Can magazine companies compete online?

I guess it’s theme week. And this week’s theme is all about magazines and the web.

Yesterday, I pointed to an interview with the business editor of Wired magazine regarding magazines and the web. Today, the Wall Street Journal has an article on the same topic, focusing primarily on the web strategy of Wired’s parent company, Conde Nast.

Quote:

“Web revenue for magazine companies is about 5% of their total revenue, says Martin Walker, chairman of Walker Communications, a magazine-consulting company. “While [online ad revenue] is growing quickly, it is not replacing lost print revenue,” he says. “None of them can compete on the Web in terms of traffic.”

While I’m sure Mr. Walker knows what he’s talking about, I sometimes think I’ve heard that statement said so many times by so many magazine industry people that it — to me, at least — has risen to the level of a tenant of faith — or an accepted myth. Again, I’m not singling out Mr. Walker — most of the people I know in the magazine world would say the same thing: Revenues from online operations are growing fast, but can only, ever be a fraction of lost print revenues because, well, magazines websites will never be able to compete on the Web for traffic (which translated, means: “with Google”).

I’ll skip the whole economics of the two different business models — economics that include the overhead of marketing, production and distribution in magazines — that make a mere comparison of top-line revenues irrelevant.

I’ll go ahead and jump to my challenge of the core belief represented in the quote: “None of them can compete on the Web in terms of traffic.” I don’t understand that theory. What does it mean, exactly? Who can Conde Nast not compete with in terms of traffic? (Again, those are rhetorical questions: The implied message is that magazine companies can never compete with Google for traffic.)

I believe a more important question to ask is this: Is traffic the the only — or the universally definitive — competitive metric of the web? Will traffic always be the metric used by advertisers to determine where they should invest their marketing dollars? Obviously, if I sell widgets online and search engines deliver me customers who are in the process of buying widgets, I’d place an extremely high value on the traffic metric. But what happens if (or, when) advertisers who aren’t driving online transactions decide “time spent” on a website is a more critical measure of engagement than unique users or pageviews? Or what about when they realize that massively-traffic’d web services and applications that are utilities and tools, rather than media one experiences — or engages with — are perhaps not the right environment for brand-building marketing?

Or what if some types of advertisers (i.e., consumer brands that aren’t using the web to drive online transactions, but to support a brand) realize that a better means of determining where to advertise is something like the Techmeme Leaderboard that ranks which websites tech-niche bloggers are pointing to. Can magazine companies compete for a top spot there? Well, one could easily dominate it if it they purchased a few properties like TechCrunch. But even today, there are plenty of print-centric brands represented on the list. Moreover, once you move outside the world of technology news, I’m sure one would find that the “leaderboards” of online media are already print-centric brands. Want one example? Here is the leaderboard for a sister “memetracker” of Techmeme, the politically-focused Memeorandum. Do print-centric brands compete there? Answer: They dominate it. (Hypothetical question: If a leaderboard of food bloggers existed, where would Epicurious rank?)

Obviously and without a doubt, Conde Nast will never compete with Google in terms of traffic. But is utility-oriented traffic what a Conde Nast’s goal should be? Google is a search engine. People use it to find what they are looking for. If Conde Nast’s web properties are what the searcher then clicks to — and engages with and blogs about and develops conversations and relationships around, isn’t that “engagement” what brand marketers want?

In the end, raw traffic will be the competitive metric of search-oriented advertising — a massive and powerful new form of advertising that leads directly to decisions and transactions. However, another form of online advertising that’s focused on brand-building and lifestyle-association will gravitate to those places on the web where people engage in their passions and loves.

And that’s an arena where magazine companies should be able to compete rather forcefully if the people who run them would get over believing in the myth that such a competition is over.