For TheStreet.com, their chief revenue generator in the past has been a subscription model. Now they're increasingly moving toward an ad model to drive revenue growth.
The company says they want to reach the "mass consumer market" more, and so are adapting their content for that purpose.
With the financial and business content market being extremely competitive, it looks like thev've stagnated in growth, and responding accordingly.
What to learn from this
While the financial and business market is one of the most lucrative, as far as advertising goes, it is saturated with content online and in print, and seems to be becoming increasingly difficult to solely rely on.
I wouldn't drop a subscription model if it's working, but I would do something similar as TheStreet.com in growing my online business.
That's one of the reasons Rupert Murdoch isn't dropping the subscription model for the Wall Street Journal. He can continue to open up some content to grow the advertising side of it, while at the same time being able to count on a significant, predictable income on the subscription side. There's no reason to choose between the two, so he is instituting a hybrid model: a smart move in my opinion.
Why they're doing it
So why is TheStreet.com making this move? I'm not asking that question only for the purpose of making more money, that's obvious. We want to know what the underlying factor is, so we can take it and use it in our online businesses.
The reason is because subscription revenue can only grow so far. Subscription implies a niche market; a targeted group of people which once having reached critical mass, has really no where to grow. While there's nothing wrong with this strategy, if you want to drive more revenue than the subscriptions are bringing in, you've got to change your model.
What they want to accomplish
* Change dry investment-related content* Ad dollars from non-financial advertisers
* Focused on reducing poorly monetized pageviews
* Becoming less reliant on subscription revenues
* Attract an even more diverse group of advertisers
* Increase non-IAB standard ad inventory such as custom sponsorship opportunities
* Run form-based ad units on its site
Steps they've taken
Relaunched TheStreet.com
Relaunched Stockpickr.com
Started Mainstreet.com - Mainstreet.com is a Web site build around pop culture and celebrity news which is blended together with financial news to create a more entertaining and interesting content site.
Acquired Promotions.com - Provides TheStreet with a technology platform for content management, consumer registration, e-commerce and advertiser promotions intended for lead generation purposes.
Will it work?
It has a good chance in my opinion. While they won't get the type of targeted traffic and quality advertising revenue they did with solely financial and business ads, they will drive more revenue through increased traffic and revenue per thousand impressions (RPMs), which increased by 31 percent in the fourth quarter of 2007 over the fourth quarter of 2006.
They also say ad revenue for 2007 increased by 44 percent over the 27 percent increase of 2006. Over 50 percent of that came from non-financial advertisers the company said. Most of that advertising growth was driven by Auto, travel and technology advertisers.
Revenues for marketing services for 2007 were 41 percent of overall revenue for the company, an increase over the 30 percent over 2006 numbers.
What to learn
The overall premise of the strategy of the company, is to include content which will drive more traffic. While people like to ravage someone like Rupert Murdoch by saying he downscales the quality of content, the truth is people want to have this type of content included and mashed together with meaningful content.
In other words, they want to get needed information while being entertained. Dry content alone won't drive huge traffic in and of itself. While we like to think it will, the truth is it doesn't. This doesn't mean there isn't room for those that offer extremely targeted content, just that once it reaches a critical mass, no matter how large or small, there's really nowhere else to go.
It's at that time we have to make a decision on whether to enlarge our content to go beyond our core customer, or remain where we're at.
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