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12/03/2001

SearchEngineWatch - Story of a Profitable Paid Subscription Web Site 

CASE STUDY

CHALLENGE: Danny Sullivan, now arguably the most famous search 
engine marketing journalist on this planet, started out as an 
ordinary consultant. Back in 1996, he added a section to his 
consulting Web site called, "A Webmaster's Guide to Search 
Engines." 

By mid-1997 the section was getting serious traffic. Sullivan 
says, "People kept referring to this site and the information. I 
realized I really wanted it to stand alone." He also wanted to 
credibility a separate site would bring when approaching sources. 
Executives who wouldn't give the time of day to an ordinary 
consultant, would happily agree to be interviewed by a trade 
publication journalist. 

So, Sullivan moved his site section onto its own domain -- 
searchenginewatch.com -- which quickly grew so popular, in part 
due to a promotion on Eric Ward's URLWire, that Internet.com (now 
INT Media) purchased the site along with Sullivan's services as 
editor, just a few months later.

However, Sullivan's site was different from the rest of 
Internet.com's fast-growing collection of sites in one key way -- 
from the start Sullivan decided to charge for subscriptions. 

CAMPAIGN: As Internet.com's network of sites grew, 
SearchEngineWatch gained traffic from intra-site links. Sullivan 
also proactively sought out links on other sites relating to the 
subject. He says, "I continually did online networking. I'd go 
to search engines to look for terms I thought were important 
(ideally I'd find a million relevant search terms), see what 
sites were coming up under them and email the sites, 'I've got a 
great search engine site, I see you have a page on the topic. 
Would you add a link to me? I've already added a link to you.'"

Sullivan adds, "The guilt thing works. You give a link before 
you request one. It's fair, it's nice." 

He also began to get a lot of mentions in the press. Often 
reporters would first learn of him from the search engines 
themselves. "That's very common in PR. Obviously reporters 
don't want to just talk to companies, you want third party 
perspective, and I would get referred by some of the search 
engines." Plus, whenever he saw a search engine-related article,
he dropped a note to the author, offering his services as a 
source for future articles. Pretty soon Sullivan was one of the 
most frequently cited sources in his field, which in turn led to 
more coverage because reporters are an incestuous lot and tend to 
borrow each other's sources.

While this sounds like an easy way to build site traffic and 
credibility, Sullivan cautions that it can be a time-suck. He 
says, "Be prepared to spend two-four hours a week talking to 
reporters. Often you're dealing with people with no background, 
so you have to do a whole lot of education, bring them up to 
speed." He also notes that it's important not to pitch your own 
site too much during the conversation -- reporters strongly 
prefer to talk to sources who are not overtly using them as a 
platform to sell something.

Sullivan had two goals for his site traffic. The first was to 
get new visitors to sign up for a free subscription to his 
monthly newsletter. The second was to convert monthly readers 
into paid subscribers to his biweekly news service. 

Unusually, instead of plastering the site with free subscription 
forms, Sullivan simply added a sign-up box at the very bottom of 
each free content page. He explains, "I feel that when people 
come to a page they're there for a specific activity -- to read 
the article -- then when they get to the bottom of the page, 
there's the form telling them to sign up for the free 
newsletter."

When Sullivan first started offering paid subscriptions in 1997, 
he simply asked readers to make a voluntary donation of $5. He 
says, "By the end of half a year maybe four people donated." At 
the same time as he was surfing the Net, he was upset to find 
sites that had lifted his articles wholesale. "I was working so 
hard to update information!" To stop the thievery, he 
immediately slammed up a password-protected barrier around his 
archives and best in-depth articles, which only paid subscribers 
could access. 

Although the barrier, "was to protect content a bit more rather 
than to explicitly boost subscription sales", suddenly 
subscriptions went rocketing upwards. Sullivan had discovered a 
key secret to selling online subscriptions, "People only want to 
buy things when they have the buy things. People won't do it 
until they absolutely have to do it."

At first he set his price "really low" at less than $15 per year, 
and then raised it every couple of months in four dollar 
increments. "I watched it really closely to see what happened as 
I took it up." During these tests, Sullivan discovered another 
key secret to selling online content -- sometimes higher prices 
can work far better than ultra-low ones.

He explains, "We found the higher price put more value into it. 
Something at $34 was more valued and sold better than something 
at $19!"

Currently the price is at $89 per year. Sullivan also added a 
half-year price, now $59, because he recognized some of his 
readers were currently researching the topic but not involved in 
search engine marketing as a full-time job. He likens that part 
of his business to wedding magazines, which only keep subscribers 
for a sure time period.

Paid subscribers get access to all back-issue archives, as well 
as a biweekly newsletter with many more in-depth articles than 
the free monthly has. Sullivan uses the free monthly and free 
articles posted on his site to push paid subscriptions. 

He says, "There are significant differences in paid versus free 
articles. The paid is twice as long. For example last month I 
posted a series on how to submit to Yahoo. At the bottom of the 
free version it says, 'That's the basic stuff, but it would 
really behoove you to read the three-part gigantic guide [in the 
paid version] to do this correctly. It will help you to do this 
and that, etc.' They realize the wealth of information they get 
if they subscribe."

In addition to selling subscriptions, INT Media also sells ads on 
the free version of the newsletter. This became so successful 
that the Company hired an additional editor to turn out a free 
SearchEngineWatch daily newsletter with more ad slots, which 
launched in May 2001. 

Plus, in November 1999 the company launched a SearchEngineWatch 
live conference in San Francisco. This did well enough that four 
regional events in San Francisco, London, New York and Dallas 
followed in 2000, and six events sold out in 2001 with Boston and 
Copenhagen being added to the locations list. Next year 
Australia, Germany and other locations may also be added. 
Tickets sell for $795-$895, and sponsorships and exhibits range 
from $500-$9000. 

RESULTS: Alan Meckler, CEO INT Media gave us the following 
estimated figures on SearchEngineWatch:

Free monthly newsletter subscribers - 195,000
Free daily newsletter subscribers - 13,000 
Daily site pageviews - 40,000
Paid annual or six-month subscribers - 5,000

Meckler says he expects the number of paid subscriptions to rise 
substantially now that his Company finally has the technical 
capability to offer automatic renewals. He says, "Now renewal 
rates are up, and the number of subscriptions increases on a 
weekly basis." 

Sullivan notes that the free monthly newsletter at first picked 
up about 4,000-5,000 new subscribers per month, then tended 
toward 3,000-4,000, and now has been in the 2,000-3,000 range for 
some time as the marketplace has been more thoroughly penetrated. 
He says about 2/3 of paid-version subscribers go for the full-
year option, and 25-40% of new subscribers say yes to the auto-
renew option in return for the benefit of locking in the lowest 
rate for the lifetime of their subscription. 

Sullivan's advice for other publishers considering selling 
subscriptions to online content is, "You're paid publication had 
better offer some value they can readily understand. We have 
testimonials, and we have a guarantee that if you don't like it 
tell us within 30 days and get your money back. (I think maybe 5 
people a month do it -- it's a naught percent.) Also you have to 
have a credit card system. PayPal is ridiculous; it's a recipe 
for fewer sales if you don't you let people use something they 
have at hand. Overall, the main thing is if you're confident in 
your content, then you should be confident enough to charge for 
it." 

Both Sullivan and Meckler agree that the conferences have been 
the killer app to make this property more profitable. Sullivan 
says, "It's amazing! In Boston in March 2001, when dot-coms were 
really doomed, we must have had 500 people packing the halls. 
Search engine marketing is coming into its own." 

Meckler notes that these events are highly profitable because 
they are marketed through ads to current email subscribers, 
rather than by direct postal mail. He says, "Before when I was 
running MecklerMedia [former owner of Internet World shows], 35% 
of every dollar that came in went out on direct mail. Now less 
than 5% of every dollar goes out on promotions because we have 
such large email inventory to promote with."

The online advertising sales lull is affecting INT Media's other, 
mainly free-access sites, so Meckler is carefully studying the 
subscription and event model that's proven profitable for 
SearchEngineWatch and applying it across many other properties. 
Learn more in our exclusive interview with Meckler next week…. 

http://www.searchenginewatch.com
http://www.urlwire.com
http://www.internet.com

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