Online outfits publish print magazines as marketing tools

As online companies "=""> from BravoGifts.com to E*Trade wage multimillion-dollar campaigns to build their brands--flooding TVs, billboards, newspapers and radios with ads--several have chosen to become publishers as one way to stand out from the pack. Pets.com recently became the latest to join the trend, launching its magazine at the end of last month.

Yahoo, eBay and Garden.com have long since blazed the unlikely path, going the opposite direction of the many newspapers, magazines, and publishing houses that have come online. But where traditional media companies' Web presence often defends against online content rivals, dot-com magazines are essentially marketing tools.

"It's all an advertising vehicle," said Peter Appert, a financial analyst with Deutsche Banc Alex Brown.

Certainly the goal of reaching new consumers is an important one. Despite the hype about record sales this past holiday season, most of the United States has never shopped online. Even consumers who made online purchases during the holidays bought most of their gifts offline, a study by PC Data Online found.

Self-titled magazines give e-commerce companies a chance to get their brands in front of consumers before they shop online.

"A great deal of eBay users come to our site by word of mouth," eBay spokesman Kevin Pursglove said. "Our magazine gives us a chance to get to a much wider audience."

But promotional magazines pose some potential drawbacks.

Launching a magazine can be an expensive proposition for upstarts such as Pets.com that try to do it themselves. Such companies have to worry about the costs associated with production and distribution.

Keeping the content fresh and maintaining an audience for such narrowly focused magazines can prove difficult as well. There's only a limited number of stories that can be written on how to run an auction or which dog leash to buy.

"They will have to work to keep the material interesting. You don't want the magazine to turn people off to your business," Yankee Group analyst Emily Meehan said.

"Yahoo is always recreating itself, so they should be able to keep things fresh," she noted.

Certainly many dot-com magazines are highly specialized for niche audiences likely to use a company's site. In a regulatory filing, Pets.com, which is in a Securities and Exchange Commission-mandated quiet period due to its pending initial public offering, said that it distributed some 300,000 copies of its magazine to veterinary offices, pet shelters and other pet-related organizations.

"Many pet owners will be introduced to our store through this magazine," Pets.com said in the filing.

Meanwhile, Garden.com has distributed its Garden Escape Magazine through Home Depot and other retail stores that sell garden supplies.

Self-titled magazines also represent a potential new revenue stream for the online companies. Garden.com and eBay share money gained from magazine sales and advertisements with their magazine partners, Primedia and Krause Publications, respectively.

Meanwhile, Yahoo licenses its name to Yahoo Internet Life publisher Ziff-Davis for a fee. Although company representatives declined to say how much Ziff-Davis pays Yahoo, they said that Yahoo earns money from the arrangement.

"That's sort of the beauty of licensing arrangement, we get the upside without a lot of investment," said Jennifer Price, Yahoo's senior manager of marketing and licensing. "It's a great vehicle for us because we're not paying the kind rates that we are for TV and radio."

The revenues could prove an important point as investors focus more closely on Internet companies' bottom lines. Although both eBay and Yahoo are profitable, Garden.com and Pets.com have struggled to operate in the black. The cost of Pets.com's sales, for instance, outpaced the revenue the company earned from those sales.

But there can be a downside to licensing too. Barry Parr, an e-commerce analyst with International Data Corp., argues that eBay, which does not control the editorial content of its magazine, should be embarrassed to be associated with it.

"My sense is that eBay magazine does more damage to eBay that it provides benefit," Parr said. "If I were eBay, I wouldn't put my name on it."

Do the magazines attract readers?

Company representatives say they do. Yahoo Internet Life, for instance, now has a circulation of some 450,000 to 500,000.

Garden.com, which has published two issues of its Garden Escape magazine since its debut last March, has decided to turn the magazine into a subscription-based quarterly publication. The company was encouraged by newsstand sales of its issues, said Jana Wilson, the company's chief financial officer.

"This is a great way to attract gardeners to Garden.com," Wilson said. "It gives them something to touch and feel, to give Garden.com a tangible presence."