Sunday, April 1, 2001

25% of Content Websites are Profitable

According to ActivMedia Research’s “Success Strategies in Online Content Markets” report, one-fourth of today’s Online Content websites (comprising of media, portal, information and publisher sites) are profitable today. Intense competition from both online and offline sources may be squeezing these firms however, 29% expect to reach profitability next year.

As with all websites, experience is tied to profitability. Statistics show that 42% of Online Content websites that have been online three or more years are profitable. Their primary purpose is more to provide information (89%) than to sell products or services (79%) online.

In contrast to B-to-B or B-to-C e-marketers, Online Content sites generate a much smaller proportion of their total revenues from the sale of products and services (46%) and much more from advertising and sponsorship (52%). More than third (39%) derive revenue from sales of advertising, sponsorship, commissions or fees for product sales, promotion, or placing editorial content. The most important means for generating revenue among these sites is through paid links / buttons to advertiser sites and through E-commerce store hosting fees.

Only about half Online Content websites provide compensation to other websites for link exchanges. However, the most profitable sites are more likely to be engaged in these activities (71%). Compensation to external links most commonly takes the form of bartering for advertising space or click-though advertising.

VP of Market Research Harry Wolhandler comments, “Half of today’s Online Content websites were established online. This is larger than other B-to-C or B-to-B businesses. These sites are extremely active and receive a very large number of “hits” compared to other types of sites. On average, their sites receive 25,000 site visitors per week, half of whom are past visitors. These may be subscribers who return frequently to review new content. One-third of these sites change content daily and another third changes content weekly, much more often than other types of e-businesses. “Furthermore,” adds Wolhandler, “Online Content sites have a huge number of Web pages (average 905 pages), separate online businesses (average 7.4), and registered domains (average 11.8). These firms are very active online and committed to the Internet.”

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