Wednesday, September 1, 2004

TechTarget's Formula for vContent

The latest news about IT publishing firm TechTarget centers on their hiring two key publishing executives: Maryfran Johnson from ComputerWorld and Joe Levy, formerly head of CXO Media, another IDG company. In early June of this year, TechTarget also attracted attention when it was reported that it raised $70 million in Series B venture capital funding. At a time when tech-related B2B publishing groups are struggling with a difficult print advertising market and are trying to reposition themselves away from a print-centric operations model, what is TechTarget's formula for success?

A key element of their model rests on building tight communities of IT execs with similar interests and business questions. Serving up specialized content in one of their 20 industry-specific Web sites, 70+ newsletters, and Webcasts helps build the community; then TechTarget uses the nicely segmented audience of enterprise IT execs to attract advertisers. So far, this doesn't sound much different from the typical controlled circulation B2B publishing company. Even TechTarget's conference operations, which emphasize "invitation only" access (to assure exhibitors and sponsors of a high quality audience) really don't differ much from the standard model used by CMP or IDG. Although TechTarget seems to be creating something more akin to "membership" organizations or associations where participants share more in common than readership audiences of most business publications.

So why would two VC firms (Polaris Ventures and Technology Crossover Ventures) entrust $70 million to TechTarget at this time? One reason is that TechTarget isn't burdened with a stable of print publications and associated infrastructure that need "reinventing". They've been able to start with a web-centric digital publishing operation from the get-go. And, they hired personnel with the right technical experience and editorial outlook.

Another reason is their approach to advertising. Again, starting with a Web-focused advertising plan, they've been able to ride the wave of growth in internet advertising that they then expand into multichannel advertising opportunities via their conferences, e-newsletters, Webcasts and print publications (yes, they have a couple of print magazines). In fact, with their growing network of sites that reach over 3 million targeted readers, TechTarget has become its own self-contained online B2B advertising network, which could easily expand beyond its primary boundaries.

A third reason for providing cash to TechTarget at this time is to allow them to make acquisitions. M&A activity in the media segment is picking up. Plus, quite a few publishing properties are currently in the hands of private equity firms, such as Veronis Suhler Stevenson and Thomas Lee Partners, and these equity firms will be interested in selling to the right strategic buyer.

Finally, with this latest hiring move, TechTarget has emphasized that it understands the need for high quality relevant content--editorial expertise and quality control does matter. Adding together TechTarget's quality content, technical capabilities to run a digitally focused operation, and its obvious understanding of the importance of developing well-defined communities of readers, TechTarget has all of the elements of a winning vContent formula.
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