Post-mortem: Inside IBT Media’s meltdown

The 9-year-old company was largely unknown until 2013, when it bought the distressed Newsweek. IBT was an aggregation- and search-driven site, many of whose staffers were paid meager salaries, supplemented by traffic bonuses. Its leaders were publishing newbies, Davis having studied engineering and co-founder Etienne Uzac, economics.

They didn’t let their lack of experience curb their ambitions to establish IBT as a global financial news powerhouse, though. They hired star journalist Peter Goodman to lead the newsroom and poured money into editorial. Newsweek, too, got an infusion, with the hiring of established journalist Jim Impoco. Newsweek returned to print, and the famed design firm Priest + Grace was hired to design the covers. “We were bringing in people every week,” recalled a former IBT employee, who like other sources for this story couldn’t talk on the record because of nondisclosure agreements. “It felt great.”

IBT’s editorial staff ballooned from 45 to more than 100, including experienced reporters such as David Sirota and Erin Banco. The traffic boomed, too. In 2015, IBT was one of the fastest-growing sites, its traffic hitting 21.5 million.

But the owners weren’t able to make the product or revenue match their grandiose ambitions. On the site, the publication calls itself “the premier gateway for marketers and agencies to reach senior-level business and technology decision-makers and investors worldwide in their own language.” IBT has produced hard-hitting stories in the past couple of years, including an investigation into Chris Christie and New Jersey’s state pension system that was a finalist for a Loeb award and coverage of Syria’s refugee crisis and the marijuana economy that won SABEW awards, among others. Still, most of its traffic continued to come from four teams that churned out 150 stories a day on breaking news and TV recaps. IBT Media didn’t take on outside funding, leaving them entirely reliant on ad revenue to fund their expansion that never came.

All this, according to the narrative that emerged from past employees, belies a naïveté about the business. To their credit, Davis and Uzac recognized the need to transition away from their SEO and programmatic advertising roots. But building a media company is hard enough for experienced operators. If IBT Media’s leaders didn’t seem to interfere with editorial, as some might have worried, they also were obsessed with metrics and didn’t recognize how fast digital media’s best practices were shifting.

“They literally thought they could be The Wall Street Journal,” said a former Newsweek employee. “I think they had a content farm that they mistook for a trusted news source. When they moved in that direction with Peter, the costs of all this didn’t register.”

A year after Goodman’s hire, the company decided it was time to begin a sales push in earnest. It hired Mitchell Caplan in March 2015. Five months later, Thomas Hammer joined as svp of sales. The company had an all-hands meeting to present the company’s strategy with Coldplay providing an awkward soundtrack. T-shirts were handed out, a big perk for a company that until recently hadn’t even offered a 401(k) program.

But today IBT is more, not less driven by search traffic, the kind that’s likely to bounce in and out quickly. Google remains the second-biggest source of desktop visits to IBT after Yahoo, accounting for 13 percent of traffic — up two points from a year ago, according to comScore.

IBT slapped video on seemingly every article, but is still mostly reliant on programmatic advertising, with CPMs that languished around $2. The site wasn’t redesigned until last December, and it still features annoying looping autoplay video ads. IBT isn’t alone in running such ads, but most sites at least recognize the need to play them with the sound off.

“They didn’t understand that you don’t just sell an ad, get the money,” a former IBT editorial employee said. “Programmatic’s just in time, but brand isn’t. And IBT as a brand was very, very tough to sell. Because it looks like something your grandfather reads.”

While other publishers chase audiences on Facebook and its ilk, IBT has all but missed the boat on social media’s power to reach new audiences. IBT has just under half a million Facebook fans to the Huffington Post’s 7.6 million and Time’s 10 million, for example. While some publishers may arguably be too reliant on Facebook, getting as much as 75 percent of their traffic, IBT got just 2 percent of its desktop traffic from the social network, according to comScore.

In January, the warning signs got more serious. The company was late paying its employees. In March, Goodman fled for The New York Times amid massive layoffs. Roughly another 30 were laid off last week, followed by around a half dozen from Newsweek. IBT is competing in a crowded news category, and by May, the site ranked 135th on the web with 18.9 million uniques, down 12 percent year over year.

In a statement, Uzac, the CEO, said the company was restructuring “to continue to support the growth of IBT Media and Newsweek. Our overall plan, which includes some staff downsizing, is part of an overall plan to drive efficiencies throughout the company.” The company did not respond to interview requests. “As you can imagine it’s a very challenging situation for all,” Caplan emailed. “Ownership has been very clear that they do not want any further commentary.”

The latest cuts left just 23 in the newsroom — mostly those responsible for producing the SEO-driven stories.Sirota, one of the remaining enterprise reporters, said he’s hopeful he’ll be able to keep doing investigative stories for the publication. “When I started at IBT, I was really encouraged that it was one of a number of organizations that was investing in enterprise and investigative reporting,” he said. “The media industry is still struggling with how to support that kind of work for the long haul. There’s no lack of proof that the work itself has been successful and impactful. The question remains, how to create a business model around it that is successful.”