High traffic draws big sponsors

By Dan Woog

     The most common model on the web is the content site that offers e-commerce on the side.
     But more and more, we’re seeing e-commerce sites add editorial and advertising, which creates both stickiness—longer visits—and ideally significant revenues. Or so’s the hope.
     The latest to do so is CDNOW, the internet's leading music store, which has unveiled a revamped site offering reviews by top music critics. The site carries a variety of advertisers beyond the expected music mix, including a number you would not expect to see on a music site.
     A prime example, says Bob Saltzman, vice president, corporate sales and development for CDNOW, is First USA, the world's largest Visa credit-card issuer. A three-year contract allows First USA to promote its products and services through integrated placements and sponsorships, including banner ads, buttons, text links and special offers. Saltzman believes the deal could generate more than $8 million in revenue over three years.
     The top of the CDNOW site features Sun Microsystems' logo and the tagline: "Together with Music Boulevard we've built a better music store!" Sun appears on CDNOW's home page, as well as the top navigation bar located on every page throughout the site. In turn, Sun's print ads also feature a CDNOW message.
     CDNOW offers 500,000 music-related products, 10 times the size of the average music store. It is the third most-visited e-commerce site, according to a March Media Metrix report, with 2 million paying customers.
     Editorial content on the revamped site includes news, reviews, artist and album picks, feature stories, profiles and interviews from staff writers of Rolling Stone Network, MTV/VH1 and CMJ New Music Monthly. News headlines are updated several times daily.
     CDNOW's addition of editorial content makes the site stickier, says Saltzman, and he believes that stickiness should increase even more when download capabilities are added in August, followed by chat and webcasting.
     Saltzman predicts that other advertisers will clamber on board. Likely prospects include telcos. "Music is a tremendous retention tool, and downloading and streaming offer great incentives to sign up for high-speed access." He also sees more consumer electronics advertising. "With hundreds of thousands of people a day shopping for CDs, that's a logical fit."
     Does CDNOW worry about cannibalization, with customers buying phone services or CD players rather than CDs? "That's an interesting question," Saltzman admits. "Because we're at the beginning of our journey it's hard to answer. We do want to continue to be a store, and we don't want advertising to become a distraction. Clearly, advertisers want to leverage e-commerce, because we can deliver high customer loyalty, a top-tier portfolio, and increasing high-margin revenue."

- Dan Woog is a writer based in Westport, CT.