IAC Publishing's About.com gets slimmer for advertising dollars

Web giant About.com is splitting up its flagship property in order to compete with smaller, niche sites for digital advertising dollars.

Last week, the IAC (NASDAQ: IAC) Publishing-owned website announced Verywell, a site focused on health. The site consists of the existing health content on About.com, which has been updated and made easier to read and navigate. Like on About.com, a panel of board-certified physicians reviews all of the articles.

"We've always had great content, but our model is no longer a good model," About.com CEO Neil Vogel said. "Our model was created at a time where scale was what mattered in the U.S. What's happened over time is the internet has involved. The things people trust are verticals."

In December 2015, IAC spun off its publishing arm into a new division called IAC Publishing. The group consists of About.com, Dictionary.com, Investopedia and The Daily Beast. Other IAC properties include Vimeo and CollegeHumor, as well as dating sites Tinder, Match.com and OkCupid.

About.com was the 40th most trafficked property on mobile and desktop in February 2016 right behind Netflix, according to comScore. It was the 21st most visited site on desktop.

"What's happening with About reflects our broader strategy," IAC Publishing CEO Doug Leeds said. "The future of publishing is strong brands in vertical categories, where the consumer and advertiser value propositions are tightly aligned. For us, this means building endemic brands that people trust, while taking advantage of our scale to accelerate our overall business in ways other digital publishers can't."

With Verywell being "vertically" or narrowly focused on health, it allows its advertising team to go after health companies looking to advertise online. At the time IAC Publishing was announced, Leeds told CNBC the purpose of the new company was to "intensify" the IAC's commitment to digital publishing and tap into the growing demand for digital media advertising.

"Vertical brands matter to advertisers because they can reach like-minded people passionate about that same subject. This is the perfect environment for native forms of advertising, like content marketing, to flourish," Leeds said.

Digital media advertising is a growing industry. EMarketer's 2016 projections reveal about 36.8 percent of advertising budgets will be dedicated to TV, while 35.8 percent of the money will go to digital advertising. Print, radio, out-of-home and directors account for the rest of the costs. But by next year, eMarketer believes digital ad spend will exceed TV by over $5 billion dollars.

About.com's Vogel pointed out that some companies in the health space, including pharmaceutical companies, are under strict regulations that relegate them to traditional online display advertising like banner ads. However, the move to create more specialized sites opens the door for custom or "native advertising," content marketing where articles, videos and other pieces are created on behalf of brands. More companies are looking for this types of ads because they have higher levels of engagement and viewership compared to display advertising.

Vogel said if Verywell succeeds, there are potential plans to create separate sites for travel, personal finance, technology and lifestyle — content about the home. The rest of the subjects will still exist on About.com.

"We think users are going to like this [vertical model] more," Vogel said. "We definitely think advertisers are going to like it much more."

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