Well aisle be: How wedding site theknot.com harnesses its brand

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David Liu, founder of the popular wedding site TheKnot.com, speaks to members of API's Reaching Young Audiences seminar about how brands can demonstrate strong local reach, the future of blogs and why his audience spends 14 hours on TheKnot.com during their first week.

I was very intrigued when I was asked to speak at this conference, because
there is, well there is some sort of tactical relationship between what we do
and newspapers. It made me think a little bit more about your businesses. How
it could help mine and how I could help yours. Then, on a larger level where
the challenges of creating a business in this environment.

Let me just preface this by saying that I'm probably a product of my
upbringing. I was born and raised in New York. I'm a born cynic. I think
it also informs a lot of the perspective that we've taken towards building
the business.

This presentation was really, it takes you through our strategy of how we created
the business. I'll talk a little bit about what we're doing to build
on top of it. I really want to try to power through that as quickly as possible.
I would love to be able to get into more of a lively discourse about some of
the challenges that you are faced with.

Also, I'll preface this before Susan [Mernit] gets back. I don't
think blogs are going to be here for very long. I think in five years it's
going to be essentially an afterthought or an asterisk to this time period.
I think Google is going to become a bit of a commodity service that's
no longer going to be relevant in ten years.

I think there is a lot of stuff that if you look at the newness and the scare
that, I think, the industry puts on industries as a whole, it's a way
to raise money. It's a way to create a sense of urgency. It's a
way to create a sense of the unknown. Then, you have to jump on the bandwagon
before it actually gets there.

You'll kind of see as we've built our business, and one of the
reasons why we're still alive today is because we didn't focus on
what I think is a lot of the scare tactics of the industry. Just don't
tell Susan I said that.

Our company actually was started back in 1996. My partners and I, we're
not technologists. We actually all went to NYU Film School. We were all media
people. One of my partners went in and built the digital media department for
Margeotes Fertitta & Partners, which is a boutique ad agency.

Carley and I had a CD-ROM development company where we were creating CD-ROMS
for the Smithsonian and Sotheby's. Michael, my fourth partner, was sort
of a consultant and an independent filmmaker. We came together around this one
CD-ROM that we did for Sotheby's.

It's a huge success. The four of us sat around and said, "We have
the requisite skills to create a business, an immediate business. " Our
original business plan was to create six media brands in quick succession. Build
it, launch it, and six months later it's widely profitable, move on to
the next one.

It took us eight and a half years to get the first one to be profitable. There's
a concrete appreciation of how difficult it is to do that. Let me just walk
you through who we are and what we are today.

As I said, we were founded in 1996. Today, we have over two million people
coming and using our site every month. About 3,600 members actually enroll each
day. These are women who are giving us their name, their address, their wedding
date, and their email addresses.

We also distribute over 1.8 million magazines. We have 18 or 19 regional additions
and a national book. One of the first things that when you listen to a lot of
the Internet stuff is that you have to start filtering in or filtering out a
lot of the things that you hear.

Like, "Millions of people a month, " or "Hundreds of thousands
of hits, " or "Page use, " and things like that. You all sit
in front of a computer every day. You probably generate a number of page use
yourselves. You visit your account yourself and these sites. That doesn't
mean a lot, ultimately.

The Internet requires very little commitment. Particularly as a media brand,
you're surfing in and out. People are not really committed as they are
in other media formats. I think one of the things that we pride ourselves in
is that we actually harvest a great deal of information from the people that
come to our site.

The members who come to our site, come back nine times a month, 20 minutes
a session. It's frequent and it's very deep usage of what we've
created.

Interestingly enough, because I'm a CEO and we've been driving
towards profitability for eight or nine years. We don't have the luxury
to just build things and hope there's a business behind it. We've
focused on how you make this thing work for your advertisers.

If they're not getting the results, it doesn't matter how popular
your tool is you're going to run out of money. You're going to run
out of the support. I think one of the things that we really focused on was
in this new world of the collision, and we don't think the collision is
actually technology, it's the collision of human behavior and what they're
doing online.

We've chosen to focus on what we call "service-based media. "
Ultimately, I believe that the interactive media is ultimately going to coalesce
around services. By services, I mean, things that you actually are helping people
with, informing people with, or the very nature of an interaction with your
computer. Basically says that the other side of the human is providing something
in return. It's broadly defined as service.

Within the wedding category, we looked at this and said, "We just want
to provide the best and most comprehensive content that's out there. "
That's something that we were able to do online that the offline people
weren't really able to do.

I was interviewed by a reporter a month ago. We got this wonderful hit on The
Apprentice. I don't know if you guys saw that, but one of the tasks last
season was to do a bridal sample sale. One of the groups happened to have the
wherewithal to call us up. We sent out an email blast for them. The other group?we
had a line of women wrapped around the block within, it was less than 24 hours
notice.

The marketing people called them and said, "We've never actually
seen a national brand be able to drive and direct local consumer behavior in
such immediate fashion. " This group could not have called the local radio
stations. That doesn't have enough targeted reach. They couldn't
call the Yellow Pages, who's a competitor of mine. They couldn't
call the Bride's magazine or the national folks.

Because we had the relations with the consumer, we were able to drive that
through. I think that's really one of the things that, I think, the world
has begun to distill into, which is brands. Brands connote all these things
that we've kind of layered onto, but haven't really been able to
sort of grasp.

That's trust, reliability, a certain foundation or to understand. You
may not agree with it, but you understand what it stands for. You read the editorial
page of Wall Street Journal, you know what you're going to get from there.
You may not agree with it, but you're informing yourself. There's
an understood identity.

I think that one of the things we focused on was creating a brand that was
distinct and different. Which I think ties back a little bit to what you guys
do. I'll sort of discuss that. To build an effective brand means you have
to be multi-platform.

One of the things that was really critical to us was to build our brand as
quickly as possible into all forms of media. As opposed to being focused on
the online, where clearly that was the greatest growth of the audience. We did
launch there.

We wanted to make sure that we were being, essentially, non-alienating to the
largest possible audience. We were gender neutral. We wanted to have a sense
of humor. We wanted to do things that were distinct and different. Reinforce,
again, the brand message and the focus of our purpose as a company.

Online, we, like I said, created services. You can search for a honeymoon destination
through our honeymoon search tool. It is not a Google. It does not go out and
crawl. It's a database of resorts that specifically are tailored with
information for the bride. It will tell you whether or not it has a spa. If
there is water sports. If there is a honeymoon package. All the things that
are very specifically relevant.

We have 20,000 gown images in our bridal gown database. Our average member
will spend 14 hours in the first week alone and see 1,500 dresses. It's
interacting specifically with that. We have now over 10,000 local vendors where
you can find a photographer, or caterer, or a band, or a venue.

I bring all those up, because all these custom databases, the only way you
get into it is if you pay us. They're sponsor-driven content information
resources. That is, in some respect, the heresy of what we do. We take the advertisers
content and we know that's what the consumer's looking for. We put
it together.

This is not your traditional banner campaign online. We don't sell based
on CPMs or banner impressions or all of that. We actually package this together
and say, "If you're the Waikiki Sheraton and you want to be in my
honeymoon search tool, you want to be in my magazine, and you want to have banners
that run through, you're really purchasing a package of this. I'm
able to deliver far better results. "

To give you an example, if you look at these little profiles, these little
things. They're designed to be the same size as an IAB standard, what
we call a little badge, ad increment. You do that because you don't want
your client to create different kind of art and creative to sponsor areas of
your site.

When we run ads, and this doesn't show up, but when we run ads on the
side, it's the same size banner. We'll do the contextulization.
Like we know if you're in the Hawaii area, we'll share your Hawaii
banner.

To click through on the banner, if you're running a really good campaign
a one-tenth of one percent click through, which is a dismal. This also speaks
to the trend in behavior of consumers. Six years ago when Infoseek was out there
and there was 12 different other search engines, click throughs and banners
were probably in the 15% range.

That's changed, because consumers just don't click the banners.
I'm sure you guys have generated a few hundred pages views yourselves.
How many banners do you remember clicking on the last week? I bet not very many.

The results of the search are essentially the same banner size and placement.
It's coming off limiting certain search criteria. The average on one of
these is close to 20%. I'm probably not doing the math properly, but that's
over 2,000% increase in consumer interaction with essentially the same content.
I'm not good with the math, obviously.

What you have is where you place that information and how it's positioned
on the site has a great deal with the effectiveness, as you are able to provide.
Not only for your advertisers, but for your consumer. You will hear me constantly
bring the ad side to this into the discussion. I just think that is so core
to the existence of ours as a business, but ultimately the existence of everyone's
here.

When you look at those blog pages, I'm looking at the design of half
of those things, and I'm thinking, "These things are out of business
in five years, because no one's going to click on those banners. "
I don't care how many hundreds of thousands of people go there, you go
to a blog to read the blog. You don't want to click on a banner for whatever
is going to run in those areas.

I think that's going to be one of the days of reckoning that's
going to hit the Friendsters and Dodgeballs and all these other people. A lot
of these people I know. I know the people who have actually started the businesses.

Online, the goal is distribution. What we did was we wanted to make sure we
locked up all the distribution partners. For these brands that you see, we're
the actual exclusive wedding content provider. You go to Comcast.net, it's
"All the Knot. " MSN Women's area, AOL, and so on and so forth.

One of the first things we did was?actually they're cash arrangements.
We were able to convince them that by creating a little wedding area within
their network. The secondary and tertiary links come to me, because then you're
really drilling into deeper information.

We were able to create really valuable inventory for them. It turns out, in
the beginning, in the early days when we were negotiating with AOL, for example,
they hadn't even launched their sports area. Here we are going, "You
got to launch weddings. It's really important. " When they did, they
suddenly realized advertisers were willing to pay premium for the women who
were actually planning a wedding.

Weddings generate $70 billion in retail transactions each year. It's
suddenly an amazing economic force within the media scape, which was kind of
ignored, I think, by traditional media.

One of the first things we did, before we even launched our website, we launched
on AOL. They provided the C financing. We negotiated a three-book deal with
Broadway Books. You all probably know that you don't make a lot of money
with trade paperbacks. It was important for us to be in Barnes & Noble.
It was important that if they've discovered the brand online, there was
even better credibility given when they walked into the bookstore and they saw
that we had three books. We actually will have seven in print by the end of
the year, four through Chronicle and three through Random House.

We then launched our national magazine, which if you've ever flipped
through you'll notice it resembles nothing like a traditional wedding
magazine. Traditional wedding magazines are 1,000 pages cluttered with really
tacky, horrible looking ads.

We convinced the advertisers to essentially turn all their ads into a templated
format. To organize it alphabetically. We've stripped away the branding
on the actual what we call our directory pages, and made it a user-friendly
experience. We wanted the consumers to find the product that they are looking
for as quickly as possible, which ultimately serves the need of the advertiser.

It took a long time. You can imagine these advertisers have great ideals of
what they're trying to do. The results that we've been able to deliver
for them is far superior to what they're able to accomplish anywhere else.

One of the other things that we did that was the real antithesis of those times.
We went public in 1999 and raised a lot of money. The first thing we did with
the money was we bought the largest regional wedding magazine publisher based
out of Omaha, Nebraska.

It was a de-listed, 12-year-old business who was publishing a crazy number of
magazines around the country. We saw access to the local advertisers as being
a key content piece that we wanted to provide our users. Through that network
that was existing within these magazines, we were able to begin to build relationships
with these advertisers. It ultimately became the content that our brides are
looking for.

We got slammed by the Internet analysts. Our stock eventually got to where
it was D listed. People just said, "You're are pure play. You got
a $100 million valuation. You went out and bought an old printing business?
It had a bindery and everything. " It's contributed tremendously
to our growth of the business, but it also reinforced our concept that what
you provide as a service to your advertisers actually becomes a core component
of what differentiates you as a media property.

People talk about Craig's List as this big threat. Craig's List
is one big aggregation of ads. If someone were to propose to a newspaper, "You
should run a section that's just ads and give it away for free, "
people will think this is again an insane concept. The reality is there are
ways of integrating that into your site or your newspapers that can generate
revenue, which we'll touch upon in a little bit, that I think are exciting.

We also, then, negotiated a relationship with the Scripps Howard Newspapers.
I don't know, are the any Scripps papers here? You're not availing
yourselves to the wonderful content that we syndicate through Scripps Howard
Newspaper. We do the bi-annual wedding supplements. In the early days, it was
a real battle with the newspapers to even get any kind of credit. That it came
from the Knot or it came from Carley, our editor-in-chief.

Today, the thing looks like a custom-published magazine that is inserted into
newspapers. It actually has enabled their sales force to sell more effectively,
because it gave a credibility to the content that the newspapers are running.
We've had a wonderful relationship.