Let’s start with some facts about the WeblogsSL. It is the first company in Europe in vertical publications with more than 40 blogs and 15.8 million unique visitors in January 2011. The Madrid based company was founded in January 2005 by charismatic entrepreneur Julio Alonso, who gave up his successful consulting career to start this enterprise. Initially, the founding team was working from Julio’s bedroom with zero outside funding. Julio surrounded himself with passionate bloggers, subject matter experts for particular topic, who write deep, insightful and interesting posts about the topic they like. There lies the main difference between WeblogsSL and traditional media, where journalists are usually “generalists” assigned to topic by the chief redactor. Additionally, on-line community of readers actively comments on blog posts and correct even slightest errors or omissions, powerful feedback mechanism most WeblogsSL’s competitors lack.
WeblogsSL’s product is the content it generates and publishes for free at the Internet. Quality, frequency of updates and the topic of the content is what determines how many readers it attracts. However, are WeblogsSL’s readers its customers? Given the fact that the content is for free, the answer is clearly no. Producing the content is actually the cost side of the value chain as WeblogsSL pays to its carefully selected bloggers. The revenues are generated from advertising in the form of banners. The Julio’s company deals directly with media agencies and advertisers while using Ads placement services such as “AdSense” only for ad inventory, which was not directly contracted. For attracting the advertisers to allocate their budget to WeblogsSL’s blogs, Julio needs to have convincing arguments at hand. Hence, daily data traffic is being thoroughly analyzed in terms of from which sites are the readers coming, what are their demographic and geographical data, how much time they spend on the blog and do they return. Example of such metrics for advertisers from Xataka blog can be found here. In conclusion, WeblogsSL business model is based on managing relationship and balancing the needs of three parties Bloggers, Advertisers, and Readers.
In the past Julio was using leading ERP system for media agencies OperativeONE, which served for managing the relationship with advertisers and tracking the ads campaign results. After some time, despite the investment to the ERP software, Julio decided to abandon it in favor of “in house” developed solution based on Google Analytics and Google Apps. Although, the complete reasoning behind this decision was not presented at the session, I assume it followed similar pattern of trade-offs between standardized and “made to measure” solution. Based on my experience, typical issues with sophisticated ERP systems are:
- Company usually utilizes a fraction of available functionalities
- Learning curve for the users is long given the loads of functionalities
- Processes in the ERP system are hard to modify so that company has to adjust its processes according to the ERP system (in consequence it leads to unifying processes in the industry and losing of competitive advantages)
Firstly, WeblogsSL mainly needs to gather exact statistics about its readers and ads campaign efficiency. Secondly, it needs to share these data across the company and with its customers (Advertisers). Google Analytics is one of the most powerful data traffic analytics tool at the market with massive advantage of being free. Also, Google Apps are relatively cheap in its enterprise version with immense capabilities in sharing the documents (data traffic results) with anyone inside or outside the company in real time. On top of that, both applications are in the “cloud” eliminating needs of maintaining own server infrastructure. Therefore, I can understand Julio’s decision to build own solution based on these two leading technologies at the market.
In summary, it was an inspiring session, which made me realize how powerful Internet is in delivering the right marketing message even for very specific audience. No wonder that Internet Ads with $22.7b represent third biggest advertising spending in the US after TV and newspapers. Another take away is that it is possible to build a large company with very limited financing if you can manage the growth wisely.
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