Still intent on being a news source for all Internet-related information through its core site (www.cnet.com), CNET Networks is now pouring its energy into the online shopping arena with the expectation that e-commerce will become a major source of its revenue in several years.
"CNET tells me, `We lose a ton of money on news -- it's a loss leader,' " Chris Charron, research director, media and entertainment at Forrester Research, said during a presentation on Internet advertising in Chicago last week.
Mr. Charron recommended online ad buyers avoid news, chat and online community sites, which resulted in fewer click-throughs in a Forrester study than targeted niche sites or e-commerce sites. Where CNET brings in the bulk of its ad revenue, he said, is in its shopping area.
CNET plans to continue to provide consumers with general technology information and product reviews, but wants to play a big role in supplying information to retailers and manufacturers.
"We want to match buyers with products all the way back to the manufacturer," said Halsey Minor, CNET's founder and chairman.
Through its CNET Data Services operations, CNET is ramping up its business-to-business services by selling e-tailers a daily stream of standardized product description and specification information in multiple languages on more than 160,000 products.
CNET has closed deals with 40-plus technology product e-commerce sites, such as Buy.com and Cyberian Outpost's Outpost.com. Later this year, CNET plans to expand the information to include consumer electronics and office supplies, said Martin Green, senior VP-products and services.
"The possibility exists that we can supply product or catalog database information to all sorts of products, but right now our focus is on technology products and then consumer electronics and office supplies, which are logical extensions," said Mr. Green.
SWISS PURCHASE AIDS MIX
By acquiring a Swiss company with a proprietary database system to create online catalogs of product information, CNET has quickly become a major player in a category expected to grow, as large e-commerce sites outsource costly cataloging operations.
In February, computer distributor Ingram Micro turned over its online cataloging services to CNET Data Services, saving "a few million dollars," Mr. Green said.
Cataloging "in a universe of products that keeps changing, and in a market that's increasingly global," is a very costly enterprise, he said. "We've developed a system and a database to provide this on a basis that's proving very cost-effective to technology e-tailers."
So far there are no plans to connect the comparison-shopping site CNET bought in January (www.mysimon.com) with its product cataloging service, but Mr. Green said there "could eventually be a crossover" between MySimon and cataloging services, including selling information about a wide range of consumer products.
CNET isn't alone. PcOrder.com, for example, has marketed a similar online cataloging product, ContentSource, since early last year. CNET is competing directly with pcOrder.com for cataloging relationships with Web retailers.
PcOrder's stock plunged when CNET Data Services won the Ingram Micro licensing agreement for cataloging operations. PcOrder called the stock slide "a market overreaction."
"Ultimately we want to be the place consumers go first when shopping for any kind of product, and sellers and manufacturers will also turn to us for information about what consumers want in the way of products, to shape the marketing process," Mr. Green said.
$100 MILLION BACKS BRAND
CNET, which is in the midst of a $100 million, 18-month ad campaign, will continue to push its shop-here message to consumers. Its agencies include Leagas Delaney, for and Lot21 for online, both San Francisco.
Future plans for CNET Data Services include managing coupons, sweepstakes and rebates to online shoppers from manufacturers.
CNET's Mr. Minor earlier shifted CNET from a TV/online programmer into an Internet-centered business with CNET-produced TV, and more recently radio content, revolving around its Web ventures. For Mr. Minor, the move to online shopping is the next step in the company's evolution.
"We are a content company, and now we're applying the principles we know about content to the supply chain for online shopping, which will be huge," Mr. Minor said.
Contributing: Patricia Riedman