'The Onion' transforms satire into big success

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Peter Haise replied with a laugh when asked if he could send a picture to run with a story about the evolution of his satirical newspaper, The Onion.

"All I have is a picture that floats around the office of me dressed up as a slut--I'm naked from the waist up," said Mr. Haise, president-publisher of Onion Inc., the newspaper's parent. "But I could send you a different photo."

The 31-year-old is more concerned with cultivating The Onion, an 11-year-old newspaper, than getting his mug in print. Launched in 1988 by Madison, Wis.-based writers with a yen for the absurd, The Onion is a free weekly distributed in Chicago, Denver, Madison and Milwaukee as well as in Barnes & Noble and Borders bookstores across the U.S., and circulated nationwide via subscriptions.

The newspaper spawned a best-selling book, "Our Dumb Century," released in March, and will launch a second book, "The Onion's Finest News Reporting, Vol. 1," next spring.

In August, Westwood One began syndicating an Onion feature on 45 radio stations nationwide. A magazine based on The Onion is slated to launch next year.

SMALL-TOWN HUMOR CATCHES FIRE

But it's the Web site that has catapulted the small-town humor rag into a thriving enterprise.

"The Web site is the driving force for all our business now," said Mr. Haise, who slam-dunks basketballs into a regulation-size hoop in his office to fight stress.

The Onion is an example of an online brand that started as an inspired idea not necessarily crafted to make money, but one certainly boosted by the Internet boom.

"That's what the Web was designed to do: effectively lower the barriers to entry so that thousands of individuals and companies could enter," said Dan Miller, VP-advisory services at consultancy Kelsey Group. "Out of them, some were bound to succeed--[the Web] was the ultimate incubator."

WHEN THE ONION IS JUST ONION

The Onion launched its Web site (www.theonion.com) in 1996. It acquired rights to (www.onion.com) from Synergistic Networks, an Internet company, this month to pick up misdirected attempts to find it. The newspaper's circulation is about 200,000; the site that is updated every Wednesday--Onion Day to readers--gets 500,000 unique visits and more than 4 million page views a week, Mr. Haise said.

The Onion culled a limited but loyal following. But the Web site provided the national distribution and exposure it needed to attract a slew of new readers and advertisers.

"We always found the most success [by] creating the shortest distance between our product and our customers," Mr. Haise said. "Our goal was to get The Onion in front of as many faces as we possibly could. We'd had challenges getting The Onion on already crowded newsstands, and the Internet presented an exciting opportunity for bucking the traditional distribution system."

LAUNCH DONE VERY QUIETLY

"We eschewed interactivity to begin with," said Mr. Haise of the site's early days. "And we in no way promoted the launch. We didn't want to be in your face. We wanted readers to feel as though they were discovering the product, which always makes them feel closer to it and, potentially, more loyal."

The plan was to carry that customer loyalty to advertisers.

"[Our] success outside our thriving newspaper business has brought us closer to the advertising community," which, he said, has "directly related to the popularity of our Web site."

Mr. Haise said 20 marketers are advertising on The Onion's site during the fourth quarter. The cost per thousand impressions generally falls between $10 and $30.

Its model has been to keep CPMs low, Mr. Haise said.

"Since our traffic has increased so dramatically over the last two years, my philosophy was to sell out the inventory and then worry about raising the rates," he said. "I thought the more advertisers we had on the site, the more it would attract."

ALL MEDIA IN 1 POT

The Onion lets advertisers put badges and text links on its front page and buy run-of-site banners. It offers combination Web and newspaper buys and sponsorship of "Onion Radio News," its syndicated feature.

Those buys have attracted big advertisers, including American Express Co., Encyclopedia Britannica, Rolling Stone, Tickets.com and Warner Bros.

And Onion Inc. plans ad sales offices next year in New York and California.

"If a service that starts out to attract and build a certain group of people hits a harmonic, there wouldn't be a reason why it

wouldn't snowball and become a magnet for advertisers and start to look like a business," Mr. Miller said.

The Onion also has gone from selling only Onion-branded merchandise from its online store to selling nearly 90% of its subscriptions online. It's also expanding its affiliates program and offering links to advertisers' e-commerce areas to boost banner packages and sponsorships, Mr. Haise said.

Annual revenue is reported at $4.5 million and venture capitalists are knocking on the door. But is Mr. Haise worried about selling out, or worse--giving up the fun of running a start-up when money wasn't the issue?

"Believe me, it's a lot more fun to be doing this when you're making money at it," Mr. Haise said.

Copyright October 1999, Crain Communications Inc.

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