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IQ News: On The Right Path?

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Three years after its debut, Pathfinder may be on track.
The Pathfinder name said it all when Time Warner launched its consumer Web site in October 1994--to blaze a trail where no general-interest media conglomerate had gone before, discovering novel ways of publishing in the uncharted realms of online interactivity. But in its third business administration in as many years, Pathfinder parent Time Inc. New Media is now starting to embody what others have begun to understand: that tried-and-true brands resonate with consumers online as well as off, and that traditional marketing pedigrees matter.
The change in attitude has to do both with the appointment of Linda McCutcheon Conneally as president of Time Inc. New Media in April and with the sometimes-difficult lessons company executives have learned managing one of the most prominent sites on the Web. In predictable Time Inc. tradition, McCutcheon Conneally came to the post from within the company, after a two-year stint as director and then vice president of ad sales and marketing in the division. Prior to that, she had spent her career in magazine marketing, having joined Time Inc. magazines in 1989.
Those skills would seem to translate well into new media marketing, but her background is still a rarity in the industry, where top executives tend to come from technology or content development.
Not surprisingly, she has put her background to use in giving Pathfinder a more marketing-savvy approach. As a result, Time Inc. New Media now appears to be headed in a better direction as compared to what many observers felt had been a chaotic Web effort. McCutcheon Conneally, however, seems unwilling to take the credit.
"Timing is everything," she insists, in her corner office in New York's Time & Life Building. "By the time I became president, Pathfinder had moved from a research and development stage to a real business stage." She has nothing but praise for her predecessors: "Walter Isaacson was and is an editor's editor. He liked to ask big questions and he was smart enough to have the answers. Paul Sagan had a very illustrious career in TV news, and what he added was that the Web was a visual and auditory medium as much as it's about reading."
What neither Isaacson, who is now managing editor of Time magazine, nor Sagan, who is now a new media consultant in Switzerland, seemed to have was the wherewithal to make Time Inc.'s new media investment pay off.
"I remember going to Pathfinder's first anniversary party and being struck by how they were just hemorrhaging money," says Michelle Madansky, director of strategic planning for interactive ad agency Avalanche Systems. "It looks like Linda is doing a good job in turning that around."
McCutcheon Conneally, however, prefers to quote statistics often cited by Time Inc. executives about the long road to profitability for startup properties. "On the average, it takes five to seven years for a magazine to see a profit," she says. "At Time Inc., People did it within 18 months, but far more typical was Sports Illustrated--it took 11 years to move into the black. I'm determined that we will become profitable sooner than the average magazine and sooner than our competitors."
Upon assuming her new role, she instituted a magazine-like business model with multiple revenue streams. "When I became president, we had two revenue lines on our budget: advertising and other," she explains. "We now have five, and we have revenue against each of them." Advertising continues to be the most important source of income, although company officials won't reveal exact figures.
McCutcheon Conneally has added syndication, distributing content to AT&T WorldNet and Microsoft Network, among others; commerce, through partnerships with Barnes and Noble and CD Now, as well as Pathfinder's online sales of Time Inc. merchandise; niche, high-margin products marketed internationally, such as the $495 Fortune 1000 database; and title development, such as selling subscription renewals online.
At the heart of this new direction is a return to traditional branding after a few years of flux over which brands should be pre-eminent online. Now, Time Inc. New Media emphasizes traditional media brands such as People, Money and Time, instead of made-for-new-media designations, particularly the Pathfinder moniker itself.
It remains unclear as to how far the company will go to amplify its traditional brands online. Asked whether the Pathfinder name may one day vanish, Time Inc. editor of new media Dan Okrent replied, "I don't know." However, he says, "We're definitely leading with our brands rather than Pathfinder, which is receding."
Of the total 17 million page views per week drawn by all the sites under his purview, only 17 percent come through the Pathfinder home page, with most going to the individual titles' Web addresses. Meanwhile, some of Pathfinder's lesser known offerings are being eliminated. Okrent wouldn't state which, since he is still in the process of giving those areas 90 days' notice.
For many of those who have followed the permutations of Time Inc. New Media, the recent changes are a welcome development. "I wondered from day one why they were trying to create new businesses, when they should have been deepening their relationship with readers of their existing properties," says Steve Klein, who leads media and interactive strategy at New York-based Kirschenbaum Bond & Partners.
None of this means that Time Inc. New Media will only be pushing existing magazine titles online. In fact, it has been aggressively pursuing nontraditional brands, such as the successful Ask Dr. Weil alternative medicine site it acquired from Wired Digital and The Rules, a new site based on the best-selling guide to dating and marriage. In January, the company plans to launch the first simultaneous multimedia debut of a magazine and Web site, Teen People.
Still, by relying on more traditional branding, McCutcheon Conneally is bringing stability to a business often in thrall to the latest marketing fad. She observes, "The Internet advertising market is evolving so quickly. If a bad trend is coming down the line, it's like New England weather. Just wait a few minutes and it will pass. This notion of click-through and the Internet as direct-mail model is beginning to recede because of research reports that have come out pointing up the incredibly positive effect that Internet advertising has on brand building."
She concludes, "We are a business built on some of the most powerful brands in the world. To the extent that Pathfinder has dominant brands in news, money and business, entertainment, sports, health and family, we are in a unique position for advertisers seeking those audiences."