Magazines and newspapers across the US are building up their Web offerings in health and fitness as their specialized advertising dollars and readers migrate online at a particularly rapid pace.
Hearst Magazines has decided to buy as well as build internally with the purchase of RealAge Inc, a consumer health Web site. Hearst, a private company, is not disclosing the price of the acquisition. But industry analysts estimate that the price is somewhat under US$100 million, based on the volume of traffic on the RealAge site and its yearly revenue.
The purchase, analysts say, is a sizable move in a single market niche, reflecting Hearst's strategy to capitalize on the tendency of consumers to increasingly seek health information online. A Harris poll, published in July, found that 52 percent of adults sometimes or frequently went to the Web for health information, up from 29 percent in 2001.
Demographics and household finances are expected to stretch people's use of online health resources. Aging baby boomers will develop more health issues and want to stay young as long as possible. And employers' efforts to limit healthcare costs mean that workers will steadily pay more of their medical bills themselves. As a result, consumers will take a larger role in managing their own care, and be big users of online tools.
"All the media companies are scrambling to adapt to this major transition in how people access health information," said West Shell, chief executive of Healthline Networks, a startup that provides health searching and content for several media companies.
RealAge, according to Hearst executives, is a valuable property in this environment. Founded in 1999 by Charlie Silver, an entrepreneur, and Michael Roizen, a physician and medical researcher, RealAge refers to a test that weighs 125 factors -- as diverse as diet and tobacco use, pet ownership and a spouse's level of education -- to determine someone's "real age."
Afterward, users are given a list of things that are making them younger or older, and suggested steps to lower their effective age.
In the first half of this year, the RealAge Web site had 2.1 million unique visitors a month, and more than 8 million registered users have taken the Real Age test. Most are female and their average age is 45, very similar to the demographics of Hearst's women's magazines including Good Housekeeping, Cosmopolitan, Redbook and O, The Oprah Magazine.
"RealAge fits in beautifully from a strategic standpoint," said Cathleen Black, the president of Hearst Magazines.
The company has annual revenue of approximately US$20 million, solid growth and is profitable, according to Hearst.
Silver said it was too small to consider a public stock offering. Combining with Hearst, he said, would give the RealAge site broader distribution and more resources, as well as giving its shareholders a payout.
Beyond cross-promotion and links to the Hearst sites, RealAge will also get new tools that Hearst's digital group is developing, said John Loughlin, an executive vice president of Hearst Magazines. One such tool will be a recipe-finder service -- a database of 10,000 recipes that can be searched and sorted by health factors like cholesterol content, fiber and total calories. The recipe feature will be on Hearst sites in October, and on RealAge early next year.
Other traditional publishers are expanding the health sections of their Web sites, typically through small acquisitions and partnerships. One of them, US News and World Report, known for its rankings of the nation's best hospitals and health insurance plans, is planning to augment its health content.
"We want to build, under our brand, a full-service health portal," William Holiber, US News' president, said in a recent interview.
Publishing companies are also following the movement of health advertising dollars to the Web. Web display advertising for prescription drugs has increased nearly fivefold in the last four years, to US$163 million last year, according to TNS Media Intelligence. That is still only 6 percent of drug advertising spending on television and less than 10 percent of spending on magazines, but it has passed drug advertising in newspapers.
The shift in advertising dollars to the Web is expected to accelerate as pharmaceutical companies become accustomed to marketing online.
"Drugs are complex products and online consumers can go as deep as they want," said Monique Levy, an analyst at Jupiter Research.
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