About Group’s Repair Efforts Continue Without Nisenholtz’s Watchful Eye

Martin Nisenholtz, who is retiring at the end of the year as the New York Times (NYSE: NYT) Company’s SVP of digital operations, managed a portfolio that included much more than the flagship newspaper site. He was also known for his close watch over the About Group, which has been working to reverse a series of revenue declines over the past year. The loss of Nisenholtz’s careful supervision will be one more thing the guide site will have to contend with next year.
Troubles begin: In the NYTCo’s Q3 earnings, the company said that the About Group’s revenues plummeted 20.8 percent while operating profit dropped 31.2 percent.
The troubles for the About Group, which includes the main guide site About.com and reviews site ConsumerSearch and nutritional info tool Calorie-Count, began roughly a year ago. Still, it had a pretty good 2010 overall, as revenues rose 12.4 percent for the group.
But then, starting last spring, Google (NSDQ: GOOG) refined its search results as part of its “Panda” initiative, which was intended to blunt the moves of SEO-based sites that sought to elevate results based on gaming Google’s system, as opposed to results that were widely used and valued. So despite the continuing online ad recovery, in Q410, About saw a mild decline in revenues of around 3 percent. Things grew worse in Q1, as About revenues dropped 10.2 percent to $31.1 million.
A watchful eye: Nisenholtz engineered the 2005 acquisition of About.com as the NYTCo sought to expand its web operations beyond the newspaper sites it ran. The purchase of About presaged the rise the large scale content aggregation providers like Demand Media (NYSE: DMD). Since that time, Nisenholtz has maintained constant oversight and has twice taken direct charge of it.
The first time came during the interim period when Scott Meyer exited as the About Group’s CEO in February 2008 and Cella Irvine took on the job that July. The second time came when Irvine was dismissed following a series of negative quarters, due mostly to Google’s algorithm change, which resulted in less traffic and, in turn, lower cost-per-click revenues.
Roughly 80 percent of About’s traffic comes from search. Unlike a direct destination site, such as the NYTimes.com, About attracts users looking for answers and advice to a specific questions, such as “how to make French Toast” or “what’s the best cure for poison ivey?” That also makes it easier to sell CPC ads, which can anticipate broader responses to user queries.
The shift towards emphasizing CPC ads was a result of another, brief dark period for About. During the deepest part of the recession of 2009, as About was coping with the loss of display advertising, it began to rely more on CPC 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, these ads represented 57 percent of the unit’s total revenues.
The challenge now, under About veteran and current CEO Darline Jean, is to build that search back up. Apart from figuring out a better SEO strategy, the company has already added 200 more guides and created a Spanish language version to attract the growing Latino community, as part of a plan Irvine charted before her departure.
Right now, the best bet About can take is to ramp up its display sales, as that segment is growing faster than search. It seems to have realized that, as it focuses more on developing video, which is the fastest growing category within display advertising.
Ultimately, the guide sites are like franchisees in a restaurant chain. They’re given the basic infrastructure and the general parameters of the business, but for the most part, About puts them in charge of their own output and promotions. There has 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 – and in general, the work they do for About is more of a part time job meant to promote their expertise and existing businesses as opposed to being full-time writers.
In an attempt to get a bit more control over the guides and their work processes, in September, Jean instituted a new structure for overseeing the its roughly 900-plus guides (it plans to have 1,000 by the end of the year) that was also designed to cut some costs. It won’t be known until next year as to what affect these moves will have.
In the meantime, About is not solely about the guide sites. A year after the NYTCo bought About, the site group started making some acquisitions designed to provide more niche offerings, while building on the main site’s use of expert guides. The addition of ConsumerSearch, Calorie-Count and UCompareHealth, greatly aided the group’s revenues, resulting in regular gains throughout 2007 and 2008. But as About began experiencing its current decline, the company sold off UCompareHealthCare.com, which it bought in 2007 when it was still in expansion mode.
The three remaining sites will still rely heavily on search traffic. In other words, About’s struggles are not going to end any time soon. And it will have to manage it all without Nisenholtz, who had the best understanding at the NYTCo of About and its direction. Still, as Nisenholtz and other NYTCo executives had cautioned during the recent earnings calls, the comeback was going to take time. Depending on how quickly About can right itself, in a large way, Nisenholtz will earn the credit or the blame for how things go at the site group for a long time to come.