June 24, 2005
Case Study

How a Niche B-to-B Database Publisher Sells Online Subscriptions With a Free Web Site

SUMMARY: If you're in specialized information publishing, this Case Study is a must-read. Niche B-to-B publisher IDES tried offering 14-day trial subs online ... only to fail dismally. Instead of giving up, they tried an even more radical approach -- offering unlimited open access to content online. Hundreds of thousands in profits later, here are their tactics, test results, and creative samples that worked.
CHALLENGE Since its founding in 1986, database publisher IDES Inc. has focused solely on technical and engineering data sheets for plastic resin buyers and related engineers, manufacturers, and distributors. It's a niche market with roughly 10,000 companies involved.

At first IDES was extremely excited about Web as a new publishing venue in addition to its line of reference books and CD ROMs. From a product perspective, electronic was far easier to search than print, and younger resins buyers seemed to prefer Web to print. Plus, IDES hoped Web marketing would be more cost-effective than relying on direct mail, print ads, and telemarketing cold-calling as they had in the past.

So, in 2002 they launched a new site home page focused on online subscriptions. The hard offer headline read:

"Prospector Express 39,000 Plastic Materials 390 Global Suppliers Product Sourcing Feature Only $49.95 (Per license, Per year)"

But, new sales did not come pouring in. Undeterred, in 2003 Director of Marketing Nathan Potter decided to try testing a softer offer based on what he saw at other online subscription sites. The new headline read:

"About IDES -- One Source. Plastics Data. IDES is the worldwide leader in plastics data management solutions for buyers and suppliers of resin. [click link:] Free Trial -- Prospector Plastics Database." Then, figuring active searchers were the perfect people to sell a searchable database subscription to, Potter invested in Google AdWords and Overture campaigns to drive traffic to this offer.

Luckily, he was in such a noncompetitive niche that resin-related keywords averaged 12 cents per click. So Potter was able to generate tens of thousands of clicks to the site without breaking the budget.

A "significant number" of these visitors signed up for the 14-day free trial ... but conversions were depressingly low. "People would sign up for the trial and never actually use the product because Prospector Pro requires some training, and they were just overwhelmed."

On the other hand, Potter was encouraged by the fact that he had a strong renewals from current customers who averaged $500 a year each in subscription fees to various Prospector database search functions. "We were successful at upselling all of our products to current customers," he notes. "Where we were struggling was to get new customers in the door, and we were hungry to grow our business and revenue stream."

CAMPAIGN Like many subscription-based trade publishers, IDES had never sold advertising. But then two different resin manufacturers contacted them asking to sponsor anything online that would be in front of resin buyer eyeballs. It was hugely tempting to grab the money, but "we didn't think displaying ads in Pro was ethical."

Then the team had a brainwave -- they knew they could bring tens of thousands of resin buyers to the site fairly cheaply using search marketing. Why not capitalize on that traffic by serving ads to them while continuing to test conversion tactics to turn more visitors into subscribers? At the very least, it would pay for the marketing tests.

Step #1. Create a free site section with enough content to generate page views for ads

How do you figure out which content should be free and which paid? The team decided to slice their service by exclusivity. "The market has a need to reference plastics data sheets. They can see those for free on manufacturer sites. But it takes time and search engine experience to locate data sheets on those sites," explains Potter.

So, the team decided to make its searchable database of thousands of collected data sheets free-access to registered users under the brand name X5. The Net-surfing timesavings would hopefully be worth the bother of registering for access, even though the marketplace perception was this content could be found elsewhere for free.

The paid portion of the site had much the same content -- but it was enormously enhanced by key functionality.

"What people pay for are powerful functionalities including search and custom data displays -- comparing materials is a biggie. Pro includes sophisticated search functionalities such as 'Alternatives,' 'Auto specs,' 'Property search.' Each helps to save a significant amount of time and uncover material options that customers may never have been able to consider if they'd used the free service alone. Alternatives Search, for example, helped one buyer save $600,000 a year."

Step #2. Start selling ads

"Quite frankly we were scared to death of moving into an ad-based revenue model," says Potter.

First the team put together a target list by asking current subscription and site license clients in the manufacturing community who to contact in their marketing departments. "We also looked at who was advertising in trade publications since those folks already understood the value of advertising."

To pick pricing and packages, "we looked hard at other models both inside and outside the plastics industry. We wanted to start small -- easier to have affordable rates and increase price with demand -- and we wanted it to be easy." The team ruled pay per click out because they worried the market was too niche to generate enough revenue that way. Plus accounting and managing PPC sales isn't worth the work for smaller vertical sites.

Instead, they decided to make advertising online as simple a decision as possible by offering manufacturers an easy-to-launch package that included ad design and custom landing pages featuring lead generation forms pre-populated with registered user contact info. Pricing was one flat annual fee, so IDES wouldn't have to dedicate a sales rep to continually managing and selling low-ball accounts. Options included:

-- standard banners $5,000 -- run-of-site skyscrapers (very long vertical banners) $7,500 -- Keyword-driven skyscrapers $10,000 -- Search result page icons $3,500

In addition, once the site launched a member email newsletter (link to sample below), existing advertisers could add a sponsorship for $1,000 per monthly issue.

Step #3. Drive traffic to the free site section

Now that he had an income stream, Potter ramped up his paid search ads to add in more networks, such as Enhance Interactive (formerly Ah-ha) and Looksmart. Plus, he grew the list of search terms he advertised under to almost 3,500 terms on Google and more than 2,000 on Overture.

How? In addition to intense research and results tracking, he used a combination of broad match, phrase match, and negative match tools to increase the list without risking nonqualified clicks. "We use negative keywords heavily because for plastics terms like Nylon, we don't want to appear when someone is searching for stockings or pantyhose," he explains.

Aside from search, Potter also tested:

o 1/2 page four-color ads in three trade magazines for three months straight o Ads in the trade's email newsletters o House ads in IDES print books (about 10,000 copies sold per year)
o Text line plus the URL at the bottom of each page of the books o Viral tell-a-friend messages scattered liberally on the site and in email messages to current users (including the Welcome message)

Step #4. Get as much traffic as possible to register

Potter decided early on to make the free site open to registered users only because that was the only way he could provide valuable contact data to his advertisers and his own in-house subscription telemarketing staff. With help from the in-house development staff, Potter used three specific tactics (link to creative samples below):

o Special free site section home page

Although the free site section is a part of IDES' site, Potter designed it as a marketing campaign landing page. Currently best practices in landing pages include focusing visitor's attention on a clear message, removing navigation and links to other parts of the site, and keeping copy short for free offers to indicate the decision is a "no-brainer."

o Revamp main site home page

IDES is a very well known brand name, especially for older executives in its niche. Potter assumed many of them would come directly to the company home page. He wanted to convert as many of these as possible, so he removed the paid subscription offers and product information from the center of the home page and instead used the space to focus 100% on the free offer.

Paid subscribers and book buyers could still find content they wanted by using smaller text-links at the bottom and very top of the screen. But the eye of the typical visitor was focused on nothing but the free offer with no other distractions.

Key -- Because his marketplace is heavy-duty Google users, Potter consciously eschewed typical text-heavy information site design for a super-clean look. The copy, from a B-to-B publishing marketing standpoint is shockingly brief (fewer than 20 words including headline and button copy) and the graphics are enormous.

o Redesign registration forms for maximum effectiveness

Like many marketers, Potter assumed that if a prospect clicked to accept a valuable free offer, they'd be willing to fill out a form asking for name, contact, and a little industry information. So he asked the Web team to post a typical registration form on the site.

It was boring-looking and a bit long, but Potter assumed if they bothered to click this far, they'd probably fill it out. No such luck. Only 1.83% of visitors who clicked to the registration form completed it.

Over the next 18 months, Potter tested two successive page revamps trying to bring that conversion number up by adding peppier graphics, cutting the very long page into a series of shorter, easier-looking pages, and repeating benefit statements throughout.

Step #5. Test more subscription conversion tactics

Potter decided to keep the 14-day trial offer but with a twist. While the trial would be promoted online, no prospect could start their trial without chatting on the phone to an IDES rep first. That way, the rep could give them a critical bit of training on and education about the uses of the tools before prospects were set free to try them out.

While Potter handed his reps leads from registered member files, he was well aware that other B-to-B sites, such as Hoovers, heavily promote in-bound calls to get those red-hot leads the moment they are truly red-hot. So he designed all promotions on the free site section to drive as many phone calls as possible.

The promotions used a basic three-step sequence (link to samples below):

o Put icons next to search results indicating there's more valuable info available.

o Link these to a landing page offering a quick Flash demo of the paid product.

o End the demo with a big bold phone number to call.

Then, Potter used viral marketing again during the trial itself by proactively encouraging trials to share their user names and passwords with co-workers. Was he worried that would create a culture of intellectual property violation? Nope. The goal was to get as many evangelists and potential subscribers in a company as possible during one individual trial. That way sales had a better chance of landing a multiuser license at the end.

However, IDES' software team set up tracking and alert reports on the backend so Potter would know if any paying user was sharing his or her password without permission. Which in the end he also hoped would lead to upsales.

RESULTS "I was just talking to one of our salespeople," says Potter. "He told me about someone who signed up yesterday for the free site, and today he called in and bought a $1,500 license to Prospector Pro. The most interesting thing is that the service uncovered this buyer and brought him to us. Our guy said to me, 'If I made a million cold calls, I never would have found him.'"

In fact, the sales team only landed one new account out of 600 cold calls they conducted in October 2004 -- a .2% close rate. However, during the last 90 days, they've closed 52.4% of the hundreds of trial leads generated from the free site.

In terms of driving traffic to the site, print ads failed (although Potter is careful to remark they're great for brand building, just not direct response). Smaller search engines also didn't pan out for his niche audience who prefer Google and sometimes use Yahoo/Overture.

On the other hand, viral tactics worked full-throttle, and the text links in print editions were a solid success. Potter is also very upbeat about sponsoring trade magazine's email newsletters, although he's careful to send to each of them only three times a year to keep list performance high enough to warrant the media buy. (Again, a branding campaign would merit many more sponsorships, but Potter's budget only allows for immediate response, and IDES' brand awareness is already high in the industry.)

The registration form redesigns helped bring up visitor-to-registrant conversions from 1.83% at first, to 6.35% for the first revamp and 7.37% conversions for the second revamp.

Next, as registered members use the search function on the free site, about 6% of the time they'll click on an icon to learn more about a value-add search IDES offers. 74.7% of these folks then click from the landing page to view the Flash demo. And 13.3% of Flash demo viewers wind up converting into hot leads by contacting IDES to request the 14-day trial.

Although Potter couldn't reveal his paid ad sales for 2005, back in launch year 2003 the team sold $108,000 worth of sponsorships to manufacturers and things have only heated up since then. "Manufacturers were eager to switch to online campaigns as their print campaigns were tough to track, and if they did track with a specific 800# or URL, the results were dismal."

Notably, by November 2004 100% of 2005 ad spots were sold out for IDES' member newsletter, which goes to its opt-in list of 14,000 registrants. The team is now taking reservations for 2006.

Useful links related to this article

Creative samples including screenshots of registration form tests and the Flash demo: http://www.marketingsherpa.com/ides/study.html

Free site section: http://x5.ides.com

Main home page: http://www.ides.com

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