If you were a leading destination site on the Web for your category, with more than 100 million page views a month and more than 1.5 million registered users, what would make you want to cannibalize your own business?
In the case of The Knot, an online wedding planning portal, it recognized an impending threat posed by niche players and decided to embrace the long tail instead of being consumed by it. “Small niche sites must be the future of your brand,” company CEO David Liu told attendees of last week’s Magazine Innovation Summit in New York.
Despite The Knot’s success – Liu said more than 80% of the “marrying audience” registers on TheKnot.com – three trends were leading the leadership team to worry about the company’s long-term survival:
- Internet adoption is beginning to flat line.
- Viewing consumption of media has shifted. In 2009, time spent on the Internet will drop for the first time.
- 9 million domains were registered in the second quarter of 2009 – an average of 99,000 a day.
These trends, Liu said, show that even as demand for online media reaches a cap, competition for consumers’ attention is fierce and getting fiercer. “This means you cannot get too specific or too precise with information,” he said.
So Liu and his team spent the last couple of years investing tens of millions of dollars into rebuilding its infrastructure in order to act as its own long tail. “Rather than let the long tail eat our lunch, our decision was that we need to cannibalize ourselves by creating our own niche destination sites,” he said.
The company has launched more than 200 such sites this year alone, segmenting its audience in two primary ways:
- By geography, which makes the wedding site a lot more relevant for consumers. Think limo services in Tulsa, or caterers in Camden, Maine.
- By topic, to take advantage of increasingly popular “theme” weddings – retro weddings, Hindu weddings, green weddings, even gothic weddings.
The impact on the business has been measurable: Site traffic is up 19% monthly. “Imagine what that increase in traffic would cost you by buying keywords on Google,” said Liu. “We’ve done it simply by being more relevant.”
Financially, the company appears to be in good shape coming out of the recession. Second-quarter revenues rose 3% over the year-ago period to $29.5 million. Online advertising revenue increased 6% over the prior year’s second quarter, driven primarily by local advertising.
The next step for Liu: Get even narrower in focus. The company is using heat-map analysis of message boards to find ideas for new destination sites – for example, college chapels that are popular wedding sites for alumni.
“The constraint of a portal environment is the Achilles heel of dominant category leaders,” said Liu. “If you’re not pursuing a niche strategy, you won’t be here in five years.”