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About.com China: Over 5M Monthly Users and Growing
 JLM recently spoke with About.com China general manager Matt Roberts about business operations, predictions for 2009 and what it means to be a foreign company in China. With a growing number of experts and strong targeted search volume, the company is looking forward to a healthy 2009.
JLM Pacific Epoch: How does About.com's business model vary from other portals and information platforms in the China market?
MR: We operate what I would call a micro-publishing model. We are able to tap into the talents of grassroots experts, who we call guides, all around the world and give them a publishing platform on which they can share their expertise, their experience, their insights. And then we are able to sell advertising across that platform. It is very difficult for traditional publishers, which have to go after a target audience, to cover anything in the depth and detail that we are able to. We are not going after one target audience; we are going after individual audiences in individual topic areas. A very large amount of our traffic comes via search, which means most of the users that come to our site have a specific query, have a specific need, are passionate about a very specific thing and are looking for that information online.
Our articles perform very well in search and that’s how most people discover our site. Then we have another stream of traffic which is people coming back to the site. From an advertiser's point of view, what sets us apart from a lot of other sites is that we have a network of close to 800 different topic sites in English and 200 in Chinese that allow advertisers to do a very targeted campaign. Advertisers can use a combination of different topics to put together the user demographic they are trying to reach.
The other two things that I think make us very powerful for the advertisers: first, all of our content is credentialed, meaning that the photos, bios, and background of the guides that write for us are all posted on the website, which is markedly different from a lot of the portals and blog networks that we are often compared to. The other thing that advertisers find very valuable is that our audience is highly purpose-oriented. They come though search and are in a more receptive state of mind for appropriate advertising messages. That doesn't mean they are open to all types of advertising, but because you can do very targeted advertising on our site and you are reaching people that are looking for targeted information, advertising performs very well.
JLM Pacific Epoch: In terms of content on the site, are there specific channels which perform better in China?
MR: The U.S. site has been in business for about 12 years now and they have a much larger group of guides, many of whom have been writing for eight or nine years or as long as the site has been around. The U.S. market is roughly the same size in terms of number of internet users, but the e-commerce component in the U.S. is much larger than it is here and the demographic is much more mature, just in terms of age and what people are looking for online. With our China site, we have only been online for about a year now, and we are still very much in a growing stage. We are up to 200 guides writing for us right now and we will keep growing next year.
We have seen some very good performance in our food channel, our health channel, our fashion channel, and travel, and then as I go down to some of the smaller channels, those started later or those with fewer guides, the game category is one for example or pets. With those smaller channels, we have a little bit less traffic but we have a very high level of interest from users. Some of those channels are even stickier, where we get more page views per visit.
JLM Pacific Epoch: In terms of advertising revenues, is branded advertising your major focus or is word-of-mouth marketing through product introductions on your site more of a focus for About.com China?
MR: If by word-of-mouth marketing you refer to the practice of having a blogger or writer pitch or promote an individual product in their blog, we don't engage in that at all. We very vigorously protect the integrity of our guides. They are very proud of the fact that they are independent, and we do not allow advertisers any direct access to our guides. We sell all of the advertising; our guides do all of the writing. That's what makes the advertising work well, just the fact that the content has integrity, and that you don't see any of the “advertorial” that is so common in China's Internet right now.
Our revenues are focused on advertising. There are two types of advertising: one is the display brand advertising and for that we are working with a number of ad agencies and a number of potential clients. Since July, we have been running campaigns for P&G (NYSE:PG), working with Starcom, and will be growing that type of advertising in the coming year. We also do cost-per-click advertising in different flavors. The most common is Google (Nasdaq:GOOG) AdSense text-link ads which are run on the site and perform well based on targeting.
JLM Pacific Epoch: In terms of the display branded advertising on your site, do you charge under a cost-per-mille model or the cost-per-time model that is used by most Chinese media?
MR: All of our calculations for price quotes are based on CPM. But as you understand from working in the advertising sector, that doesn't necessarily mean that your final price has to be linked to a certain CPM, often times it's bundled up with different packages.
JLM Pacific Epoch: About.com China is still wholly-owned by About.com which is wholly-owned by The New York Times Company. That hasn't changed, right?
MR : That's accurate.
JLM Pacific Epoch: So being a foreign media company in China, having to compete with the domestic players how does that impact you? For example, we hear a lot about how Google is held to a higher standard than Baidu.
MR: The advantages that we have with our current structure are that we get the best of both worlds: we’re both a start-up and a mature, thriving business. When we started building our China operation, we had pretty much free rein to build a product that serves users in China. We weren't tasked with extending the reach of the business in the U.S. We were basically given a free remit to go out and build the business that China needs using all of the resources at our disposal. So it's very much a start-up mentality. We are a Chinese team. I count myself Chinese sometimes, as I've been working here for my adult life, But we are focused on what it takes to serve the Chinese Internet user.
On the other hand, About.com is a thriving company, very successful, 12 years of experience, growing very rapidly, doing very well and that gives us a lot of strength and some deep pockets so that we can focus on long-term value. We don't have to worry so much about quarter-to-quarter survival, and we can focus on growing what needs to be grown.
Is being a foreign-invested company a liability in this market? Frankly, I think there has been a little bit too much hype around that. Number one, your definition of what is foreign and what is local. I think in many cases there are stereotypes of foreign companies being slow, being very bureaucratic, having to get approval from an office in New York, but I have seen Chinese companies that have similar bureaucratic problems. So I think what really matters is not whether you have raised money on a New York stock market or whether your founders were born in Beijing or New York, but how you set up your operations. I think to be successful in this market you have to be nimble; you have to be close to your customers; you have to understand what they need, whether it’s the users or the advertisers, and be able to deliver that. It's a moving target. I don't think we are necessarily at a disadvantage for our structure. In fact, I think it works well for us.
JLM Pacific Epoch: What are your thoughts about your company from a more macro perspective?
MR: We very much view the upcoming year with the gloomy macro environment as a huge opportunity for us. We are coming off of a fantastic year. We achieved all of our growth targets and surpassed some of them in 2008, and our guides are really excited about what we are going into in 2009.
We just announced that we have over 5 million users coming to the site per month and growing. And as we look at the environment going forward, we are seeing some advertisers increasing their spending online, often times at the expense of more traditional media. There is certainly a focus on making sure that whatever money you spend in marketing and advertising is effective, and that's where online media has a lot of advantage, specifically with a site like ours. We are very focused on measuring, very focused on evaluating the performance of marketing and making sure we are hitting objectives.
So I think even though the ultimate environment may be one where there are fewer advertising dollars and more people chasing them and a little bit of desperation in the air, I think in the long term it plays to our strength. It means our focus in the next 6-12 months has to be on being an efficient operation that is really catering to the needs of our users and advertisers. I know that sounds like a lot of spin, but that's really how we see it here. We have been very excited for the last couple weeks.
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