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Engineering.com Incorporated (EGN-TSXV) |
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June 25, 2012 Issue |
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The Most Powerful Name In Corporate News and Information |
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CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
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With Bloggers Creating a Deeply Segmented and Highly Technical Content Stream, ENGINEERING.com Incorporated is Attracting a Very Valuable Audience for Their Advertisers |
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John has proven experience
in executing business strategies that build shareholder value. Between 1991
and 1995, he was Chief Financial Officer of RAND Worldwide, where he was
responsible for taking the company public. He was then appointed Chief
Executive Officer of United Software where he developed the strategy, grew
the business, and successfully sold it to a large public company. Mr. Hayes
is a Chartered Accountant and holds an MBA from Carnegie Mellon University. ENGINEERING.com Incorporated [TSXV: EGN] is building the leading digital publishing platform for engineers. The Company provides engineering bloggers and analysts broad distribution to a worldwide engineering audience across social media, mobile devices and web destinations. ENGINEERING.com offers unique advertising products such as content marketing distribution, video creation and lead generation tools to a wide range of business-to-business advertisers. |
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – June 25, 2012
CEOCFO: What is the origin of the site, how long have you been up, and what was the initial concept? Mr. Hayes: That is a very fair question because during the dot.com boom there were many Internet companies getting started, most of which are gone now. Engineering.com started with a business model to sell engineering software to engineers over the internet. That business model had a number of challenges, and was probably somewhat before its time. We now focus on being a digital media company for engineers because engineers are such a uniquely high-value audience.
Mr. Hayes: Our mission is not only to inform and inspire engineers, but also to entertain our audience as well. We have a unique editorial style that brings engineers back time and again. Things like videos and humorous takes on engineering news have become a hallmark of our site. In 2011, our traffic was up 84% over 2010. Our goal is to continue that growth, and to begin to deliver the truly informative and deep technical content that our audience craves. There are so many technical topics that engineers want to understand and comment on, so we are increasingly turning our editorial focus in that direction.
Mr. Hayes: No, there are several other competitors in the engineering media space. Some are owned by large public companies, so it is hard to tell exactly what the engineering component is, but it would be fair to say that there are several with more than $50 million in annual revenue.
Mr. Hayes: Engineering.com has content streams that span a wide range of topics and projects. These topics can be very technical, such as the specifications of consumer devices. For example, before you turn on your iphone, someone has to specify all of the components that go into that device. Those purchasing decisions are extremely high value, but they are also incredibly technical. The engineer who is designing the chip set in the iphone or ipad has a completely different set of skills and interests from the engineer who is deciding the specifications for a new railway line.
We have to create a wide stream of engineering content, but we have to do it in a very structured way by sequentially targeting tight vertical markets. Some of the topics we have identified for this year are “careers for engineers”, 3-D printing, mobile device design, and design technology. Those are just four. I can probably name fifty to one hundred of these vertical segments, each of which can be a meaningful market for Engineering.com.
Mr. Hayes: According to IAB, the Interactive Advertising Bureau, internet advertising revenue grew to around $31.7 billion in the US in 2011, which was a 22% increase, compared to 2012. There is no question about the huge trend of advertising moving away from other media towards the internet, so we don’t have to educate our customers about the value of digital advertising. And because Engineering.com has a strong brand presence, they know about us. But while digital media has been growing, it is becoming increasingly complex. Social media and mobile devices have made it difficult for marketers to get their messages to the market. Companies like Facebook and Zynga have had some market bumps lately because of the shift to mobile devices for example, which makes it harder for them to get their advertisements delivered. We have developed some unique products that address those concerns and allow business to business marketers to reach our audience, whether they are on a website, on social media or on a mobile device.
Mr. Hayes: We offer a couple of products that help industrial companies reach engineers using social and mobile media. The first product we offer is to create content for our customers. There are an increasing number of companies that are reaching the conclusion that before their engineering audience will search for them on Google, they will have to have first heard of their brand. Therefore, they are taking an increasing part of their budget to create brand awareness, and they are doing that through content marketing - telling a series of stories that help engineers understand what they do. We have a large network of researchers, writers, videographers, actors, and editors that help get these stories out. One example of that is the product design show. We are about to release our sixtieth episode of this video series about product design, which is a sponsored content stream. The other thing that we do that ties very neatly into the creation of content is that we distribute that content across the internet through our sites, through our partner sites and also to social media. We have the biggest social media following of any engineering and technical media brand by far, and we also have a very large mobile following. We are helping marketers simplify their approach through our one-stop-shop while the actual internet advertising landscape is becoming increasingly more complex.
Mr. Hayes: There is no question that companies like ours have to spend a significant amount of their time researching and understanding what is coming next. We have to place bets on technologies and platforms that we believe are going to be important. Not all of our bets are right, but we do a lot of experiments and we quickly shut down things that are not working. We put additional efforts into the things that do work. For example, we built an ipad app. We did not build a Playbook app. Upon the success of the ipad app, we decided to do an Android app. That is an example of the sort of forward planning that a company like ours has to do. We certainly keep a very close eye on all developing trends in the industry to make sure that we are first, which is how we were able to pick up on things like mobile and social well ahead of our competitors, and build our audience as big as we have. For example, it may not sound like much to a traditional media player that we have 180,000 Facebook fans, but in our niche market, 180,000 Facebook fans is a pretty big deal.
Mr. Hayes: Our site and all of our partners’ sites are written exclusively in English, so our audience is predominantly North American plus some other English-speaking countries like UK and Australia. There is a tremendous explosion in engineering talent in other parts of the world, and that presents an exciting future growth opportunity for us. Even without international expansion, we have the opportunity to be easily ten times our size in the market space we are in. We will focus here first before we start to move into other languages.
Mr. Hayes: The most important new things that we are doing is targeting highly specialized content areas in partnership with leading industry analysts and bloggers. These partnerships help us create a platform that is rapidly scalable and can lead to a large number of contributors matching up to a very large audience.
Mr. Hayes: I spoke earlier to our traffic growing by 84% in 2011 over 2010. Now in 2012, we are starting to see the advertising revenue follow that audience growth, so we are starting to enjoy some rapid growth in our internet revenue, which is encouraging. We have cash on hand that will enable us to execute against this strategy. While we were EBITDA break-even in Q-1, as we become more profitable we intend to continue to channel those funds back into continued growth and follow this vertical expansion path that I mentioned.
Mr. Hayes: I think investors traditionally have a difficult time investing in a microcap stock like Engineering.com. The trading is light and that depresses the share value below what you might expect when you look at the bright future that the company has in store. Frankly, we do not have immediate plans to change how the trading patterns of the company look. The majority of the shares are held by insiders. The Chairman and I both made significant investments into the company last year. We are happy with the progress and direction of the company. We see that there is a very bright future for this story.
Mr. Hayes:
The key thing they should take away is that Engineering.com is building a
platform to connect a very large pool of industry analysts, bloggers, and
other experts to a very rapidly growing audience of engineers. It is a large
and segmented audience, which is highly valuable to advertisers. We are
executing against that plan and doing it very well. |
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Our bloggers create a content stream that is deeply segmented and highly technical. In turn, that content attracts a very valuable audience for our advertisers. - John Hayes |
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