A Breath of Fresh Air

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When interior design student Melissa Cohen decided the time was right to have a child, she acted fast. Cohen, who lives in New York City, was already 38, and statistically her fertility was decreasing at a rate of 2 percent each year. One day, as she was searching for design information on the Web and watching TV, an advertisement for iVillage, the woman's network, came on the tube. Cohen left her research project behind for the moment, and typed in the iVillage URL. She navigated through the site until she found a page on fertility offering tons of information on ways to increase her likelihood to conceive. "It was great information that I really needed," says Cohen. "And even though I'd heard of iVillage before, I don't think I would have clicked on the site if the ad hadn't come on."

"Convergence" not only describes Cohen's multitasking, TV-watching, Web-surfing behavior, but defines a high-tech concept that almost every media company is obsessing about these days. One of those is Oxygen Media, which rolled out a Web site in May and plans to launch a television network next year. "Women live converged lives already," says C.J. Kettler, the president of sales and marketing for Oxygen Media. "We go from a meeting to a cell phone call, from the school nurse to checking our e-mails." That's why the minds at Oxygen believe the time is right for their ambitious millennial plan to deliver the undertapped women's market to advertisers. "We'll drive women from our television network to the Web, and back again," says Kettler. And once set-top boxes roll out, making it possible to watch television and surf the Web through one screen, Oxygen will have all the pieces in place to be what Kettler calls a converged brand.

In February 2000, the Oxygen cable network expects to launch with an initial presence in 8 million homes. By 2001, the company says it will reach 20 million homes, putting the new channel in position to go after a share of cable advertising revenues, including the $340 million that Lifetime netted last year. And as with all convergence ventures, Oxygen is betting on a chunk of the profits from the forthcoming e-commerce bonanza to be a large part of the mix.

"We're looking to create deep relationships with only a few partners -to take advertising to the next step with true comarketing relationships," says Kettler. These relationships, she says, will encompass television, online, and grassroots marketing efforts, and depend upon research generated from Oxygen's "convergence lab." When true convergence arrives, advertisers will be armed with research from the lab to help them turn the television sets of Oxygen's audience into virtual buying machines.

Sounds great, but there would have to be some pretty powerful minds behind a project like this to make it float. Of course, that's exactly what Oxygen has. Foremost is Geraldine Laybourne, who grabbed the attention of kids and delivered the tykes to advertisers when she transformed Nickelodeon into the ratings powerhouse it is, and who was voted one of Fortune magazine's 50 most powerful businesswomen. Partnering with Laybourne are Oprah Winfrey, who has signed on to show reruns of her talk shows, and Marcy Carsey, whose television production company has been responsible for such hits as The Cosby Show and Roseanne.

Still, Oxygen faces more than a few hurdles. Its success depends on paying a hefty price for space in the crowded cable landscape. While Laybourne has said she'll be able to pay cable providers between $1 and $4 per household, according to Jason Helfstein, an equity researcher at investment bank Schroder & Co., Oxygen may have to shell out as much as $10 a subscriber-13 times more than Lifetime currently pays. But with Disney and America Online holding equity stakes in the company, and plans to invest $400 million raised by Morgan Stanley over the next four years, the high price for access to people's homes may not be a concern.

Oxygen's success will also depend on how soon the female romance with the Web heats up, and on whether Laybourne's media mix is the right one to light the fire. After all, she is a Web newbie. In fact, early reaction to the Web site's launch has been lukewarm: "I'm a little underwhelmed," says Lisa Allen, a senior analyst at Forrester Research, who says the site offers little to distinguish itself from competitor iVillage, which boasts the largest number of unique visitors to a women's network -4.1 million a month, according to Media Metrix. Other competition includes women.com, with 3.8 million unique visitors a month. So far, Lifetime's Web site doesn't present much of a threat: The site only hosts 275,000 visitors monthly, though the cable network reaches 72 million homes. In April, Oxygen says its sites attracted 3.5 million unique visitors. Still, some observers say that Laybourne has some catching up to do. "Oxygen has an uphill battle. And we don't have a taste of their programming, yet, either," says Diana Holman, president of WomanTrend, a Washington, D.C.-based market research company.

But the battle is clearly worth it: Women make up slightly more than half the population and control the majority of household spending. "Women are shoppers, and I'm not just talking flats and pumps," says Forrester's Allen.

Women control 85 percent of all personal and household spending decisions, and make 75 percent of their family's financial decisions, according to the Women's Consumer Network. And they are the principal drivers of 49 percent of all new cars bought, according to J.D. Power and Associates, a Chicago-based automotive research company. Forty-six percent of women are decision-makers in terms of technology purchases, and 42 percent influence such purchases, according to Forrester. "They are also a growing audience of influential online consumers," says Allen. "The percentage of women online will go from 29 percent today to almost 49 percent in 2003."

That's something advertisers like Procter & Gamble have taken note of. "A lot of P&G products are targeted at women and the Web offers a way to have two-way communications with them," says spokesperson Gretchen Briscoe. While P&G's 1998 Web spending amounted to a paltry $4.4 million, compared to the $1.3 billion the packaged goods mammoth spent on television, its online dollars are growing fast-doubling in the last year. "I think that fact speaks to how important we feel the medium is," says Briscoe. "But, we still have a lot to learn about how and where to reach women."

Of course, where the Web is concerned, everyone's on a learning curve. While various research shows that more men are online than women -34 percent versus 29 percent-the good news, according to Forrester, is that women are embracing the Internet at a faster rate. But Forrester also finds that 56 percent of women- versus 40 percent of men -are "technology pessimists," meaning they are less likely to adopt new technology. This isn't necessarily a detriment, according to Ekaterina Walsh, a Forrester analyst. But some women will need more coaxing to get online. "Women's sites need to tout their ease of use to attract users," she says.

Women online are not only less likely to buy, but they also spend less: 40 percent of online women make purchases, compared to 60 percent of men, and the average amount women spent in 1998 was $313, or 24 percent less than the average spent by men, according to Jupiter Communications. Concerns about security may be one reason why women are less likely to pull out the virtual plastic and charge: A slightly higher percentage of women than men believe that the Web is not secure (53 percent versus 49 percent), according to Forrester. So, says Walsh, security should be emphasized when pitching women.

But before marketers gain women's trust, Web sites need to lure them in. Television is clearly a boon, if not the ticket. "Having a powerful traditional media presence is very important," says Cindy Dale, vice president of interactive at BBDO New York.

In addition, says Allen, "Cable will be increasingly important in the future because it will have an all important back channel for e-commerce." In other words, women will be able to send messages back to advertisers through cable-attached set-top boxes-messages containing their orders and credit card numbers.

If that happens, Lifetime appears to be well positioned-not only for the new world of convergence, but for good old-fashioned television. And catching up will be tough. "Channel capacity is so tight on cable systems that it's extremely difficult to launch a new service," says Derek Baine, a senior analyst at Paul Kagan & Associates. "Advertisers aren't usually interested in placing ads on a cable station until there are 20 million subscribers." Baine is not convinced that Oxygen can lure advertisers by dangling a Web site in front of them. After all, most television networks already have Web sites.

Still, the industry perception is that Lifetime is a little tired-the average age of its viewers is smack in the middle of the baby boom: 43.5. The network dubs its programming inspirational and aspirational, and its schedule is filled with shows about women overcoming terrible odds and afflictions.

Oxygen's programming will target women "who feel good about themselves," says Kettler. While Laybourne bristles at comparisons between her fledgling media venture and Lifetime, she has said that Oxygen's viewer/user will be more active. The implication, of course, is that Oxygen's audience will be younger and more desirable, and more likely to log on to the Web.

Lifetime has yet to do much more with its Web site than use it as a kind of glorified program guide. Oxygen has other ideas. "Unlike other media companies, from the get go we're developing a converged brand," says Kettler. "We won't have to retrofit our cable brand to the Internet."

Of course, magazines can also drive traffic to Web sites. Women.com, which is partly owned by the new media division of Hearst Corporation and benefits from the link to its portfolio of magazines, boasts almost as many unique visitors as iVillage. Ultimately, when the set-top box arrives and all roads to the Web originate with the tube, the absence of a television partner may drain the purses of women's sites. "It's very expensive to go out and buy all those ads to drive people to your Web site," says Baine. "If you have unsold [television] inventory to drive people to your site, it's much cheaper."

Unsold inventory is something Oxygen may have plenty of when the network launches. But what else has it got going for it? Thus far, hype and promise-promise of enticing a younger, clickier, and more future-oriented demographic to the network. And then there's the vision thing. In an Oxygen manifesto, Laybourne invokes true believer digital and millennial language. And the predominant generation cited in her research package is X-no accident that X is the letter that resonates in the word Oxygen.

Still, with so little known about what Oxygen will really deliver, why has there been so much anticipation? As Forrester analyst Allen puts it, "Oxygen is living on the promise of more things to come."

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