Mequoda System History and Methodology

A Brief Letter From Editor and Author Don Nicholas About the History and Methodology Behind the Mequoda Sytem

I have been involved in Internet marketing and publishing since 1995, when I was running an agency called Blue Dolphin Direct—primarily a print direct marketing and editorial consulting firm for a variety of magazine and newsletter clients. It was during that time when the folks at ComputerWorld had the revolutionary idea that we could sell subscriptions to their print magazine via the Internet. The program took about eight months to develop and was successful, in that we were able to sell print subs at a cost per order of about $65—a little below their average cost per order via direct mail. And that was the beginning of our journey.

In early 2000, we converted the agency into BlueDolphin.com, which was an early, successful online retailer of print magazine and newsletter subscriptions—albeit a hub-less site. And although we became very good at mining our database, we were not so good at building it through the kind of frictionless sources that we see successful integrated media companies using today.

In late 2003, we concluded that the action was not in managing a centralized retail site for the print magazine and newsletter community but, instead, in helping individual publishers build their own portals, or hubs. So three of us formed Digital Media Advisors—still not having a clue about what we now know as the Mequoda System.

We spent 2004 researching successful online companies and, discovering similarities among them, began to label the approach they seemed to be following as the “Media Quote Daily Methodology.” That was quite a mouthful and, rather quickly, the shorthand version emerged: “Mequoda Methodology.” In early 2005, we decided to change our company name to Mequoda Group and rebrand every product we produced under the Mequoda label—including Internet Media Review which, along with SWEPA, was the precursor to the current Mequoda Daily.

By mid-2005, I found myself running the Mequoda Group, an Internet marketing research team of 20 people—most of whom have been working on the Internet for five to ten years and who now use the Mequoda System as a backdrop for finding high-performance, integrated media companies.

What’s a high-performance, integrated, media company? At Mequoda Group, we define it as one that:

  1. Generates more than 10 percent of its total revenues online; and
  2. Successfully integrates and dedicates resources to its Internet operation, which is growing.

While 10 percent may seem like a rather low cutoff in this day and age, we have bumped into only a few media companies that actually meet that threshold. We have, however, identified a handful of media organizations that are earning a disproportionate amount of their annual revenue—20, 30 or perhaps 40 percent—online and have a growth history over the last five years of 30, 40 and even 50 percent.

The most impressive example of a good-sized, high-performance, integrated media company that we’ve found so far is Agora, Inc., which has grown from $1 million in online revenue in 1999—four percent of its total revenue—to an estimated $110 million in 2005, which will represent more than 52 percent of the company’s total 2005 revenue. The secret to Agora’s success, of course, is its free Internet hub, DailyReckoning.com, through which visitors can subscribe to the company’s free, daily email newsletters. The subscriber names then become a robust marketing database of loyal, qualified individuals to whom Agora markets its print newsletters, books and events.

Another successful high-performance example is Forbes, which basically took its offline magazine brand and made it the centerpiece of a free online operation. Forbes.com is not limited to the content and frequency of the biweekly print magazine but includes a plethora of stories that are free to the visitor and refreshed daily. As a result, the number of unique visitors to Forbes.com jumped from 11 million in January of 2005 to 14 million just 11 months later. And because perhaps 80 percent of its online revenue comes from third-party sponsors, that is the important metric for Forbes.

Other successes that we’ve discovered include America’s Test Kitchen, PC World, the Book Report Network, The Goals Guy and a dozen or so more.

We found certain similarities among all these examples:

  • A robust Internet hub
  • Frequent, well-edited, free, controlled circulation email newsletters
  • A large marketing database generated from the free email newsletters
  • Senior personnel involved in the online operation
  • Substantial revenue generated online
  • Impressive growth rate

We also began to understand that there was no required revenue mix. We did notice, however, that the seriousness with which they dedicated resources to their Internet hub seemed to be the single most-important definer of a high-growth, integrated media company that was doing well online—as compared to a company that was bringing in only five or 10 percent of its revenue from online sources. The successful Internet business practices of these high-performance media companies, therefore, became the basis of the Mequoda Methodology.

What’s particularly fascinating about the Mequoda strategy that we’ve defined is that it’s business model agnostic. It doesn’t matter whether you want to generate revenue by selling sponsorships or by selling information products—and it’s size agnostic and industry agnostic, as well. The Internet is an information distribution model that, unlike any media that came before, is an extremely flexible format. And the high-frequency email newsletter—which is so important to the Mequoda Methodology—is a flexible, fluid platform.

So now, just as anthropologists search for the missing link, our Mequoda Group research team is constantly on the lookout for all manner of media websites that fit the criteria to observe, review, profile and critique them in order to affirm, tweak, update and improve the Mequoda System.

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