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service, in August.; INTERACTIVE MEDIA & MARKETING THERE'S NO PLACE LIKE HOME; HEARST AND NOVO MEDIA POUND ON THE FRONT DOOR OF A $260 BILLION MARKET

By Published on .

Call it the war on the homefront.

Publishing giant Hearst Corp. and upstart rival Novo Media Group are out to shake up the market for new-media products aimed at people who love to putter around the house and garden.

Hearst in August will unveil HomeArts, a CD-ROM/online service linked to its shelter and women's magazines. One-year-old Novo, meanwhile, is working with the new Home & Garden Television cable network on LivingHome, also a CD-ROM/online hybrid.

Unlike existing home CD-ROMs bearing straightforward names like "3D Home Architect" and "Garden Encyclopedia," the new products are meant to connote a certain lifestyle and establish a sense of community among users.

They're also meant to attract more women-and, of course, advertisers.

"HomeArts is the exclusive place for Hearst magazines related to the home," said Kathryn Creech, general manager of the Hearst unit. "We believe strongly that having those brands will be a powerful incentive for folks who haven't been into the new media to move into the new media."

Hearst will launch the online portion of HomeArts in August, creating a Web site that will tie in with its Good Housekeeping, Redbook, Country Living and portions of Popular Mechanics. In the fall, HomeArts will release its first two CD-ROMs, "Country Living Style" and "Great Gardens," the latter based on Country Living Gardener. The discs will enable users to connect directly to the online service.

Material from Hearst's Colonial Homes, House Beautiful and Victoria will be added into HomeArts later. Popular Mechanics already has a more technology-oriented Web site at http://www.pm.com.

Novo, with offices in San Francisco and Minneapolis, has a head-start on its larger rival. A LivingHome Web site was scheduled to open late last week at http://hgtv.com/livinghome/, featuring information about future LivingHome products, an invitation to join a product testing panel and a series of hypertext links to other online gardening resources.

The first CD-ROM is due out Oct. 1. The quarterly discs-including four hours of full Internet access as well as access to a private LivingHome online service-will be sold at retail for $9.95 each or by subscription at $40 per year, significantly cheaper than existing CD-ROMs in the category.

"We're trying to change the model," said Novo CEO-Publisher Kelly Anthony Rodriques. "We're trying to make the value go up and the price go down."

In an ironic twist, Mr. Rodriques is the former VP-marketing of Books That Work, a publisher of home and garden CD-ROMs in which Hearst acquired a minority stake last year.

To keep consumer prices low, Novo is aggressively courting advertisers. Toyota Motor Sales USA last week became the first charter advertiser, and Frigidaire Co., Levi Strauss & Co. and AT&T are close to similar deals.

LivingHome is selling 10 category-exclusive sponsorships for $68,000 per year, plus production costs. Advertisers can sponsor sections of the disc and create hypertext links from the CD-ROM to their Web sites.

Novo also is creating Toyota's Web site, expected to make its debut this fall.(See related story on Page 26.)

"We think it's a great product," said Drew Sievers, account supervisor at Saatchi & Saatchi DFS Pacific, Torrance, Calif., agency for Toyota. "What they're trying to do is make advertising have some value."

Hearst is negotiating with several marketers to advertise on its service but hasn't yet signed any deals, Ms. Creech said. Online ads will range from $5,000 per quarter for a simple listing to $100,000 for marketers that want to have Hearst create and manage a product database. CD-ROM ad prices range from $25,000 to $50,000 per disc.

Hearst also may sell packages that combine interactive ads with ads in its magazines.

Books That Work is not involved in the initial CD-ROMs from HomeArts. Those projects are being handled by Mammoth Micro Productions, Seattle, and Sonic Enteractive, Washington.

The Hearst and Novo products will take advantage of a booming market. A recent survey commissioned by Rodale Press' Organic Gardening found that 78.3 million U.S. adults gardened in 1994, up 28% in just three years. Home improvement superstores like Home Depot, HomeBase and Builders Square all are growing rapidly.

E.W. Scripps Co.'s Home & Garden Television, launched in January and now reaching 6.5 million homes, estimates Americans spend $260 billion a year in and around their homes.

Home improvement and gardening are a small but growing category of CD-ROMs as well. A year ago there were 20 home-related titles on the market; today there are nearly 60, said Ann Stephens, president of PC Data, Reston, Va.

The major name in the market is Books That Work, a Palo Alto, Calif., company that has put out 15 discs in nearly three years, all focused on home design, home repair and gardening.

Meredith's Better Homes & Gardens has issued three CD-ROMs in the past year in conjunction with Multicom Publishing, Seattle. Hachette Filipacchi Magazines is developing discs based on its Home, Elle Decor and Metropolitan Home.

Gardening and home design resources are popular online as well.

Time Inc. operates the Virtual Garden as part of its Pathfinder Web site (http://pathfinder.com), Hachette offers a version of Home on America Online and Meredith will soon announce that BH&G will build a home for itself on one of the commercial online services.

What Hearst and Novo are trying to accomplish goes far beyond the current crop of stand-alone discs and online resources.

"3D Home Architect," a top-selling product from Broderbund Software with a retail price of $95, will sell well under 100,000 copies, industry experts said. Others in the category are lucky to sell half that number.

Novo, by comparison, is guaranteeing 100,000 subscribers in its first year through distribution agreements with computer marketers, Baby Bells and Internet service providers. Hearst is building HomeArts on a foundation of magazines that reach 17 million readers a month.

Hearst's Ms. Creech said competition in the field "will encourage more entry," adding, "We are all chasing a relatively small market."

Mr. Rodriques, a newcomer trying to make a splash, is more combative.

"This LivingHome product far surpasses HomeArts," he said. "It delivers a strategy to the advertiser that Hearst does not understand .....They're trying very hard to lean on their old brands."

The competitive friction also is obvious in the assessment of LivingHome by Stuart Gannes, Books That Work's publisher-CEO. Mr. Rodriques left Books That Work in April 1994 after clashing with Mr. Gannes over marketing philosophy.

"Nobody will make a profit producing an online service combined with a CD-ROM in 1995," Mr. Gannes said. "It's too early."

Books That Work operates its own site on the Web, at http://www.btw.com/, and will be a content provider for the upcoming Microsoft Network. But it has yet to link its CD-ROMs directly with an online service.

Whether the hybrid model will bear fruit for Novo and Hearst will depend on each company's ability to attract and retain consumers year-round.

"With gardening or home improvement, there are seasons for these things," noted Julie Schwerin, president of multimedia consultancy Infotech, Woodstock, Vt. "In the summer, we'd be out gardening. We wouldn't be online chatting about it."

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