How to make billions, literally, from online publishing

By David Eedle |

Mark Glaser has a terrific interview on Media Shift with IDG Publishing Chairman and Founder Patrick McGovern. IDG is a tech publishing business with $3.2 billion in revenue last year, and a network of 450 web sites. IDG has been transitioning a lot of content from print to online. Online now accounts for 48% of revenue with a goal of 50% by 2010.

McGovern gives the example of InfoWorld, that has moved from print to online, and revenue is up 10% overall. Whilst they’ve lost some income from advertising, the significant drop in expenses – printing, distribition and so forth – makes up for the loss and more. IDG has shifted other publications including editions of PC World to online.

However, it’s a market-specific decision, he gives the example of India where 3% of people have internet access and print is hot.

One aspect I found fascinating is how IDG leverages its content and audience (40 million visits a month) to charge companies for sales leads. This is apparently a major part of their business, and adds a whole new dimension to a content driven web site:

With lead generation through webcasts and white papers and with other techniques, we generate a nice profile of someone who’s really in the buying process for a product. And we try to describe for a client the next logical step in the buying process. We can then survey the leads after two or three months. We can find out, for instance, if we gave them 500 leads and found that a third of them bought a product in May, and that means $660 in total profit per average lead. And if we’re charging them $100 per lead we can go to them and say, ‘We’re giving you $660 in cash profit and you’re only paying us $100.” So we’re doubling our price to $200 and aren’t finding real sales resistance.

The interesting thing about leads is that we’ve been able to double the income per lead by demonstrating its profit contribution to the client.

This highlights how some lateral thinking about your content, audience and online properties can yield significant revenue opportunities.

McGovern says online advertising makes up only 3 or 4% of their annual growth rate of 35% to 48% over the past three years.

Since we focused on cost-per-lead (CPL), we’re getting much higher revenues. About 50% of our growth is from price increases and 50% from volume increases, so at a time when most people are having difficulty retaining price integrity, we find that we don’t need to discount because they show the economic value of the lead.

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