February 2004

Inside Jupitermedia
 
While Alan Meckler publicly rants about the future of technology trade shows, a “brain trust” of editors, analysts and IT professionals quietly builds an online media powerhouse.
 
By Cathy Chatfield-Taylor

If Alan Meckler’s Web log produced a sound, it would very likely be that of his own horn blowing. But then, he’s the first to admit, he likes to make noise.

In a typical post on Nov. 5, 2003, two weeks before the debut of cdXpo, Nov. 17–20 at

the Mandalay Bay Convention Center in  Las Vegas, Jupitermedia’s chairman and CEO predicted the future of information technology (IT) trade shows, writing, “The future is cdXpo (now called Enterprise IT Week) and not the possible continuation of Tumbleweed shows (Comdex, CeBIT and Techx-PC Expo). This Tumbleweed trio are not long for this earth.”

The day after cdXpo closed with a disappointing turnout of 4,300 attendees and 54 exhibiting companies, Meckler was contrite. “I was provocative in my comments about the ownership of Comdex and what they were doing, and some people in the industry got offended by it,” Meckler says. “Too many people got caught up in that. Enterprise IT Week was an experiment. It’s not the company.”

The real story, he says, is Jupitermedia’s global reach — 21 million unique visitors to the company’s internet.com network in a typical month, with nearly 35 percent from outside the United States. “That gets lost in the noise I make on the blogging,” he says. “We’re a powerful news organization that has this great reach around the world.”
The Darien, CT, company employs 285 very smart people to run theinternet.com,EarthWeb.com,DevX.com andArtToday.com networks, which generate more than 275 million page views monthly. A cadre of editors and freelancers refreshes the online content daily and publishes nearly 200 e-mail newsletters, fueled by expert field reporting from IT professionals and Jupiter Research’s 40 analysts in 14 vertical markets.

Jupiter Events spins off conferences and expos that bring these online communities face to face. As the hands-on manager of this division, Meckler exercises his true talent: identifying the next big thing. He has a knack for spotting growth markets with rapid change — a combination that’s perfect for a growth trade show.

“You have to go into it with the idea that 50–60 companies participating, if you get the right ones, would be a blowout success,” he says. “The thing is, focus is the key.”

Jupitermedia’s willingness to test ideas in vertical markets has helped the company survive and thrive. Projecting $59 million in revenues for 2004, a 28 percent increase over 2003, the company is positioned to be a player.

“We have a group of people, called the ‘brain trust,’ in editorial, technology, research and trade shows,” says President and COO Chris Cardell, who’s been with Meckler since 1993. “We triangulate around new ideas. We discuss new technologies. The folks we have here have heard about it first and know more about it than most others in publishing.”

Despite a three-year nosedive, the $870 billion IT space is hotly contended by major media, event and research companies, including International Data Group, MediaLive International, CNET.com, Ziff Davis Media, Forrester Research and Gartner. With IT spending projected to grow 5 percent in 2004, competition for marketing dollars will only heat up.

The company with the best model will win.

Building a business model
Back in the day when few knew what the Internet was, Alan Meckler had the foresight to create Internet World. Then chair of his own company, Mecklermedia, he started the newsletter in 1990, launched the show in 1993 and rolled out the Web site in 1994.
“At Mecklermedia, I was the first one to have a show, a magazine and a Web site all devoted to the same topic,” he says. “That’s what made Internet World such a powerful community. We were hitting the people several times a year with a trade show, we were hitting them with a weekly magazine, and we were hitting them daily with a Web site. Internet World was in your face all the time. If I ever get credit for anything, I think I invented that concept.”

Internet World became Meckler’s flagship property. He sold it to Penton Media in 1998 for $274 million, but he immediately bought back the Internet assets and incorporated internet.com. Precluded from launching events and print publications by a non-compete agreement with Penton, Meckler built a network of Web sites and e-mail newsletters, becoming one of the first to sell online advertising.

By the time his non-compete expired in 2001, the internet.com community was primed for face-to-face meetings. “We had all this readership in some very vertical areas. Why not look at those vertical subject areas and see if some of them would need shows? The idea was, if you did a whole bunch of shows with 10–20 exhibits and 200–300 paid attendees, you can make money.”

Instead of doing direct mail promotions, Meckler used the online properties and permission-based e-mail lists to promote events at a fraction of the cost. One of the first events, 802.11 Planet Conference & Expo, debuted in Santa Clara, CA, in December 2001, with eight booths and 120 conferees. It lost money.

The companion Web site and e-mail newsletter has since grown from a few hundred readers to the No. 1 resource on the topic —Wi-FiPlanet.com. The seventh edition of the show, now called Wi-Fi Planet Conference & Expo, attracted a record 4,000 people and 125 exhibiting companies to the San Jose McEnery Convention Center in San Jose, CA, Dec. 2–5, 2003. It made money.

And that’s the Jupitermedia business model.

“We start with content, content attracts the audience, which then attracts the advertiser,” says Cardell. “It’s relatively easy to sell the exhibitors, once they see that you’ve attracted a large number of high-caliber people.”

Today online media generates 62 percent of the company’s revenue. Jupiter Research — whose purchase in 2002 prompted the name change from internet.com to Jupitermedia — pulls in 21 percent. Jupiter Events generates 16 percent.

“Jupitermedia's biggest strength is their focus and the fact that they are content creators,” says Senior Internet Analyst Safa Rashtchy, U.S. Bancorp Piper Jaffray. “Very few sites actually create content instead of aggregate it. Equally important is that they have done this through a network of sites, which makes it very efficient for them.”

Nurturing online communities
Organized into 16 content channels, the internet.com network includes more than 160 Web sites covering such interconnected topics as application development, wireless Internet and interactive marketing. About 70 full-time editors and 50 freelancers create the content, half of which is news. The network gets 21 million visitors a month, and more than 4 million users subscribe to affiliated daily or weekly e-mail newsletters.

Advertisers are attracted to these targeted audiences, which are measured in page views (impressions) and clickthroughs. A team of 23 online sales reps work with advertisers to maximize their exposure across the network.

On the Wireless Internet Channel, for example, rates range from about $150 CPM (cost per million) on the most targeted sites, to $20 CPM on the more general sites. Discussion list sponsors reach subscribers at prices that reflect their rarity — from Windows Exchange Server aficionados for 4 cents per name to Internet Service Provider CEOs for $1.28 per name.

“The greatest asset we have is our ability to define and identify specific niches people are looking for,” says Scott Bialous, Vice President and Group Publisher, Jupiter Online. “What allowed us to survive and thrive was our ability to provide customers with targeted advertising opportunities. At the same time, we also believed that you can’t cut your rates. You need to consistently show that your properties have value.”

That said, the sales team has the flexibility to create affordable solutions, such as the Wi-Fi Planet Marketplace for small companies. And Jupitermedia routinely rolls out new content areas that cover topics with advertising potential.

“Our advertising business is the primary directive. It’s why we launch a Web site and why we build content,” says Editor-in-Chief and Vice President Gus Venditto. “If the market is just starting to clarify, that’s the perfect time.”

The only risk is sinking the costs to develop a Web site and pay a freelancer, if existing staff can’t cover it, before ad revenues kick in. But once a news site is connected to the network, page views climb. It took only 6–8 weeks for Wi-FiPlanet.com to gain traction. Within three months, it had a companion event.

“We run things in a lean manner, test it, and when we start to see some traction, we start to put dollars into it,” Cardell says.

To expand the online community and gain more newsletter subscribers, the company often buys existing properties, sometimes very inexpensively. “We don’t have to rent the lists. We’re buying them outright,” says Venditto.

An early example is SearchEngineWatch.com, founded by search engine expert Danny Sullivan in June 1997 and sold to Mecklermedia five months later. Sullivan continues as editor and is a featured Search Engine Strategies Conference speaker. SearchEngineWatch.com now gets close to 90,000 page views a day, and its companion newsletter goes to about 175,000 subscribers.

The job of maximizing the potential of every list falls to Director of Marketing Michael DeMilt, who has a keen eye for spotting affinity groups in the online communities, then cross selling the Jupitermedia properties, events and research.

Launching strategic events
Meckler and Cardell collaborate to run the events division with a staff of 25. Much of the sales team has been together since the Internet World days. Selling against such stiff competition as Comdex in Las Vegas, the team is charged with demonstrating the unique value of Jupiter Events.

“What distinguishes us, the philosophy that came together in the ’90s, is that we say ‘yes’ to the customer,” says Vice President of Event Sales Tim Walsh. If that means changing the rules and restrictions, so be it. “We work with customers to gain as many points of access to the attendee base as we can distinguish.”

Having Meckler champion Jupiter Events on his Web log doesn’t hurt, or necessarily help, sales. Although his posts sometimes raise a furor, it’s launching shows in direct competition with industry stalwarts that creates the real stir. Critics said the announcement of cdXpo in February 2003 was opportunistic, taking advantage of Comdex organizer Key3Media’s financial woes.

Meckler’s the first to admit his strategy is to “piggyback” off competitors. “We thought Comdex would bring in a greater crowd, and we knew we were going to leverage off that crowd,” he says. If 10 percent of the Comdex crowd had crossed over to cdXpo, he would have had the 5,000 attendees he expected.

Although cdXpo’s losses will be lower than the projected $719,000, Meckler is rethinking its location for 2004, speculating that a Las Vegas destination is no longer a draw.

“For the amount of money we spent, and the promotion we did in direct mail and on our network of Web sites, I think the same effort that we did for Las Vegas would have brought in double to triple the traffic in San Francisco or New York.” As a test of this theory, he plans to bring Enterprise IT Week to New York on May 26, 2004, coinciding with CeBIT America’s second year at the Jacob K. Javits Convention Center, May 25–27.

New show ideas can come from anyone in the company, but Meckler has to buy in. Plus, they must have a subscriber list that reaches the target audience and no real competition. “The right field has a certain narrowness to it,” say Venditto. “It’s got to be just the right size, so that you can’t learn about it well without this type of conference, but not so esoteric that only 100 people scattered around the country would be interested.”
Not every idea for a new show has been a good one. Memorable misses include launches focused on voiceXML and grid computing. Cardell guesses 90 percent of their launches are a hit, though some topics are more profitable than others.

“An unsuccessful launch for us might be a break-even situation or a $20,000–$30,000 loss. It’s a pretty calculated risk, and a pretty limited loss,” he says. “One of the reasons we’re able to launch these events so cost effectively from the start, and once they grow have them be so profitable, is because our marketing expenditures are already drilled in with our online publishing model.”

As with online ad rates, space rates vary depending on the audience. Space at Wi-Fi Planet costs $33 per square foot. Priced at $44.95 per square foot, Enterprise IT Week undercut Comdex’s space rate by $15. And at Search Engine Strategies, space costs $50 per square foot.

The potential to grow conference revenues is high. “We’re getting, at some shows, 700–800 paid at close to $1,200 or $1,300 per person,” Meckler says. Jupiter Research analysts often serve as conference speakers, which allows them to demonstrate their expertise in specific coverage areas and cross promote their services.

With the exception of Wi-Fi Planet, most events generate more conference revenue than exhibit space and sponsorship revenue, but Jupitermedia is banking on exhibitor growth to accelerate its overall growth rate. Total event revenues have already grown about 25 percent over the previous year.

For 2004, Jupitermedia has announced 17 conferences and expos, including Search Engine Strategies in New York, Tokyo, Toronto, London and San Jose, CA; Wi-Fi Planet in Toronto, Tokyo, Baltimore and San Jose, CA; the new government-focused IT Service Management Forum in Washington, DC; and the new Digital Rights Management Strategies in New York City.

Enterprise IT Week was conspicuously absent from the list, with future locations still in question.

Hitting the numbers
In the five years since he took his company public, Meckler has seen his financial results waver from staggering losses in 2001 to modest profits in 2003. But he never doubted the company’s value, even when its stock dipped to under a dollar.

“It was never worth as much as it was when it was at $60 a share, but it was never worth as little as it was when it was 96 cents a share,” he laments. “We’re starting to get some sanity into our value.”

Jupitermedia weathered the technology slump by restructuring and laying off, ebbing from a peak of 475 employees to a low of 210. Since the acquisition of DevX.com and ArtToday.com last summer, the company is back up to a scrappy fighting weight, with little redundancy, flat management and no secretaries.

Now cash-flow positive, all divisions are either at break-even or making money. For the nine months ended Sept. 30, 2003 (the most recent statement available) online media generated $19.6 million in revenues, research generated $6.6 million, and events generated $5.2 million.

“Our trade show group would show relatively significant profits if I wasn’t constantly probing and trying new shows like Enterprise IT Week,” Meckler admits.

Analysts agree. Piper Jaffray’s Rashtchy advises, “As with many Internet companies, Jupitermedia has gone through a major cycle in an advertising recession but has managed to stay afloat, become profitable and now recover its growth path. The company’s key challenges are to maintain growth in research and seminar business and to maintain the level of content that will attract advertisers. Their weakness will be in their size and focus, which may be too narrow for some advertisers, and having enough scale and audience to attract large advertisers.”

How long Jupitermedia’s focused topics stay hot remains to be seen. Meckler believes the Wi-Fi and paid search markets have at least five good years ahead. When they cool off, he’ll surely have the next big thing in the pipeline.

Cathy Chatfield-Taylor is a freelance/writer editor. E-mailcathy@cc-tunlimited.com