Sites Struggle as They Connect Women to Web

After watching men colonize cyberspace, in the last two years women have populated it. In February for the first time, more women than men surfed the Web.

Why then is it so difficult to frame a successful online business around women? IVillage and Women.com--the most popular and the only publicly traded companies among such ventures--have seen their stocks go into free fall recently, placing them among Wall Street’s basket cases in a fickle dot-com marketplace.

Despite having devoted users and a clear focus, these sites and others like them face surprisingly grim prospects, analysts say. The missteps suggest that online women need something they haven’t been offered yet--and certainly something beyond an electronic spin on a traditional women’s magazine.

The full-service women’s portals--one-stop guides for a female Web experience--combine fashion tips, financial guidance and parenting insights with shopping and expert wisdom.

But their active ingredient is a sense of community.

Consider Peg Gray, a resident of rural Pittsfield, Maine. Gray, 52, felt isolated as a breast-cancer survivor because support groups were at least an hour’s drive away. Last fall, Gray turned to the anonymous IVillage message boards and online chat groups.

“I lurked for a while, reading things that the ladies were saying to each other, and finally mustered enough courage to post something myself,” she said. “The depth of compassion and empathy and the love and concern [expressed] for others is unequaled. . . . It felt like family from the beginning.” Now she spends two hours a day on the site as a volunteer discussion leader.

Few Women Purchase Items From Web Sites

The leading women’s sites and a host of newcomers--notably Oxygen Media, which operates a women’s cable TV network headlining Oprah Winfrey and a companion Web site--recognize that women like Gray are an ideal online target.

Nearly 4 million women log on to IVillage or Women.com every month--better than 1 in 10 women online. That’s according to the New York research firm Media Metrix, the same firm which determined that, since February, women have outnumbered male surfers on the Web. But too few of those visitors click on the “purchase” button or ad banners that could turn a village into a successful business.

“I’ve gone to Women.com as an information resource, and not as a commerce destination. Amazon books--I’ve gone there to buy,” said Ellen Brook, 36, a Silicon Valley investor-relations professional. “I notice the ads, but I don’t think I’ve ever clicked on one.”

Such experiences have made the companies’ “burn rates”--the pace at which they consume available capital as they struggle toward profitability--a worrisome countdown on future success.

Michael Perry, the former chief financial officer of Women.com, said in April that the company’s cash reserves will last another year. Yet analysts don’t expect the firm to achieve profitability until the end of 2001, suggesting that Women.com may be forced to dramatically increase revenue as it slashes expenses, or to raise money from increasingly skittish capital markets. Perry quit to join a start-up on May 24.

In the last quarter IVillage lost $1.30 for every dollar it brought in. The company recently settled lawsuits by former managers who alleged that IVillage used misleading accounting practices and failed to deliver on promised stock options. And its chief financial and operating officers recently quit.

“The big myth is that these sites should attract every woman,” said Ekaterina Walsh, an analyst with Forrester Research in Cambridge, Mass. “It’s not about gender, it’s about what your interests are.” Some of the women’s sites are spread so thin that they fail to provide the deeper information that discriminating users insist on, she added.

Brook, for example, dabbles in Women.com’s news and travel listings, and for fun, the astrology section. But for investments, she seeks true experts.

“I tend to look at sites that have a lot of information on the smaller-cap companies,” she said.

Daniella Hocking, a 25-year-old medical student at Stanford University and an experienced Web user, checks IVillage or Women.com regularly--but only for a quick overview of offerings in fashion, beauty or health.

“If you have a unique women’s interest, you can find better,” she said.

Some experts are still strong supporters of the major women’s sites.

“Of all these consumer ventures, the women’s networks are going to be the most viable,” said Shelly Hale, an analyst with Banc of America Securities. “The handful of good Internet consumer plays are being dragged down by the 95% that are not viable.”

The market malaise also ignores these sites’ impressive backing. Old-media titan Hearst Corp. owns a controlling interest in Women.com; the site sponsors Hearst’s popular women’s magazines. America Online and NBC are the leading shareholders in Ivillage.

Sites as Content Providers to Leaders

The women’s sites provide content to Web leaders AOL, Yahoo and MSN.com. And some large corporations view the women’s sites as such likely sources of sales referrals that they provide exclusive advertising and commissions. One such player is Ford Motor Co. on the IVillage auto area.

Noting that women purchase more than 80% of personal and household goods, Hale said they need online sites that cater to female sensibilities--suggesting that IVillage and Women.com share a lucrative franchise.

The problem with that theory is that women are brick-and-mortar bankrolls but online misers. A January Forrester survey of about 100,000 U.S. households showed that only 7% of women made online purchases last year, compared to 12% of men. On average, women spend far less per purchase, a disparity the survey suggests will grow this year.

“Women are not early adopters,” said Marleen McDaniel, Women.com’s chief executive, using the term applied to people who are quick to employ the latest technologies. “They do things for convenience,” she said, adding, “We’re at an extremely immature state of e-commerce. It will develop over a number of years; let’s say over 10 years.”

That’s a long wait for a consumer-oriented dot-com. In the meantime, Women.com and Ivillage are primarily media sites that earn at least 80% of revenue from advertising, and profitable ad-based Web ventures are rare.

Women.com and IVillage also suffer from a surprising gender-identity crisis: About 30% of their users are men.

“We obviously speak to women in a very specific way,” said Alison Abraham, Ivillage’s former chief operating officer, in an April interview shortly before she left the company. “But men can learn a lot” from the site, particularly in the health, parenting and relationship areas. Advertisers are looking for critical mass, regardless of gender, she said.

But Barry Parr, an analyst with International Data Corp., said advertisers wonder what message to convey in a site exclusively targeted to women yet teeming with male interlopers.

The sites try to reinforce their female orientation with an appeal to community--operating hundreds of small online chat groups and bulletin boards, such as those moderated by Peg Gray.

But the heartfelt bonds they engender aren’t yet an important magnet for advertising and commerce. Several studies suggest that most women are pragmatic in their Web-surfing habits, while the chat rooms and message boards concentrate on what Brenda Laurel, a consultant on gender-oriented Web design, calls “trouble talk.”

“Women are increasingly power users on the Web; they know that they can go places to actually take action,” Laurel said. “Just talking about problems doesn’t cut it.”

Moreover, there are few models for making a paying business from online commiseration. Many top community sites, such as GeoCities and Angelfire, were acquired by larger Web companies that view community as a means to drive Web traffic to profitable services.

Forrester’s Walsh sees a more perplexing problem in the approach of the major women’s sites: They inadvertently condescend by implying that most women require predigested, feminized content. She expects women’s sites to gradually lose ground to full-service portals such as Yahoo and America Online on the one hand, and to gender-neutral specialists on the other.

“Can you really treat women as a uniform audience any more? I think those days are over,” said International Data Corp.’s Parr.

The ‘Pop Culture Junk’ Approach

The major Web portals seem to agree. Instead of gender-specific offerings, they use personalization--customized content settings for each individual.

“I pretty much guarantee you [that] what I would want in a women’s page and what a 62-year-old woman in Canada would want would be very different,” said Michele Turner, Excite@Home’s vice president for personalization. “ ‘Women’ is a huge category.”

The generic feel of IVillage and Women.com may stem from their close correlation with traditional women’s magazines that emphasize parenting, fashion, beauty and diet.

Like others attempting to expand opportunities for girls and women via computing, Laurel finds fault with the high profile the sites give to mass-market cliches for what women want.

“A horoscope and a sex quiz--it’s pop culture junk . . . pandering to the lowest common denominator,” she said.

Several start-up companies seem to be taking Laurel’s advice, concentrating on more high-minded or provocative content. For example, Austin, Texas-based Disgruntledhousewife.com offers an irreverent counterpoint to big-site conventionality.

And a more mainstream innovator, Oxygen Media, offers a less obviously commercial, more political and feminist slant than IVillage and Women.com. Its home page prominently features advocacy about issues such as gender pay equity and highlights personal stories written by the site’s users.

“We see women’s content not in the traditional sense of fashion and home and garden, but as a look at the world through women’s eyes,” said Lisa Gersh Hall, Oxygen’s chief operating officer and co-founder.

Oxygen hopes that the cable network-Web site combination will cross-pollinate a profitable business, though that day may be far in the future. A cable TV network typically must reach 50 million households to break even, a level Oxygen expects to hit in 2004.

IVillage shares touched an all-time low of $6.75 on Friday, down from $130 little more than a year ago. Shares in Women.com, which traded as high as $23.38 last fall, recently dipped well below the $5 threshold for “penny stocks,” at which the company could be dropped from Nasdaq’s National Market and brokers might stop recommending its shares.

The collapse in share prices suggests to some experts that the major women’s sites could be absorbed in the next wave of Web consolidation. A Yahoo or Microsoft may view the combination of large audiences and relatively tiny market valuations as an irresistible opportunity to steer users to more lucrative Web properties.

In that case, the largest efforts to build Web sites by and for women would become just another loss leader in the Internet’s epic battle to make a buck.