When MountainZone president Greg Prosl talks about the business strategy of the adventure sports site he runs, he can't resist a chuckle. "It all comes down to 'the three C's,'" he says, "content, community and commerce." It's the motto "the three C's" that elicits a laugh from Prosl: The mantra is so often used by e-commerce gurus that it's become almost meaningless.
Cliche or not, MountainZone proves that the combination of content, community and commerce remains a profitable Internet strategy.
In essence, MountainZone uses a rich content mix to attract visitors. Then the site's material about mountain biking, skiing, climbing and snowboarding enhances its e-commerce efforts. It's not just an ad for a Gore-Tex jacket; it's a Gore-Tex jacket ad next to an article about a 10-day Yukon survival trek.
The community aspect comes into play as members share their outdoor experiences via forums and chat, and submit photos, videos and articles. "The community writes for us we've got user gear reviews and user discussions and tens of thousands of registered members," Prosl says. According to him, the site gets about 300,000 unique visitors a month.
MountainZone's rich mix of the three C's works to support the site's biggest revenue stream: advertising. Its audience of outdoors enthusiasts a group that spends heavily on gear is enough to make MountainZone's ad inventory a consistent seller, Prosl says. About 70 percent of site revenue is from advertising and 30 percent is from outdoor gear sales.
At MountainZone, Aberdeen Group analyst Kent Allen notes, "You've not only got a targeted audience, you've got an audience who has come to do something. It may not be to get involved in the product discovery process, it may just be 'I enjoy the content, I enjoy the community.'" But, notes Allen, "That's what marketing and selling is all about."
Dropping From the Peak
The MountainZone saga includes an all-too-familiar boom to bust chapter from the late 90s.
Formed by Prosl and two other entrepreneurs in 1996, the site was a pioneer in audio cybercasting of outdoor adventure events. It focused on first person accounts. "We did the first live Everest snowboard event, the first call from an 8,000 meter peak and the first call from Mount Kilimanjaro," Prosl says.
These dramatic first person accounts created a buzz, and MountainZone climbed rapidly to the top ranks of outdoors sites. In 1999, the site had nearly $10 million in e-commerce revenue, Prosl says. "It probably put us 2nd or 3rd in terms of e-commerce and the outdoor space after REI."
Quokka Sports acquired MountainZone for $33 million in 2000 in a deal that was primarily a stock transaction. "Quokka looked at the time to be one of the winners, with a big cash horde and these amazing partners: Intel, NBC, and one of the big VCs," Prosl remembers. "Everything seemed perfect, and it's an interesting lesson because absolutely nothing was perfect at the company. Just 13 short months later, they declared bankruptcy." Since the deal was primarily a stock transaction, most of the $33 million just evaporated, Prosl says.
After The Fall
Prosl extracted MountainZone out of bankruptcy and has set about rebuilding the site's business. From its peak of almost 120 employees, it is now run by only 12 employees.
Prosl's been slow to jump back into e-commerce because of the costs involved. "Rather than burden ourselves with those significant upfront costs we've been I think prudently allowing ourselves to get our feet back under us before we ventured too deeply."
Click on MountainZone's Marketplace section and the site uses frames to present outdoor retailer REI's e-commerce store. This allows MountainZone to offer some 10,000 skus but take no financial risk. REI maintains its own inventory and handles fulfillment.
MountainZone's e-commerce strategy, Aberdeen's Allen notes, is a sort of affiliate marketing, in which REI is the merchant and MountainZone is the publisher. "It's like REI needs to view MountainZone as an indirect sales channel," he says.
In fact, Allen says, "I would argue that MountainZone is a better sales person because they're a third party, they're a validator [for REI]. Before the Web I might have called my buddy for an opinion about gear, now I'll look at a site like MountainZone."
Prosl plans on venturing deeper into e-commerce this fall, when the site will re-launch MountainZone branded gear. Since the gear needs to be manufactured before it sells, the MountainZone gear is a financial risk, and a big bet on the value of the site's brand.
Rebuilding the site's old look and feel Prosl "hates" what Quokka did with it was a big job. "Imagine, we've got 15,000 pages of content, so we had go back by hand and bring all the programming code current so there were new ad tags."
But the effort was worth it, because the content-community combination creates a certain user loyalty, Prosl explains. "If I'm participating in the community it holds that all things being equal I'll likely purchase my goods and services in the community as well."
The content-community combination allows for merchandising opportunities a sun protection ad next to a rock climbing video that Prosl calls "the secret sauce of the model."
And customer acquisition cost is significantly less than for a stand alone e-commerce site, he says. "If you're just an e-commerce site, you don't have all of these pre-qualified viewers regularly visiting. That's huge differentiator in this content-community-commerce model over somebody who's strictly e-commerce."
Allen notes that MountainZone is an example of how e-commerce is blurring the line between media and marketing. "This gear review: is this a piece of content or is this part of the sales process?" he asks.
As Prosl sees it, the three C's creates a new kind of brand equity. "We're creating one of the most solid branding exercise because it embodies the actual people. I don't just wear this Nike it's as if I'm part of the Nike community in a way. It's deeper and richer experience when I participate in a way that makes me more distinctly part of the community."
As mentioned earlier, MountainZone's biggest revenue source is not sale of goods but rather its advertising inventory. Relying on advertising as a primary revenue source a strategy that has seen plenty of failures is now working, Prosl explains.
Internet advertising rates have firmed up, he notes. "You've got a lot more traditional advertisers who now apportion a chunk of their ad budget towards online. So you've got a bigger pool of advertisers competing for that space." Allen echoes this view. "We're seeing people who shift some of their budget away from TV into online and see their gross rating points increase," he says.
"When you have a specialty site, you can command much higher ad rates," Prosl explains. And, the Net ad industry is now selling bigger and more diverse ad units, like interstitials and half page ads, products that "weren't available back when this whole was concept was thrown out with the bathwater," Prosl says. The site has recently hosted big campaigns for Chevy trucks and Nissan sport utility vehicles.
For all its success, the site has plenty of rebuilding to do after the Quokka implosion.
"From a business perspective, the biggest challenge is, again, just growing the business. We've been down this road before," Prosl says. "Maintaining that delicate balance of spending enough to grow the business, and learning the lessons of the past, not overspending, to avoid ending up as roadkill."
"Over the last months we've demonstrated we know how to manage the process, so we're kind of sitting pretty once again, it's been surprising," he says. "We're not quite back to where we were, but we're close."
Adapted from ECommerce-Guide.com.