While most b-to-b media companies wrestled for advertising dollars during the economically challenged first quarter of this year, TechTarget was enjoying robust growth. On May 6, the company reported its first-quarter financials, highlighted by a 30% increase in total revenue.
Some of the growth was due to added revenue from the KnowledgeStorm acquisition that closed during the first quarter, and some was a result of four new site launches. However, the ultimate driver of TechTarget's growth was a fundamental shift in b-to-b advertising, said Greg Strakosch, TechTarget chairman-CEO.
Marketing dollars “are moving offline to online, from nonmeasurable to measurable and from broad to targeted,” he said. “Because of that shift, the tail winds propelling our business are stronger than any macroeconomic head winds we may have to weather.”
While none of these trends is new, “this shift is happening at an accelerated rate,” Strakosch said. “We grew our online revenue 38% in Q1. I don't know how much the IT market grew in Q1, but ad budgets obviously aren't growing 38%.”
TechTarget has been a pioneer and leader in lead-generation programs for b-to-b marketers, but “our branding business is really booming as well,” he said. “The bigger players who are more interested in branding are realizing they are behind in the way they are allocating their ad dollars versus how the audience is consuming media.”
In the IT market, Strakosch said, “there are things happening that aren't economically sensitive, and they are also fueling our growth. One example is compliance. The regulators aren't going to give you a pass because the economy is bad.”
The company is also benefiting from companies' efforts to cut costs during challenging economic times. “Businesses are driving efficiency in IT through server virtualization, data center consolidation and power conservation, so our online data center business almost doubled in Q1,” Strakosch said.
On May 14, TechTarget announced the launch of its 50th Web site, SearchSMBStorage.com. “We already have the dominant storage site in the market, SearchStorage.com,” Strakosch said. “SearchStorage.com is focused on enterprise storage, but SearchSMBStorage.com is for small and midsize companies who are looking for different solutions.”
The SearchSMBStorage introduction followed the debut of a pair of sites that represent another TechTarget milestone. Launched in mid-March, SearchStorage.co.UK and SearchSecurity.co.UK are the first sites outside the U.S. to be operated directly by TechTarget. Other international sites were developed through partnerships with local companies.
“You'll see us being pretty aggressive in international expansion,” Strakosch said. “We're focused on the U.K. right now, but you'll see us going into other English-speaking markets and, eventually, you'll see us going direct into non-English-speaking markets.”
The capital to fuel its growth initiatives is the result of yet another TechTarget milestone: In May 2007, it started trading on the NASDAQ exchange as a public company.
“We were able to raise almost $100 million and really strengthen our balance sheet,” Strakosch said. “It allowed us to do things like launch 10 new sites and our first international sites.”
It also provided capital for the acquisition of KnowledgeStorm, a vast library of IT white papers and other vendor content. TechTarget paid about $52 million of the $58 million purchase price in cash.
The acquisition will give TechTarget a head start in introducing new sites in markets where KnowledgeStorm is strong. “Our site model consists of independent content, peer-to-peer content and vendor content,” Strakosch said. “KnowledgeStorm will absolutely accelerate our launches into new segments because we will already have an archive of vendor content. It will also help us scale more quickly because we will already have an audience and we will be seasoned in the [search engine] rankings.”