Last week, following three consecutive quarters of declining revenues at its About Group unit, the New York Times Co. (NYSE: NYT) decided it was time for a change at the top and dismissed CEO Cella Irvine. Instead of a direct replacement, Martin Nisenholtz, the NYTSVP of digital operations who engineered the 2005 acquisition, is taking charge along with returning former About CTO Ron McCoy. In an interview with paidContent, Nisenholtz discussed his initial plans for arresting the declines by focusing on the basics — strengthening the position and enhancing the profiles of About’s expert guides.
Nisenholtz would not discuss the specific “internal issues” about why the company felt Irvine needed to be let go. (Irvine declined to comment for this article.) The basic argument against Irvine was that she was not a “product-oriented” executive and that she was not creative enough in terms of finding ways to build up the guide sites as individual destinations — though several observers said Irvine’s creativity was constrained by financial pressures. Either way, with the declines extending into Q2 and probably into Q3, ultimately, the NYTCo felt they needed to react, given the importance of the About brand — comScore (NSDQ: SCOR) Media Metrix says About.com reached 42 million uniques visitors in the United States and 75.6 million uniques visitors worldwide in December 2010 — and its position as a prime source of revenue.
“We’ve said that we’re not opening a CEO search at this time,” says Nisenholtz, who also helmed About with McCoy in between the time Scott Meyer suddenly left as CEO in February 2008 and Irvine took on the job that July. “I’m very excited to be back involved in the day-to-day running of About. You have to remember that About has reported to me since we acquired the company in March 2005.”
About’s decline started in Q4. Before that, About, which in addition to its main guide site About.com, also includes ConsumerSearch and Calorie-Count, posted a 12.4 percent revenue gain for 2010 — itself, a turnaround from 2009. The decline in Q4 was only 3 percent. But About’s revenues dropped 10.2 percent to $31.1 million in Q1 — and Q2 has been trending similarly, executives have said.
Too much reliance on search: One of the chief causes of About’s recent stumble is the change in Google’s search algorithm. About largely has been able to avoid being pegged as a “content farm” thanks to the fact that its guides are considered experts in their field and are not simply crafting posts around popular keyword searches. That said, when About was coping with the loss of display advertising, it began to rely more on cost-per-click ads and the search traffic that brought users to them. In hindsight, there may have been too much reliance on CPC ads, as according to the NYTCo’s annual report (pdf), these ads represented 57 percent of the unit’s total revenues.
Doubling down on guides: Nisenholtz feels that too much has been made of the change in Google’s algorithm as the cause of About’s troubles.
“Look, Google (NSDQ: GOOG) is not in the business of distributing websites,” Nisenholtz says. “Google is in the business of giving great search results to users’ queries. Our job is to make sure our content is as good as it can possibly be. That’s the point. That’s what I mean by doubling down on the core — making sure we have the best quality content and guides. We are going to double down on the guides and the guide sites. As we do that, I suspect we’re going to see a positive change in terms of our volume metrics. In some ways, we’ve gotten away from that the last couple of years. Now, we have to get back to it. ”
Guide sites as destinations: While About’s business is still relatively healthy, the 10.2 percent decline was like being hit in the head with a two-by-four and executives felt they needed to make a change fast. Irvine was regarded as a strong manager and administrator who was able to keep a large number of staffers together, including many who had been at the company for the better part of a decade — though there have been some key departures, including Marjorie Martin, the former GM of About Health who left for *AOL* and is now headed to Canyon Ranch; Dae Mellencamp, formerly SVP, product management and now a GM at Vimeo; and Sheryl Goldstein, former ad sales head and now chief revenue officer at a company called House Party.
Prior to About, Irvine was chief administrative officer at Publicis Groupe interactive shop, Digitas, and had held GM posts at Hearst New Media & Technology and New York Sidewalk. As such, she was given fairly high marks by a number of observers for initiating several branding campaigns designed to build up display advertising among media buyers.
In the weeks before being pushed out, Irvine unveiled a plan to add 200 more guides to the current 800 About contracts with. Plus, the company had just introduced a Spanish version to reach that growing segment. But to NYTCo executives, that was too little, too late and didn’t address the main problem — the sense that About had drifted from putting more emphasis on the guides.
Building franchises: The guide sites are like franchisees in a restaurant chain. They’re given the basic infrastructure and the general parameters of the business, but otherwise, the corporation puts them in charge of their own output and promotions. For the most part, About and its guide sites are not destinations. As Irvine told me last year, roughly 80 percent of About’s traffic come from search. There was a desire to see the About guides become the top two or three in their respective category but that has proved to be a struggle, since the guides are largely independent.
The company tried to build some buzz for its sites by bringing in celebrities as “expert guides,” such as chef Wolfgang Puck, county singer Faith Hill, NBA point guard Nate Robinson, and actress Marlee Matlin. But those were a small part of the traffic and those celebs didn’t really commit to their sites. Plus, it was seen as diffusing About’s mission of having singular guides providing regular posts. For example, About has an “American Food Guide,” John Mitzewich, who’s been with About since 2007, so bringing in a famous chef may dilute his value to a degree.
Instead, what About observers feel the company should have been doing was trying to make Mitzewich and his counterparts in other categories more well known. Or, at the very least, getting the guides to associate themselves more as representatives of About through their Twitter feeds and other social media outlets.
The payback: While some have faulted Irvine for not being inventive enough or focused on building new products, others say that she may have been constrained from putting the necessary investments back in the business because, despite its healthy margins last year, the NYTCo needed that revenue for other things.
For example, in October, Bloomberg reported that the NYTCo was in a position to pay back the $250 million loan from Mexican billionaire Carlos Slim by 2012 — three full years ahead of schedule. There is a perception that the the NYTCo needed every available penny to pay down that debt more quickly, and therefore Irvine was limited in her ability to be creative in addressing About’s growth.
Nisenholtz emphatically denies this — and About insiders were at great pains to say that the NYTCo has been very supportive of the company even during the recession. “There’s no relationship between paying down the loan and investing in the business,” Nisenholtz says. “Just take a look at our balance sheet. Our investment in About has by no means been modest. Over the years, we’ve expanded it to China, we’ve bought three companies and built a sales and marketing department from scratch.”
In addition, Nisenholtz mentions the recent support for the 200 guides and the creation of the new Spanish site as evidence that the company has heavily backed About. He declined to venture any thoughts about how soon a turnaround might occur, saying only “It’s too early to say when we’re going to turn it around, but we’re going to try to do it as soon as possible.”
McCoy returns: The general consensus at About is that this isn’t a troubled property. For one thing, the declines starting in Q4 are being compared to the burst of activity that occurred when the advertising spending snapped back. The feeling is that it just needs some minor tweaks and the double digit revenue gains it had enjoyed last year will materialize again. The company isn’t expected to do any other dismissals or layoffs, at least not anytime soon. Neither is it expected to start getting heavily into mobile — thought its ConsumerSearch property just introduced a new mobile wap site — which is still not a major ad revenue producer for most media companies.
The main idea really is as simple as returning About to its roots, and as such, Nisenholtz is placing a lot of the turnaround on McCoy, who first started with About in 1998, when it was owned by Primedia (NYSE: PRM). Before that, McCoy was CTO for Cox Interactive Media following a stint in the early 1990s at the company’s Atlanta Journal and Constitution. He has been credited as one of the people behind About’s technology — and though the Google algorithm issue is not the only reason for About’s predicament, the sense is that he’s the best person to help resolve that.
“Ron is a superb technologist, a good friend of mine and someone who I’ve worked really well with in the past,” Nisenholtz says. “He’s also a very good business person and he understands this company extremely well.”