"The model here is of traditional publishing," said Lou Wallace, CEO and founder of Santa Ana, Calif.-based DMO, which targets creative and management professionals within vertical segments of the burgeoning digital media industry. Wallace spent many years as publisher of various Advanstar Communications Inc.'s print titles.
"We did something that's old-fashioned: building a real business and not just an online concept to lead to an IPO [initial public offering]," said Wallace, who nonetheless wouldn't rule out an eventual IPO for DMO.
"Historically, magazine-based Web sites have shoveled their print material online and have offered little extra value to either readers or advertisers," he said. "What we've done is taken offline brands and converted them into viable online communities."
DMO's central site, DigitalMediaNet.com, acts as an industry hub, connecting viewers to more than 40 vertical communities, including DigitalProducer.com, Millimet-er.com, DigitalAnimators.com and DigitalCAD.com. Each site is updated daily with editorial perspective provided by DMO's 30-person editorial staff.
With the company closely held, Wallace wouldn't offer any specifics but claimed that advertising revenue is on track to increase 500% this year, compared with last. He said DMO, which launched in April 1999, expects to turn a profit by the fourth quarter of 2001. In the meantime, the company wants to expand its services.
"DMO is able to separate itself from the rest of the [Internet] pack because it provides strong editorial content and in-depth coverage of digital media news," said Mike Savello, director of marketing for Media 100 Inc. Marlboro, Mass.-based Media 100 provides streaming media solutions and sponsors a few DMO sites, including DigitalVideoEditing.com.
Prior to DMO, "The only way to get information about our markets was through print or press releases. By focusing on content, he [Wallace] is focusing on quality," Savello said.
Janet Matey, marketing communications director for Matrox Electronic Systems Ltd., a Montreal-based video editing systems company that sponsors DMO's DVFormat.com, said: "Lou had the first site of any significance in the digital area. I find myself going to his site almost every day because of the immediacy of the news. As a marketer I know if I send him a release regarding the company it's going to be on the Web site that day."
In October DMO served more than 3.5 million page views, with more than 1.3 million visits a month to all of the online communities. User traffic doubled between the first and third quarters of this year, while page views tripled. DMO communities delivered more than 7.7 million ad impressions in October alone.
In another stark difference from many media-related Web sites, about 95% of DMO's advertising comes from brick-and-mortar companies. It has licensing deals with two traditional publishers, Primedia Inc. and Phillips Business Information L.L.C., and is seeking more. Content from Primedia and Phillips appears on DMO sites, while DMO ads appear in various trade publications of the two companies.
A recent Jupiter Research executive summary on licensing and syndication concluded, "most online content creators will never generate significant revenues from licensing. However, licensing agreements will provide essential value through incremental advertising, commerce and paid content revenue, as well as cost savings on marketing, distribution and promotion." The report added that direct online licensing revenues will grow from $126 million in 1998 to nearly $1.5 billion in 2004.
Wallace is unbowed by such a forecast: "We're well positioned. Like Yahoo!, we're where other companies want to be," he said.