Reaching Women "Offline and Online"

Survival skills are second nature to iVillage CEO Douglas McCormick, who sounds off on innovation, ads, and dot-com idiots

If you were looking for a company that exemplified the dot-com boom, iVillage would fit the bill. One of the first dot-coms, iVillage set out to be a community for women who wanted to share information about everything from parenting to bad dates. The company went public in March, 1999, and saw its stock soar to $130 a share within a few weeks.

Its IPO success was all the more remarkable, given the company's reputation on Wall Street for being poorly managed and lacking focus. Its brash, Versace-clad founder and first CEO, Candace Carpenter, hired and fired staff in rapid-fire succession. In five years, the firm burned through CFOs, not to mention dozens of senior sales executives and strategists.


  Yet iVillage has persevered. In June, iVillage merged with its chief rival,, co-opting the remaining competition. And amid a severe advertising slump, iVillage reported remarkable third-quarter earnings. Sales revenues leapt 19% from the second quarter to $18 million. Its net loss for the period narrowed to $5.9 million, vs. a $44.4 million loss for the third quarter last year. The company also has squirreled away $43.7 million in cash and expects to lose just $5 million in the fourth quarter.

To survive, current iVillage CEO Douglas McCormick, who took over in July, 2000, says he's pushing "every revenue model we have short of holding a bake sale." That, according to him, means transforming the company from a simple dot-com to a diversified women's media company -- one that he believes where so many others have failed. Though iVillage continues to build its brand online, it counts on offline businesses -- such as Lamaze Publishing and a career/finances information-subscription service -- for 40% of its revenues.

As CEO of Lifetime Television in the '80s, McCormick steered the then-insignificant cable channel into a programming powerhouse that has inspired imitators like the new Women's Entertainment channel and Geraldine Laybourne's now-struggling Oxygen Network. McCormick recently sat down with BusinessWeek Online Technology Reporter Jane Black to outline his plans for iVillage. Edited excerpts of their conversation follow.

Q: Running a dot-com right now can't be easy. What's your philosophy about getting through the down market?


It's like the old routine about the two guys that are out hunting. In the middle of the night, a bear comes into the tent. One guy gets up and starts putting his Nikes on. The other guy says, "What are you doing? You'll never outrun a bear." And his friend says, "I don't have to outrun a bear. I just have to outrun you!"

That's the way that I feel. I just have to be a little bit better than the next guy.

Q: What new tacks are you taking to bring in revenues?


We're doing a lot of different things. First, we're starting a second revenue stream. The thinking goes like this: Women have babies -- irrespective of war, peace. And people get sick. And so what we've done is, we have The Newborn Channel and The Health and Wellness Channel in the hospital. [The Newborn Channel is a satellite television network in more than 1,000 hospitals nationwide.]

Another area of creating dollars is selling research [to help advertisers develop better ads and target them better]. We sold research for the first time, for real cash. It solved marketing problems rather than just media problems for advertisers.

Finally, and I can't minimize this, we're charging for information. Most sites give away free IQ tests, and they're worth the price you pay. We put together an IQ test, and after you get to figure out what your IQ is, if you want to know more information, for $8.95, we'll tell you. Who doesn't want to know about themselves? People spring for the $8.95.

Coming out of cable, I have a black belt in dual revenue streams. These tough times have forced us to be more suspect of the future of any business without that. We already have a dual revenue stream. We get millions in a year from people having their [astrological] charts done. Now we've just started a service where, based on your chart, we'll send you your astrological forecast every day.

I think we'll be able to increase our revenues exponentially with these programs. We're also looking at ways to charge for the site.... We want to know how many people are willing to pay $5.95 a month for us. Will it ever cost $5 a month or $20 a month for iVillage? I don't know.

Q: Ad research is one way to branch out. But isn't it true that many big advertisers want to deal directly with ad agencies?


Many advertising agencies will take a generic approach to a very specialized medium, and that is ill-founded. So many of them have taken a look at this as a direct-response-only medium.... The fact is, our ads deliver five times the results of agency-designed ads overall. The purchase intent increases 15% on ads viewed more than four times on iVillage-developed ads. We clearly have something to offer.

Q: iVillage has developed its own ad formats. One, called an "interquizzal," is a TV-like ad that runs while quiz results are tabulated. You also run ads that you call NTVQ -- Near TV Quality -- that resemble TV ones. Are you seeing increased interest in these kinds of ads?


Yeah, but it's going to be directly proportional to the proliferation of higher-speed Internet access. I would say that sales of these ads make up about 5% of ad revenues. They sell for CPMs comparable to TV [$25 to $30 per thousand impressions].

Q: What about commerce?


Commerce was another one of those great ideas from the boom. Everyone thought everyone was going to come for information and magically be moved to shop.

Of course commerce is a piece of the business, just the way it is in other media. But even those folks who concentrate on commerce every day are having a hard time making money. How could we expect to understand how to do it better?

Q: Right now, many businesses are trying to leverage their offline businesses online and vice versa. iVillage's acquisitions appear somewhat disjointed. How do your businesses work together?


Let's talk about one of the biggest acquisitions we made: The Newborn Channel. It now has a half-hour show called Parent Soup, the original iVillage brand. And after the program, it tells people that, for more information, come to There is total synergy. Shame on us for not having had it before.

The key is that all the businesses are women-oriented. And they feed off each other. But they're not necessarily Web-driven. Frankly, we have forsaken the dot-com mania aspect. This business, it has to be a bigger business. It has to reach women offline and online.

Q: So you're no longer an Internet company -- just a media company?


Absolutely. It's a media company for women. At Lifetime, we were television for women. At iVillage, we're information. We want to be the de facto [choice], where women will want to be able to vet ideas with each other.

And I think it's an information business that has tremendous brand-equity potential. Think back to MTV in the early days. MTV sells T-shirts, movies -- a whole range of things. It's certainly more than an ad business. And I think we are, too. We are to women's information as MTV is to the voice for teens.

Q: Women's media companies, though, are struggling. Cable channel Oxygen is having a hard time, and women's-magazine ad pages are plummeting. How will you avoid their pitfalls?


Catering to women isn't the problem. Look at Lifetime. That's a pretty successful media company. And a lot of the team that built Lifetime are at iVillage. Jane Tollinger is our SVP of operations, Nancy Alpert is our SVP of strategic acquisitions, and Debbie Reichig, who I worked with years ago at Lifetime, now is our head of research. Each of them have been with me at least a year. We have some sharp businesspeople here for whom success is not a coincidence.

The difference is, we run these things as businesses. Many businesses, whether they deal with women or not, are just some kernel of the idea that people try to squeeze a business plan around.

Q: What kind of future revenue split do you see? Now about 40% of iVillage's revenues come from the offline businesses and 60% from online advertising and commerce. A: You know, at some point, it could be 80/20, from offline to online.

Q: You're not backing away from online advertising, are you?


Not at all. It's more parallel to the early days of cable, when all of cable started out as ad-supported. Those were the days when an ESPN was paying a per-subscriber monthly fee to cable operators. Now an ESPN gets license fees every month from the cable operators.

It's not an abandonment of the ad model. It might be an abandonment of the free model. The sooner we get rid of that, the better. The idiots that went out there and said, "Free! Free! Free!" are all back skateboarding on Santa Monica Boulevard, where they came from. And, for the rest of us, the laws of gravity and economics are still in place.

Edited by Patricia O'Connell

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