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Ziff succeeds by scaling back Web strategy

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When Ziff Davis Media said earlier this month that it was folding its stand-alone Supersites covering security, storage and wireless into a redesigned eweek.com, it was only its latest zig in a zig-zagging Internet strategy.

The company has gone from front-runner (launching ZDNet, a pioneering and ambitious, broad-scaled Web site) to laggard (not controlling the online rights to a large chunk of its print content and falling well behind traditional competitors such as International Data Group and CMP Media).

Now, rather than trying for a ZDNet-like grand slam on the Web, Ziff Davis is opting for an Internet version of small ball, developing targeted initiatives such as Webcasting and subscription newsletters. So far, the scaled-back strategy is generating some success.

"It was definitely a challenge," said Jason Young, senior VP-general manager of Ziff Davis Internet. "Every reader that we captured, every new advertiser, we had to take from someone else."

In the second quarter, Ziff Davis boosted its online revenue to $4.2 million, up 55% from a year earlier. Those numbers, however, are a far cry from the astronomical figures associated with ZDNet at the height of the Internet bubble.

Trading as a tracking stock, ZDNet, which was part of what was then known as Ziff-Davis Inc., had a market capitalization of nearly $4 billion in early 1999. The following year, Softbank Corp. shed Ziff Davis, selling ZDNet to CNet Networks Inc. and its print publications, such as PC Magazine and eWeek, to a private equity fund run by Willis, Stein & Partners. Under the terms of the deal, Ziff Davis Media, the name of the new company owning the print publications, was required to supply content to ZDNet even though it was now part of a competitor, CNet.

"They had this great brand name, ZDNet, which they didn’t own, which is bizarre," said Seth Alpert, managing director of media investment bank AdMedia Partners.

Through legal wrangling and negotiation, Ziff Davis Media eventually regained control of its content for use on the Web. By that point, however, the company had to play a serious game of catch-up with its tech media rivals.

Ziff Davis responded by spending. "They threw a lot of money at it," said Jeffrey Dearth, a partner at media investment bank DeSilva & Phillips. "They were building a lot of things from scratch."

Two advantages Ziff Davis had in launching its new strategy was experience and the benefit of seeing which initiatives by its rivals worked and which didn’t.

Ziff Davis’ stand-alone Supersites, which were intended to provide in-depth content in vertical market segments, emulated TechTarget’s network of targeted sites, such as searchstorage.com.

Industry observers say Ziff Davis is a leader on the Web in paid newsletters and Webcasting. For example, the publisher launched a paid subscription newsletter called "MicrosoftWatch," in which veteran tech journalist Mary Jo Foley covers Bill Gates, Steve Ballmer and company.

"This is a unique play Ziff is trying," said Sam Whitmore, editor of mediasurvey.com. "They won’t say how many subscriptions Mary Jo Foley has, but they do have people paying, some very influential people in the business."

In the Webcasting arena, Ziff Davis offers eseminars.com. Michael Rivet, senior marketing manager of Intel Corp’s. LAN Access division, was happy with the 15 or so e-seminars his division has done with Ziff Davis. Rivet is especially pleased with the editorial commitment Ziff Davis makes to produce the Webcasts.

The Intel e-seminars have attracted 1,400 to 1,700 registrants and 550 to 700 attendees. "We’ve seen extremely good results from Ziff Davis," Rivet said.

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