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Things are Starting to Clique

Have you picked up a popular magazine lately? Probably not with one hand–they’re so thick with ads. Now, Clique.com is offering publishers a way to make more money from that advertising, via the Internet. Say Pampered Woman (PW) has an article rating pink fuzzy slippers. There would be a reference to the PW website, where you could find out more about the slippers and even order a pair, without ever leaving the site.
If you think the above example blurs the distinction between editorial and advertising, we agree with you. To guard against that, the publisher could outsource the e-commerce component, and that’s where Clique.com comes in. Below, we asked co-founder Mark Lundstrom to explain the Clique technique.–SJ

Seattle24x7: Mark, why would publishers want to venture into e-commerce?
Lundstrom: Publishers are trying to figure out how to make money on the web. How do they leverage their content when customers aren’t used to paying for it? (1) They can sell syndication rights, which dilutes their brand; or (2) they can do affiliate deals (where they’re sending customers to other sites). We’re saying to them: Why not bring the e-commerce transaction onto your own website?
Before we started Clique.com, Drew Ladner [other co-founder] and I realized that to make money in e-commerce you must have low customer-acquisition costs, basically an existing customer base. Who has the largest bases? The media companies. They also have a huge advertising machine, and they have a fantastic brand.
Forrester recently did a research report that concluded that the publishers of the future will compete not only against other publishers but also against retailers. Content and commerce are going to become more closely aligned.

Seattle24x7: What about editorial independence?
Lundstrom: That will remain fully in tact. What we want to do is provide customer service to the people reading the editorial content. We think editorial is most powerful when it directly impacts your life. Now, as you’re reading, you can take action on something.

Seattle24x7: What do the media companies get out of this?
Lundstrom: When their ad people go to sell a page of print advertising, they can say: Not only are you buying this page of print, but you’re buying online product info and you’re buying an e-commerce distribution channel to reach the same 4 million people you’re advertising to. And the media company would also get a percentage of each sale made on its site.

Seattle24x7: But will people be more likely to buy the products featured or advertised?
Lundstrom: Half of advertising is effective; you just don’t know which half–or however that famous quote goes. I think this is an opportunity for advertisers to reach out and connect with those readers.

Seattle24x7: Your first major deal is in Europe. Why haven’t American publishers been more interested in what you’re offering?
Lundstrom: In the U.S., we’ve worked with Times-Mirror, and we’re negotiating with other major U.S. publishers now. But it has taken longer here because in the U.S. e-commerce was pioneered by Internet startups, and it’s just recently that offline companies have started to get involved. In Europe and elsewhere, where Internet usage is less than in the U.S., publishers have the opportunity to get involved in e-commerce much earlier.
And right now, we’re the only company focused on providing media companies with a new way to link advertisers and readers.

Seattle24x7: What’s the British deal about?
Lundstrom: We’re in a joint venture with two UK publishers–Attic Futura and North-South Publishing–to create a teen site that will launch this summer. Together, they have about 5 million teenage subscribers in Germany and England to publications such as Sugar, B, TV Hits, Inside Soap. The umbrella website will contain articles and products mentioned in the magazines.
Say Sugar has an article about the hottest backpack to hit London. Readers would be referred to the website to get more info on the pack and make a purchase. The same article would appear on the website, perhaps with a picture of the backpack, which would be linked to an e-commerce component. The link would be to our servers, but the reader will feel as if he’s never left the magazine site.

Seattle24x7: How will you make money?
Lundstrom: In the above venture, we are partners in a newly created business. They’ve invested $16 million, and Clique is providing software and expertise. Basically, we’re building the entire online system. But we also can provide e-commerce capabilities to a media website for a fee and a cut of the transactions. In that case, we’d be acting as an e-commerce service provider.

Seattle24x7: Do you deliver the goods ordered?
Lundstrom: Yes, through relationships with major distribution call centers. But we never take title to the goods.

Seattle24x7: Mark, you and co-founder Drew Ladner quit Teledesic and Netscape, respectively, to start Clique.com. Where do you want to be in a year?
Lundstrom: We’ll have several more international joint ventures, as well as more service contracts. In terms of financing, we already have $7 million and are close to announcing another $15 to $20 million. We currently have 50 employees and are looking to double that number by year-end. We’re hiring heavily in programming, project management, business development, and some of those jobs are overseas.

Soula Jones is Content Chief at Seattle24x7.com

The Clique
616 First Ave., #700
Seattle, WA 98104
Tel: 206-834-4500
Fax: 206-834-4501

Other offices: New York, London

Employees: 50

Funding: $7 million so far, including money from Black Fin, Hook Partners, Wit-SoundView, Jim Nordstrom, Scott Oki and co-founders of Wired magazine.