Investment information site TheStreet.com is putting more and more of its eggs in the advertising basket. Like some other online financial publications, such as The Wall Street Journal Online, TheStreet is making changes to its sales force, diversifying content and media formats, and in turn, attracting dollars from a whole new set of non-endemic advertisers.
It’s all in the hopes of garnering more online ad dollars, which some say is a more reliable revenue stream than subscriptions, especially when media distribution is making all content much more easily — and freely — accessible. According to chairman and CEO Thomas Clarke, who spoke Thursday during a Kaufman Brothers conference, the company is poised to earn 52 percent of its revenue from advertising in 2008.
Last year, said Clarke, TheStreet got 70 percent of its revenue from paid subscriptions and 30 percent from advertising. In Q2 of this year, 37 percent of its revenue came through ads, with subscription revenue comprising 58 percent and syndication and licensing dollars making up the remainder.
Extending coverage beyond dry investment-related content into areas such as entrepreneurship, politics, real estate and business travel is part of TheStreet’s ad growth strategy. “We want to provide broader-ranged content to our audience, and services to our advertisers, across a full range of distribution platforms,” said Clarke in July. “This strategy is grounded in our desire to expand beyond the world of just stocks, bonds, and ETFs, and become a destination for everything related to money,” he added.
The Wall Street Journal Online has expanded its content coverage beyond financial and business news into information intended to appeal to a wider audience as well as better attract search engines. The just launched “Entrepreneur” section, for instance, broadens content covered by the former StartupJournal.com site, in part to attract more advertisers; initial sponsors include Mastercard and Dell.
The publisher also launched an autos section geared towards car buyers and enthusiasts earlier this year, and recently made changes to integrate its sales staff across print and digital media. “We have launched a number of free offerings over the past two years to drive traffic and sampling of Journal content and drive new paid subscriptions,” noted Wall Street Journal Digital Network Spokesperson Christine Mohan, who referenced new blogs, video content and podcasts added to the site.
TheStreet, which has bolstered its ad sales team in the past year, boasted a record 93 advertiser clients during Q2 of this year, up from 75 in the first quarter. New advertisers like Holiday Inn and Blackberry were among the site’s growing pool of non-financial advertisers, which provided over 200 percent more ad revenue than non-financial advertisers did in Q2 2006.
Holiday Inn is currently sponsoring TheStreet’s business travel section with video-enhanced display ads. The site also switched its “Wall Street Confidential” podcast to an ad-supported model through a Continental Airlines sponsorship this year.
Since the acquisition of Wall Street Journal parent company Dow Jones by News Corp, there have emerged rumblings regarding the potential for The Wall Street Journal Online to ditch subscriptions altogether. In a weekly newsletter, Lehman Brothers analyst Doug Anmuth wrote, “Although the company has not suggested a move to free is imminent, we believe the option will at least be seriously considered.” He added that ad payments generated by financial news are “among the highest CPMs for display advertising.”
Lehman estimated about 54 percent of WSJ.com’s revenue will be derived from advertising this year, with the remaining 46 percent coming from subscriptions.
“Putting something behind a subscription wall, especially online, makes it difficult to gain a critical mass of subscribers and maintain a critical mass of subscribers,” Kaufman Brothers Internet and digital media analyst Sameet Sinha told ClickZ News.
“We believe it’s critical to expand our audiences by growing our paid subscription base, while at the same time introducing free features like blogs and video that extend the conversation beyond our sites,” Mohan told ClickZ, adding, “Our hybrid model enables us to maximize revenues while serving as a buffer against the cyclical nature of advertising.”
TheStreet, however, is pushing ads for that very same reason. Commented Clarke during the firm’s Q1 earnings call, “I think if you really look at why we have a multi-tiered model, we anticipated the fact that you had these cycles in the subscription business.”
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