Media sets up shop

Wine, books, food, even foreign holidays are now available through media owners' websites. Media Week reports on how the industry is turning to online shopping to boost digital profits.

If a trusted brand, existing content and access to a large audience sound like ideal elements for an e-commerce venture, then it's little wonder that media owners are upping their investment in this area.

With broadcast and print ad revenues in decline, media owners are increasingly eyeing the potential profits to be made from integrating their core propositions with online shopping.

The gloomy economic climate has not deterred consumers from shopping on the internet - customers are using the web to seek out bargains, compare prices and ensure they get the best deals. In July, consumers' online spending rose 11.3% on the previous month, to reach a total market value of more than £4.8bn - the equivalent of £79 for every person in the UK (source: Capgemini).

Zach Leonard, director of digital strategy and development at News International, sums up the benefits of moving into e-commerce. The publisher has been involved in a variety of e-commerce sites over the past year, ranging from a significant investment in French fashion portal Brand Alley to the Times Selects shop, which offers tickets, wine, books, food, travel and gifts online.

"E-commerce is an additional revenue stream to our traditional digital advertising model," he says. "We can also deepen our relationship with customers through the use of data and product and service delivery."

Jeremy Hill, founder of digital consultancy Circus Street, says media owners have been involved in e-commerce for some time, whether through affiliate deals or reader offers. However, the nature of such ventures is changing. Media owners are increasingly launching their own e-commerce propositions or white-labelling others (rebranding as their own service) and now view e-commerce as a powerful way to boost existing revenues.

Hill says: "Media owners are turning to e-commerce because the money they receive per viewer online versus the money per reader in the press doesn't stack up on its own. For some publishers, e-commerce contributes more than display. Consumers have a relationship with the media brands and trust them, so it makes sense for media owners to have a commercial relationship with the customer."

Over the past year, media owners such as UKTV, Sky, Telegraph Media Group, News International, Mirror Group Newspapers and Future Publishing have invested heavily in their e-commerce offerings, either through new launches or boosting existing services.

Other media owners are starting to recognise the potential of e-commerce ventures. For example,, which so far has had a limited shop on its portal, recently launched an online shopping and price comparison site, called, offering goods ranging from mobile phones to books, computers and financial services.

Partnership model

While the level of investment in e-commerce varies between media owners, their chosen model is primarily based on a partnership between media owner and specialist e-tailer, developed around either a tenancy or a revenue-share model.

News International's e-commerce ventures pass qualified leads through to partner websites, where the transactions are made. Data and revenues are shared with the partners on varying terms, depending on the product or service.

Telegraph Media Group's e-commerce sites, launched this year, include travel, personal finance (with and local listings (with

And UKTV's five e-commerce sites partner brands that carry out all the payment details and fulfilment. Wine specialist Laithwaites powers UKTV's Wine Club and kitchenware supplier Blueshoots partners its cookshop service. As well as linking up with strong brands with a close affinity to the target audience, it is also vital to build on existing levels of customer loyalty.

Mike Moore, general head of digital at Telegraph Media Group, says: "Digital is a significant part of our multimedia offering and it is only going to get bigger, with e-commerce playing a significant part in the company's digital revenue.

"Our transactional websites aim to create a good user experience and, as media owners, we have the advantage of being able to offer strong content to a user base where the trust element is considerable."

Amber Coley, head of online advertising sales at UKTV, says that the company's e-commerce sites, which cover cookery equipment, diets and wine, provide users with an extension of their current experience, as well as opening up new revenue streams.

"E-commerce elements provide a deeper user experience and give consumers another reason to return," she says. "We can derive revenues from both transactions and page impressions."

Producing tailor-made content and offers for users is also important - UKTV has carried out extensive research to discover whether there is an audience for its e-commerce services. "We know that the UKTV Food audience is passionate about wines and selecting the right wine to match a meal type," says Coley. "When we launched the cookshop, we carried out trials to establish whether our users are comfortable with spending online and if it is important to them to buy quality equipment."

At the same time, magazine publishers are exploiting different approaches. For example, Future Publishing, which specialises in titles for gaming, technology and biking enthusiasts, has linked its website to a number of retail partners.

"With more than 8,000 products in our online reviews database, linking to retail partners was a logical step," says Simon Wear, chief operations officer at Future Publishing. "We have a licensing model that offers a minimum guarantee of income for Future, set against a percentage of revenue."

Media owners also have the advantage of a ready-made customer base - a fact that has not gone unnoticed by Sky. In October last year, the broadcaster launched personal finance and motoring sites, in partnership with MoneySupermarket and Auto Trader.

This January, Sky overhauled an existing online travel portal offering package holidays. All the sites are based around tenancy deals, and future e-commerce propositions are under development. Carly Crouse, director of content for Sky's online business unit, believes these e-commerce services naturally align with Sky's existing subscriber base.

"We already have a billing relationship with our customers and many of our users have Sky broadband, so they can connect to the internet," she says. "We have made a significant investment in e-commerce and we are constantly carrying out research with our user base to see which services may best suit them."

Media owners are also using their e-commerce ventures to create special offers to encourage users to come back for more. News International negotiates exclusive access to limited or special edition products for its users, or extends deeper discounts than might be available elsewhere.

Generating revenues

So how much money can media owners make from investing in e-commerce? Media owners are reluctant to reveal revenue figures and, according to Ralf Elmer, chief executive of e-commerce service provider Avail Intelligence, most initiatives are not yet reaping the financial benefits.

"Internet surfers are a fickle bunch and they move easily to the next fad," he says. "It is hard to create a stable user community around a site if you do not employ social networking technologies and involve the users in the browsing and buying process."

Circus Street's Hill believes that newspapers are leading the way, as they are able to cross-promote from print to online. "Newspapers have a heritage in reader offers, as they were used to increase circulation in the past. Magazines haven't developed as much since, traditionally, they were able to underwrite their business through cover price."

If media owners' forays into e-commerce are ultimately to prove successful, Elmer believes companies must rethink their distribution channels and design new consumer segments.

"Those who run e-commerce sites must define the key metrics they want to improve, ensure they are measured and then choose the tools to improve them," he says.

"For example, a personal finance site can be dependent on an ad-business model to create revenues on top of transactions. And media owners can use behavioural targeting to place the right ads in front of each visitor to optimise relevance and increase revenues."

Media owners' e-commerce ventures may not yet be in the same league as e-retail giants Amazon, Argos and But as consumers' disposable incomes shrink, their confidence in shopping online is rising - particularly in the clothing, footwear and accessories sector, which grew 23% on the previous month in July.

The Financial Times selling handbags? That would be something.

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