The web's monetising challenge
Monique Talbot started her own business Tempest Media in 1999, just as the internet boom took off. She sold it at the market peak, and people comment on her fantastic timing. But instead of being a woman of leisure, she is throwing her energy at another venture, emerging as publisher of SheSaid.com.au.
Monique discusses why starting online sites is so hard, how online is changing and new business opportunities (and how much she made selling Tempest).
Amanda Gome: Tell us about how you got the money to start Tempest.
Monique Talbot: I was at OzEmail and I had written a business plan for a women's website SheSaid.com.au. I went and saw a venture capital group and they liked my idea, and so we got some funding from them and then we had further discussions with them and said, well who is going to represent it?
And we said oh, I better write another business plan for a site repping business. At that time there were only two people that really did site representation in Australia; DoubleClick and BMC Media, which later folded into Telstra Media Smart.
And when you say repping, you mean selling for...
Monetising other people's websites.
Why didn't some of the other major media groups set up those kind of services?
Well they did, but they were only representing their own properties. And I thought there was a real opportunity for somebody to represent niche independent websites that were number one in their category but that were not part of the big five.
What was it like when you first started... the ignorance of online back then?
I think I may as well have said I was an axe murderer, you know, similar reaction - people were aghast. "You what? You sell banner ads?" A lot of my friends also thought I was completely crazy because I left a fantastic job at OzEmail with a company that I loved and a nice salary, a car and all the rest of it, and went to start my own thing and had no staff, and was just at a desk at my venture capitalist's office with a phone, and that was it.
How did you get that money, and how much did you raise?
Seriously it was a fortuitous meeting. Richard Poole and I met and he liked my drive and my enthusiasm for the industry, and he also had been doing some work for Kaos Music so he understood the potential of online.
We also didn't need millions of millions of dollars because all we did was work out how much we needed to fund the business for the first 12 months, and some sort of capital to be able to hire staff. We stayed in Richard's office, well we actually shared offices right up until the end of 2007.
So that would have been a huge benefit.
I think it wasn't the money that the venture capitalist gave us, it was the access to him.
That was sort of the thing that I could never have afforded, and he had such a vested interest in guiding the strategic... I just used to walk into his office and go "what do you think about this?" and he would go yes, no, have you thought about this. A completely different way of thinking.
I was so immersed in the industry, he was quite separate from it yet he, as a veteran of business, knew exactly what I should and shouldn't be thinking about. He just taught me all about margins and what's in your cashflow and profit and loss. He just drummed it into me.
What percentage of the business did he own?
In the end I had the majority stake.
A lot of people want to run a business on their own and they don't take that money in or the strategic advice.
No, I think that could have been the biggest mistake I could have made.
When you sold, did most people know what a banner ad was?
We sold in the middle of 2007 and people had a very good understanding of what online advertising did. But I still don't think they even now have a good understanding of what it takes to actually generate millions of dollars of revenue for a website.
I still think people underestimate how difficult it is to (a) to get the media planner/buyer's attention and (b) get those continual bookings and (c) keep your website running at the same time while you still get all that revenue in the door.
What are your average costs to run a small niche website per year?
Oh god, how long's a piece of string? You'd have to put in not only the hosting costs, the building of the website, the staffing up of it, search engine marketing. You would have to put it at hundreds of thousands to millions, depending on how big you want it to be. As you would know, you can't make a website, spend lots of money on it and let it sit there and not promote it.
If I had a dollar for every person that had come to me while I was at Tempest and said, "Hi this is our plan, we're going to build a website and this is our projection of online ad revenue for the next year or two years or five years", I would never have had to do Tempest.
What do you tell them?
We tell them to go away, build their website, get their traffic up to 50,000 or 100,000 uniques and then come back and talk to us.
Do you tell them how to do that?
No, they don't want to listen in the beginning either because they totally underestimate how hard it is. I know how hard it is, even with SheSaid.com.au now.
The problem is that it is publishing. And many people attempting these websites are not publishers.
They think they've got an idea, "I will build a website, it will only cost me $15,000". And it's not only just the getting traffic to your website straight away, it's the continual getting traffic to keep coming back and building a community.
I think one of the best examples I've seen in the last few years, and I don't know how much money they've spent but I know it's a lot, is Katie May and the Kidspot brand. That's taken three years, maybe four.
But they've spent quite a bit of money on that.
Oh millions. I'm sure they must have spent millions. But they've got 600,000 uniques now. I can't think of any other site that I've seen in Australia go from absolutely nothing to that in recent times so quickly. Well not quickly, but it's still taken them three years.
That site hasn't got killer content of a high quality. What's so successful about that?
Well I think that the search engine marketing that they've done and the offline marketing that they've done. They've built a brand as well, and I think that's the challenge.
So you've got to have a whole lot of skills to build these things?
Definitely, and that's the hard thing to tell people. Because I think they think it's that field of dreams; if you build it, they will come. Well let me tell you, they won't come.
And then there will be ad dollars... you're not going to ask me back, I'm going to be the most depressed interview you've done all year.
How has the actual repping changed. I mean two or three years ago you had large companies that really didn't understand this space. But there's a lot more diversification now. What's changed?
Well I think there's a lot more sophistication. There's carsales.com.au and seek.com.au and ebay.com and companies Tempest worked really close with for the past 10 years.
When their online ad revenue stream becomes in the multi millions of dollars, I think the fear is that that's a revenue stream you should control yourself. So it's OK when it's only maybe a couple of hundred thousand a year or a million a year or five million year. But you get up to being the second most important revenue stream in a large company, and they feel the need to bring it back in house, and sometimes it is the right thing and sometimes it's not.
So what are the trends? Are you seeing more people wanting to build their own sales teams internally?
No, I actually have seen in the last 12 to 18 months more people wanting to build their own sales team. And I think the challenges of that is that you will then get media planner/buyers, which are already stretched for time and resources, having instead of the big five of Ninemsn, Fairfax, News, Sensis and Tempest and all that calling on them, they've got them plus they've got a complete other layer of another 15 or 20 sites continually trying to get to them to get on the brief, to get online ad dollars. And that's I think probably the biggest challenge of all.
Now that leads us to SheSaid.com.au. One of the aims for this is to build a network of small niche women's sites, making it easier to get the attention of the buyers. How do you get that attention?
The thing that worked best with SheSaid.com.au and women is you get a much better result as an advertiser with a strategic partnership or a sponsorship model.
The content has to be relevant to the female, and then your advertising is supporting that or complimentary to that, then the results seem to be amazing. We're doing movie partnerships with people and a review, and we're doing an email out and we're doing a trailer of the movie and a competition to win tickets. And we're getting amazing results for them.
We haven't actually got any other sites in the SheSaid network yet except our own. We're getting our content right first and then we will go out strategically and do partnerships with other female related content.
I think the challenge for us is actually finding really good content, Australian content online for women. Because even as we talked about Kidspot, they've got fantastic directory content but not magazine content, and I don't think the magazines have got online right yet, or I wouldn't be doing SheSaid.
That's the problem with newspapers, when you go online, you've got to protect your print monopoly.
Exactly what the mags have done. So allowing women to be part of a community and engage with each other as well as the magazine is our aim. But we only rebuilt the new site in January, so we're taking baby steps at this stage. I might be a veteran of online advertising, but I would never say I'm a veteran of publishing, so we've got lots to learn. We've got 55,000 chicks on our database. So we've got a nice start, but I've got a long way to go.
What's the value proposition online for women? How does it differ from the magazines? You know the Women's Weekly is huge and it appeals to a lot of different types. Do you have to be more niche online?
I think you have to make the content as relevant as possible. The thing with Women's Weekly and all of that is that they have online and a 25 year brand history. But we have to bring other things to the table to the advertisers, which can be the integration or the ability to have focus groups online with women.
I think the other thing that is a challenge at the moment for women is that all the fast moving consumer goods (FMCGs) aren't online yet. Yeah they're coming, and Proctor & Gamble are talking about it and Johnson & Johnson and Unilever and all those big brands. But I've been waiting for those guys to come online my whole online career. And it's not that you don't see the billions of dollars that they throw at TV and magazines, I just have not seen those briefs yet for online.
Why is that?
They get such great results from TV, and they're all into brand building. And unfortunately for us online has been sold more as a direct marketing medium or a performance medium lately.
So how big do you think the women's market is online?
I don't think it's massive yet, but I think it's definitely a growing sector. I mean if you look at the Interactive Advertising Bureau report, the beauty and pharmaceutical category is 2% to 4%.
I mean cars, computers and telcos and all the rest of it, they're all up at 15%, 20% each. So I think there is a long way to go for the pharmaceutical, the health and the beauty sector also for women definitely online. Well that's what I'm hoping anyway.
So you've now joined SheSaid more permanently, which has been ticking along in the background. What are your plans to rev it up?
Well we've just built the new website - that took most of the second half of last year, hiring a new editor and getting strategic partners for content and for marketing, which is actually what I'm working on right now.
And what are your projections?
Look if it all goes brilliantly, I'd love half a million uniques by the end of this year with FMCG advertisers and entertainment advertisers and fantastic content, and it could be rated up there as one of the best sites. But I'm also realistic that these things take time.
Tell us about your timing for selling Tempest. You actually did very well out of it.
Yeah we did. We decided at the end of 2005, part of the discussions we had as a management team, that we saw that site repping was going to be challenged.
How big had you got? How much were you doing in revenue that year?
We never have released any of our figures.
Well how many staff did you have?
We can say $3 million to $4 million revenue, and you can say around that?
No, you can say a lot more than that.
Well that's good for 25 staff, given that it's a labour intensive business.
It is a very labour intensive business, you're right.
What did you sell it for?
Everybody speculates, but I've never said it. It was commercial in confidence as part of the deal.
So you would have got a few million from this whole process and you're back at work already.
No, I just think it's time for me to put some time and energy into SheSaid, but also put some time and energy into myself. So that's why I'm only doing SheSaid two or three days a week. And the other couple of days a week I'm trying to get fit. I have a personal trainer which is not very much fun. But he's very good for me I'm told.
The more you get fit, the more you will enjoy it.
Yes so they keep telling me, but it's only three weeks in and I'm still in the pain sector I think. I've got two little young kids and it was Ollie's birthday on the weekend and I made the birthday cake. And everyone was like "Oh my god you actually made that cake".