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IAC's Dotdash has built a profitable business out of evergreen service content. Now it's setting its sights on selling products like paint and bedsheets.

Neil Vogel
  • IAC's Dotdash has avoided the layoffs and furloughs that have impacted many media companies in the pandemic.
  • It's an example of how even an ad-based business can survive tough times, with evergreen service content that's advertiser-friendly and can be extended to commerce.  
  • The company also has grown its commerce revenue with new licensed home products like housepaint that are well suited to people while they're in lockdown.
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Media companies have been walloped as advertisers slash spending in the pandemic, but IAC's Dotdash has been a rare exception.
Dotdash — a portfolio of service sites like Verywell (health) and The Spruce (home) that grew out of About.com — saw traffic soar 40% in the first quarter as people in lockdown sought out actionable information on its sites, like redecorating tips and gardening ideas.
Dotdash was already in the black, making $40 million in profit on revenue of $168 million in 2019. Revenue was up 30% in the first quarter. (For more on Dotdash's business model, here's its recent pitch deck.)
Advertising softened in April, but revenue still increased 22% thanks to a 115% jump in performance marketing — money the company makes when people click from Dotdash sites to buy products and services from third parties.
Last year it started to expand into its own products, licensing a line of The Spruce-branded house paint for millennials and Gen Z sold at Amazon. After the pandemic hit, sales blew up and have been growing 25% per month, per the company.
"We're selling thousands of units a month," Dotdash CEO Neil Vogel told Business Insider. "All of sudden we have this breakout product."
Dotdash's TheSpruce paint
Sales were helped by the fact that Dotdash already has a big audience to sell to, and painting is an easy DIY project people can do while stuck at home. The company also limited the line to 30 neutral shades it says are popular with its millennial audience.
"It's easy to choose the color, it's easy to buy because you can buy it online, and it's easy to use — you only need one coat," said Mélanie Berliet, GM who oversees The Spruce.

Dotdash plans to launch products in a nationwide retail chain

Dotdash is expanding next to pet wash, rugs, and bedding. It's planning to launch another product, which it wouldn't specify, nationwide in a big retail chain in September. Byrdie, its beauty site, is planning to come out with a makeup line towards the end of the year.
Performance marketing revenue makes up a third of Dotdash's business, and product sales will be included in that bucket. Vogel said these new products won't materially add to the bottom line this year, but said they show how far the company's brands can stretch at a time when all media companies are trying to figure out different ways they can make money.
"It's another way we can be successful doing what we're good at," he said. "We're not all of a sudden selling TV shows to Netflix."

Dotdash is still looking for acquisitions

Dotdash is also growing through acquisition. IAC has aggressive growth plans for Dotdash; it acquired six niche sites over the past year, including Liquor.com, Brides, and Byrdie. Vogel said the pandemic hasn't changed those goals.
"We're always talking to everyone. There are a lot we could have a lot of fun with. Asset valuations are still very high, so it may take a while, but we're still looking."
Many CEOs see remote work as the future now that the pandemic has shown people can do their jobs effectively from home. Dotdash is also a contrarian on this front.
Vogel said it's not clear yet when and to what extent offices will reopen, but that there's value in working face to face. He cited a recent employee survey where more than 80% said they wanted to go back to the office if it was safe.
"It's hard to have an office culture when you're remote. The whole idea of saving money on real estate doesn't make sense to me because you create a whole lot of value when you're together. People like coming to the office. What people do want is flexibility to work from home, which I'm totally down with."
SEE ALSO: Complex Networks is profitable, has diversified revenue, and wants to compete with the entertainment giants — here's its pitch deck
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* This article was originally published here

https://www.businessinsider.com/iacs-dotdash-ceo-is-profitable-and-expanding-to-dtc-products-2020-5

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