included Time Magazine, Forbes
and The Economist.
His ad sales are helped by the fact that his readers are
unusually loyal. Most visit the site multiple times each week,
every week. He says, "They are faithful readers. That's what
advertisers want. They're interested in being in front of the
reader. If they think you've got them, they're going to
advertise with you. Humphrey Ralston of The Economist never
looks at click through rates. He's much more interested in
seeing an Economist ad in front of those eyeballs."
Many of Ely's advertisers have come from reader referrals. "Our
readers say to their media buying clients, 'I read this, it talks
to me.' We have a built in sales force." Because of this, he has
been able to survive without hiring sales staff, or even making
trips to meet media buyers in person. 90% of ads are sold via
email and phone.
Although 2001 has been a tougher year than expected, Ely is
excited about the opportunities a downturn creates. He advises,
"Try to be ahead of the recovery. Build yourself in expectation
of it. We know it's coming -- we don't know when but we want to
be in position when it does."
He adds, "I learned an enormous amount in this last nine months.
It was not a very pleasant nine months; it was tough, very
tough. But the online marketplace is very vital and it gets
smarter every day. We're now entering a period where online
advertising is coming into its own. The real value of the
Internet as a branding medium is becoming more apparent."
BTW: Interested in planting a story about your media organization
in Ely's daily? Learn how to in this profile that we recently
published in a sister MarketingSherpa newsletter.