CondéNet grows, strikes distribution deal with YouTube — CondéNet, the digital division of Condé Nast Publications is best known in the tech world for Wired Magazine and Reddit, the social news site with a sizable geek following. That’s all part of the company’s plan: It has been building and buying web sites that aim at particular audiences, and is building an ad network for them. The division now includes eight different sites, including larger sites like fashion site Style.com and food site Epicurious.com. See this in-depth piece in the Wall Street Journal for more.

The company is trying out new media distribution tactics. It has a deal with Google’s video-sharing site, YouTube, where CondéNet gives Google ad inventory that it doesn’t sell for its videos.

Traffic to its Web sites increased 16 percent in October to 9.4 million unique U.S. visitors from the same period last year, according to comScore Media Metrix. Year to date, revenue at CondéNet is up 49 percent year to date versus the same period last year, counting its core properties, 81 percent counting Wired and Flip.com.

 

 

 

 

Is CondéNet's Web Approach Paying Off?

CondéNet today plans to announce it has struck a deal to distribute videos from its various Web sites, which cover topics such as food and travel, via YouTube. It is the latest in a string of partnerships for the digital division of Condé Nast Publications, including deals with MSNBC and Yahoo.

 

Magazine publishers were slow to embrace the Web, and until recently, many magazine Web sites were bare-bones operations with limited audiences. More magazines are giving away their online content, putting pressure on them to figure out how to make money from their Web products.

 

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The bulk of magazine publishers believe the answer is to build separate Web sites for each of their print titles. Sarah Chubb, president of CondéNet since 2000, has taken a different approach: CondéNet has built Web sites based on topics, such as fashion and travel. Ms. Chubb believes this is the best way to expand the audience and the ad revenues. CondéNet, whose parent company is a unit of Advance Publications, now includes eight different sites, such as the food site Epicurious.com, the fashion site Style.com, and Reddit.com, a social news-aggregation Web site.

 

 

By some measures, CondéNet's partnerships appear to be paying off. Traffic to its Web sites increased 16% in October to 9.4 million unique U.S. visitors from the same period last year, according to comScore Media Metrix. Year to date, revenue at CondéNet is up 81.8% versus the same period last year. (That number includes revenue from Wired.com and Flip.com -- neither of which figured in last year's figures. Stripping out those two sites, CondéNet revenue is up about 49% year to date versus the same period last year.) That comes amid a strong year for Web advertising in general -- online ad revenues for the first nine months of 2007 were up about 26%, to $15.2 billion, according to the Interactive Advertising Bureau and PricewaterhouseCoopers.

 

With revenue and circulations steadily dropping on the print side of magazine businesses, digital publishers such as CondéNet have their work cut out for them. Web revenue for magazine companies is about 5% of their total revenue, says Martin Walker, chairman of Walker Communications, a magazine-consulting company. "While [online ad revenue] is growing quickly, it is not replacing lost print revenue," he says. "None of them can compete on the Web in terms of traffic."

Ms. Chubb has worked in new and traditional media for more than 21 years, starting as an account executive at Elle magazine in 1984. Below are excerpts from an interview where she talks about the company's latest partnerships and its strategy moving ahead.

 

 

Wall Street Journal: How are your content deals structured?

Sarah Chubb: We do not pay to distribute our content. It is generally a no-cash exchange. The trade-off is that we get distribution.

WSJ: How does the YouTube deal work in terms of the advertising piece?

Ms. Chubb: We have the right to sell the advertising. There is a revenue split, as there always is with Google. If we are not able to sell the full inventory, it goes into the Google system.

WSJ: Are you finding that the advertisers that traditionally advertise in Condé Nast print magazines are the same brands that are advertising with you online?

Ms. Chubb: Our list of top advertisers matches up pretty closely with the Condé Nast advertising list of advertisers.

WSJ: How have you managed to grow your revenue for the year by 81%? With new advertisers? More spending by existing advertisers?

Ms. Chubb: A little of everything. Growth from existing advertisers and a lot of new business.

WSJ: Condé Nast still, of course, operates Web versions of its print titles -- how do those fit into the big picture for you?

Ms. Chubb: Their main purpose is a consumer-marketing purpose, a connection for the consumer to the brand. The reason for those sites first and foremost is renewing and selling subscriptions.

WSJ: Is the ad-network strategy one you plan to pursue?

Ms. Chubb: We actually were one of the first companies of our type to get into an advertising relationship with a blogger, the Sartorialist on Style and Men's Style. Right now, the idea of a vertical advertising network is very interesting to us. We actually have some activity going on in that area, but it is also the trend du jour. So you are probably going to see a lot of announcements about things like that. Not all of them are going to succeed.

WSJ: Is the market for sites based on specific topics, such ad food, fashion and travel, saturated now?

Ms. Chubb: I don't think that the market is saturated at all. We are looking at lots of different categories all the time. We are also investors as well as acquirers of other businesses. I am looking for growth. If there is a category we can get into by starting something new, like we did with [teen site] Flip, then we will. If there is a category we can get into by buying or investing in something that is adjacent to a category we are in today, we will consider that seriously also.