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DOWNSHIFT: Industry Veterans Share Their Survival Strategies For The Summer Slowdown

DOWNSHIFT: Industry Veterans Share Their Survival Strategies For The Summer Slowdown

Historically, that means less Internet traffic, and that means trouble. Popular theory has it that, what with winter's once-captive audience out enjoying warmer weather, memberships lapse, the Web's traded for actual water, and your bread-and-butter's on vacation. What can you do to avoid the blackest of the summertime blues?
Truly, everything is cyclical, and the adult Internet economy comes - so to speak - and goes with the best of them. Business 101 (or trial and error) has probably apprised you of the need for a Plan B. Certainly, if you've gotten this far, you are doing something right. Whether this is your first (potential) slowdown with us or our first with you, here's an array of suggestions above and beyond the obvious "Fasten your seat belts. It's going to be a bumpy night!"

Brainstorm, Regroup, Restructure

"There are several ways to survive this time of year," says Brad Shaw, president of Shaw Internet (www.shawinternet.com). "Personally, I like to have my employees take this time to restructure our current projects and brainstorm for new ideas and ventures."

Shaw is a pay site owner, and describes a typical downturn as marked by a drop in traffic and sign-ups. Shaw has heard that one of the elements effecting the slowdown is that of college students going home for the summer. "If this is the case, in my opinion, additional advertising is not cost efficient," he adds.

"This year I want to use our down time to restructure our members' areas and add additional resources to our Webmaster program. Our content department will use this time to market our content to others looking to redesign or build." Shaw believes this will result in growth, even through the slow times.

His advice to new Webmasters is to prepare. "If I have one thing to pass on to newbies in our industry, it would be to put money back [into your business] and prepare to work harder during this time of the year.

"Our business is going through some interesting changes," Shaw says. "As a business owner, I'm seeing a lot of people cutting back on costs and preparing to work within a budget." Shaw believes these changes will make adult sites as financially viable as the most solid of the mainstream Internet-based companies.

Add a New Website

CyberNet Entertainment produces exclusive content at niche sites hogtied.com, fukingmachines.com, whippedass.com , buttmachineboys.com, and wiredpussy.com. In terms of zeitgeist, these ventures are on the crest of the wave.

VP of Marketing Tony Pirelli says managing such sites precludes a general industry trend like the summer slowdown. "We shoot all our own content; and we are our own Webmasters. We are, essentially, maxed out - as far as being busy - every day of the year."

He notes a converse phenomenon: "Last summer, we saw memberships rise every month, because we added a new Website, and then another site. Our total memberships kept on climbing.

"Any time we spend the effort on unveiling a new Website, we're obviously doing it to add new members and capitalize on our existing traffic. It works some times better than others," but that depends, Pirelli believes, on the Website itself.

Pirelli doesn't necessary gauge a Website's value by the numbers alone. "We look at whether or not it's enjoyable, shooting the content; and if it's socially acceptable."

Though the traditional ebb and flow of the industry doesn't seem to effect CyberNet Entertainment, the company still suffers slowdowns. Company projects can bog down progress; a recent move proved to be a massive undertaking that accordioned "typical" workdays.

"When we had only one site, or when we were solely dependent on one major [or] money-making site," then, Pirelli says, slow times were anxious times. "Now we know that it goes in cycles... but when you find yourself in the slow time, you worry. You know the market will come back up, but you worry."

Pirelli says that if he were a new Webmaster facing down time, he would "look at other sources of content, at other [means] of exposing the content.

"One of the nice things about the Internet is that it's an ever-changing landscape. There's always room for growth, and there's always room for new players. But a lot of people go for that comfort zone - such-and-such works for this, such-and-such works for that." Pirelli believes it's this kind of complacency that makes for the most permanent of slowdowns.

Shave Operating Expenses - Judiciously

Ray Vanpraag of Prime Internet (www.primenetwork.net) notes, "Since we're a data center, we don't get hit as hard with the decline in traffic. We do see it, of course, but it's not that bad.

"Usually when we see anything in excess of a 5 percent decrease in business from one month to the next, we consider that a down turn." He says this might happen once or twice a year, at most.

Vanpraag uses a lull of any kind to focus on Prime's network framework. "We do large-scale upgrades, make any major changes, as our tech/admin staff is less busy and can dedicate more time to the projects without increasing their work loads."

Forging good customer relations is a foundation for the company, and Vanpraag thinks it's also what sees Prime through. "Our success is based on personal relationships and dedicated service to our customers. We really take the time to involve ourselves in their online operations; they become almost an extended part of our family."

This fosters solidarity. "When times get slow and the profits decrease, our clients tend to stick it out with us."

Prime also keeps an active "wish list." They maintain programmers in-house who can work at fulfilling "wish-list" requests. "We always end up deploying something new and improved during the slow times," Vanpraag says.

He reminds Webmasters to "relax, and understand that there are going to be slow times throughout the year for one reason to another." Also, being aware of where money is going, for what purpose, and with what result, will clarify where cuts can be made.

"Most new Webmasters, and some old ones, tend to throw way too much money at advertising to compensate for a slow down. This almost never works."

Vanpraag also notes the common sense practice of shaving operating expenses during slow times. "As a rule, I'm in favor of that. The thing [people need] to remember is that if they are happy with their hosting company and their Website is working well, don't go switching just to save a few bucks. The headache a move can cause could all but negate anything you might save. Focus instead on where you buy your traffic, where you advertise, and who's on your payroll before you try to fix something that isn't broken."

Strengthen Business Relationships

Adult Entertainment Broadcast Network (AEBN; www.aebn.net) is a partnership-program adult video-on-demand provider that offers pay-per-view virtual theaters rather than the more common membership sites. Little wonder, then, that President Scott Coffman concerns himself with keeping his affiliates happy during down time. "We strengthen our partnerships and traffic trades with our biggest partners; it's more effective to strengthen existing ties than [to try to] create new partners during the slower times.

"We take down times to look at projects that have been on the back burner. This is the best time for us to develop projects" and introduce them with a soft launch, then working "through any problems that may arise."

Confidence in the basic business model also sees AEBN through. "We're secure that our business model is sound," Coffman says, "so we don't cut back on employees or advertising." The company's even open to new hires, "if the right person becomes available.

"Our strategy is to spend time working with our affiliates to help them make more money. We know their business will also be slowing, so we want to help them make more money, which will help our sales," Coffman adds.

AEBN's survived past slowdowns by preparing for them in advance. "We know sales are going to drop, so we prepare all year for these down turns. We keep payroll, and other fixed costs, in line with sales from our slowest months."

Coffman also touts project-building. "We always have one main project that we implement during the down times. This year we're expanding our All Nude Sports show into All Nude Wrestling and All Nude Dudes."

Coffman has some sound advice for Webmasters: Don't worry.

"The most important thing is to always be thinking six months ahead," he says. "We're planning now for summer, but when we're in summer we're planning for winter. The biggest thing from a money standpoint is to keep your overhead as low as possible and still be able to operate and make money. Slow summers really hurt the companies that are running high overhead when times are good."

Finally, the main goal, according to Coffman, is "to broaden your market geographically, as wide as you can. If you have a truly global market for your product," one part of the planet's summer slowdown is another's wInternet wonderland.

Take a Calculated Risk

A Web hosting company that relies on Webmaster growth to fuel its own, NationalNet (www.national-net.com) really knows the value of building strong industry relationships. "When things are good in the industry they are good for us," owner Tony Morgan says, "but when things go bad for the industry, they get especially bad for us. We see it in things like accounts receivable; by and large our clients are very good at paying their bills on time and in full, but [in the down times] we see more and more people paying later and later and trying to avoid paying things that were never an issue before.

"We have really never experienced a true 'down' time because when one part of our business begins to slack off, another happens to be picking up."

Taking an unflinching look at your operation is also key. "As a good business person, I have to look inward to decide if there's any fat that can be cut." Due to NationalNet's renown in the adult Internet industry and also because "our growth has come more from our existing clients than anything," according to Morgan, "we usually look to cut advertising first.

"We will not make cuts in service-related areas (staff, connectivity, and such), but we do look at things like travel and entertainment. We do not, however, ever look to cut new projects. This goes back to a philosophy of being aggressive during a down economy," Morgan reveals. "For example, right this second, we're looking at a couple of acquisitions - it's a buyers' market.

"I tell people to not make wholesale changes during these times," Morgan advises. "Rather, they should be looking at these things even during the good times."

A lot of newbies end up coming NationalNet's way, and Morgan tells them all the same thing: "I can't tell you how many times a week I tell a newbie, 'Treat your business like a business every single day.'"

Morgan's not an alarmist when it comes to the current economy. He's more of a Darwinist. "I think that we, as business people, need to be smarter than ever before. I do not subscribe to the theory that our world is coming to an end; I simply think that there will be a thinning of the herd, so to speak. I think the people who have run their businesses correctly will reap the benefits of the others' timely demise."

Capitalize On What You Already Have

A few weeks before beginning interviews for this story, a PR-style content email arrived at the AVN Online office, planting the seed for this article. It was only fair, then, to contact Off The Planet Entertainment (OTPE; www.offtheplanet.com), the generator of the announcement that read, "Prepare for the summer slowdown!"

Says Kevin Sienkiewicz, director of OTPE: "As a Webmaster sponsorship program, we see summer as a time where traffic is certainly 'down'; yet it can be a time for better conversion ratios as a lot of the curious surfers find other things to do."

Also, "the diehard porn surfer will still be around." Thus the adult industry's reputation as being "recession-proof."

"Our No. 1 responsibility is to our Webmasters," Sienkiewicz says. "We spend summer doing our best to ensure new and existing members stay longer. This results in great membership retention, which means our Webmasters receive a sustained income even when their traffic drops."

This is the strategy that's seen OTPE through slow times past. Focusing energy on current traffic and members, rather than aggressively pursuing new ones, has worked out well for both Sienkiewicz' company and the Webmasters they service.

Any new addition that encourages membership retention and conversion ratios gets a fair shake. "That could be testing new tours, trying new content" among other things. "Work put in during the trying periods not only means a healthy summer bank balance, but an awesome income when summer is over," Sienkiewicz says.

Not to mention, "Summer is a time for fun. It really doesn't make too much sense to work twice as many hours just to sustain your traffic." He espouses a defense that supplements a primary pay-per-sign sponsor with another trusted program before summer begins.

"By the time summer hits, a Webmaster will have built up a large revenue from rebilling members" even when traffic is lowest.

Sienkiewicz's final comment is one of Zen proportions: "There are good times and there are bad. The Webmaster who really profits in the good times is the one who is prepared for the bad."

Take Time For Yourself

Gamma Entertainment's VP of Marketing, "Evil" Chris Rodger, describes the company as one that "runs two very successful Webmaster affiliate programs," at GammaCash. com and GammaXtreme.com. "We also sell content in the form of leased online galleries, and licensed CDs for Webmasters. I guess you could say that we have our bases covered."

He isolates the slowdown as occurring from about mid-June through the end of August. "The summer months are good times for catching up on projects that might have previously been on the back burner," Rodger says. "You roll with the punches; maybe just prior to the summer holiday, pitch your product in the form of special promotions just before everyone goes to the beach."

In the final analysis, however, Rodger believes the best strategy might be the extended mental margarita. "Go get yourself a nice picnic basket and fill it with food and drink. Then pack up your things - including your laptop, for those ideas you need to take down - and enjoy yourself for as long as you want to go for a break. You'll come back refreshed, with a bunch of new ideas on the laptop."

That the adult online business mirrors any other business should be a cause for relief among Webmasters, he explains. "If you or your company have the necessary backbone [to make it through] times of slow business, you'll be just fine. Stick with it, and 'See you in September.'"

Change

Freelance marketing consultant Holly Moss (www.hornyholly.com) spent five years as VP of sales and marketing for Interactive Gallery, Inc./New Frontier Media, a distributor of adult entertainment content, delivering via cable, satellite, Internet, broadband, and video-on-demand.

"Rather than thinking in terms of a 'summer slowdown,'" Moss says, "the question is what to do during the new economy." Factors such as the global business climate and international events inform her beliefs. "I think the events of 9/11 and the fall of the dot-com industry has set a very serious tone in the marketplace" in general, according to Moss.

She attacks the problem point-by-point:

Diversifying assets. "Adult Web-masters' No. 1 asset is traffic," Moss notes. "How you maximize and diversify your traffic is what can help you stay competitive in the marketplace. Niche and specialization are key for gaining a competitive advantage."

Incentives and special offers. "During slow times, offering discounted products and services works fine. In the past, I've seen many content companies, for example, offer summer specials" or one-month-free deals.

Moss recognizes this is short-term thinking. "At this time, companies must restructure and reevaluate their entire business models on the Web; look at their break-even point, do analysis, figure out what can bring the biggest buck. Listen to the marketplace and change with the times.

"This takes guts and owning up," she adds. Scrutinizing one's practices can sometimes be uncomfortable. Moss believes in particular that "The pay site has been a dying model for years." Webmasters are reluctant, however, to reevaluate it. "They keep pushing traffic to retired and old business models. I see very few Webmasters actually tweaking membership models."

Adding to available products and services or meeting specific customer requests can also bolster a company's lifespan. "If you're in the adult hosting business and your customers are demanding graphics design or programming assistance, offer them.

"If it's not cost-effective for you to offer [such things], network or, better yet, work out a deal with someone who does." This can be worth a referral fee.

On the up side, Moss reminds Webmasters that it's generally agreed upon within the business community that our industry is among the best ones to be in right now. "Take advantage of that!"

Meet, Learn, Negotiate

Input from one of the most visible of the boardmeisters, YNOT Network LP's YNOTBob, focuses on "negotiating lower prices on advertising through the down times, and working on perfecting your business."

YNOTBob, sometimes known as Bob Rice, is VP of Webmaster sales and a general partner in the Network (www.ynotmasters.com). He says "A down time for us is when we start to notice the pricing for our Premier advertising [dipping].

"While many surfer sites start to notice a drop in traffic, we traditionally still stay strong with Webmaster traffic. Webmasters during this time still need information, services, and tools. Our Premier advertising is based upon a voluntary auction format where the Webmasters bid for placement. Since this is a voluntary auction, it's market-driven. When times are flush and business is good, the top spot commands a high price. When the down time, or summer slowdown hits, Webmasters have less traffic, and less money to spend."

Having grappled with the question of how best to handle the summer slowdown before, Bob concludes, "[We] need to be prepared for this, and monthly budgets should reflect this.

"Here at YNOTMasters, we factor the down times' lower revenue into the higher revenue of the up times in order to stay within our budgets across the board." The company is always working to improve its management systems and basic framework, so summer doesn't necessarily mean an emphasis there.

"We do offer bigger advertising discounts," Bob says, "especially on pre-paid monthly contracts, and even throw in some more bonus ads to help with branding."

Working harder is Bob's primary survival tactic, with these suggestions for newbies: "I would plan for a down time in budgets, negotiate better pricing for everything from content to hosting to advertising - everything is negotiable in the down times - and spend time in development and learning.

"Don't waste this time sitting around and moping. Network your business for free in chat rooms, on the boards; talk to other Webmasters; get informed, learn something new."

Bob urges relationship-building. "I, for one, love to interact with [other] Webmasters, and I look forward to the slower times when they contact me more in search of help."

Ah, Grasshopper

To everything, there is a season, as the song goes. Industry is cyclical, the economy variable; what's up one day can be down the next. And then up again.

The down times are inevitable, but they don't have to be deadly. Surviving them can be the most valuable learning experience a Webmaster will ever get.

There's a fable you probably came across in grammar school, and this is as good a time as any to invoke its moral. It's the story of the grasshopper and the ant, in which the ant toils and toils all summer long and the grasshopper plays and pokes fun at the industrious little insect.

Come winter, you might remember who gets the last laugh.

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