Cooking

Are you logged on to cook up a new meal? If not, then plug in, because the rest of the world is using the Internet to cook. According to comScore Media Metrix, a whopping 39 million Americans visited food Websites in July 2006, a rise of 23% over last year, to search for new recipes on the net and guess what, the trend is fast catching on. A search for the word “cooking” on Google generated 211,000,000 results. Now you know that something is definitely cooking. If you are still not convinced, then check out the latest Yahoo! website on food and cooking, which it launched on November 02, 2006. [Download Squad, Mashable, AndyBeal ] This is what Deanna Brown, General Manager of lifestyles at Yahoo! had to say about the new website “this is very much of an extension of Yahoo’s media business and it’s a very compelling experience for Yahoo advertisers.”

The cooking websites provide a wide collection of recipes and seasonal menus by professionals and suggests step-by-step techniques, interesting tips on cooking, organizational secrets, reviews and ranking of recipes, review of local dining spots and more. The Internet allows a user to research recipes across the globe, with the click of a button. You can do it either from your office or from the comfort of your drawing room, anytime you wish to and this has resulted in the laptop invading the kitchen. Yahoo! gets more than 1.5 million food-related search queries every day, which indicates the growing popularity of food and cooking websites. Next time you want to cook a meal and are not sure of the recipe, just Google it. Google cooking has arrived and is here to stay.

Why the sudden rush?

“Content is King” and all major companies are working overtime to increase and improve the quality of content on their website. Internet companies are looking at newer avenues for generating revenues and lifestyle content seems to be the answer. The fact that Yahoo Tech attracts around 2.5 million users every month and is a big hit with advertisers, confirms that all major internet companies are seriously considering lifestyle content to differentiate their service offerings and drive eyeballs and advertisement revenues.

Food and cooking are among the fastest growing lifestyle segments on the Internet. The most searched word on the various search engines around 4 P.M. in the evening is food or cooking related, and this explains the new-fangled interest in cooking websites. Though there are a number of cooking websites, there are only a few big, well established independent players and most of them are regional in nature or cater to a typical segment. The food and cooking website industry is highly fragmented. Big companies are trying to take opportunity of this fragmented market and offer unique content to garner eyeballs and generate ad revenues.

The packaged food industry spends over $900 million on advertisements and Jupiter Research feels that “there’s a real ad play to be made here.” Deanne Brown’s view that “user demand, and potential ad revenues, make it a good time for Yahoo! to enter the food content business” confirms that the stakes are high and companies are playing for big money by trying to drive up the usage of its websites among its customers and attract unique visitors. [Note: The 900 Million number seems low to me …]

The demographics of internet cooking

With such high stakes the segment is seeing a lot of intense activity. The big boys of the industry, Kraft Foods, Time Warner, CNet Networks, etc. have launched there own cooking websites. According to comScore Media Metrix, 54.4% of the visitors to cooking websites are females (wow, so a lot of men cook these days!), 58.5% of the visitors are of the age group 25-54, more than 54% are employed out of which, 30.4% are in the management or professional level and around 33% of the visitors earn $50K and more annually.

Deanna Brown co-founded Epicurious.com, one of the first, food and cooking websites in 1995. In the mid 90’s, when cooking websites started appearing, they were generally promoted by celebrity chefs, like, Martha Stewart, who were showcasing their cooking talents online and promoting their cook books. But slowly big companies like AOL, Kraft Foods, and others launched their own cooking websites. Today there are hundreds of food and cooking websites serving a variety of national and regional dishes, ranging from classic Oriental dishes to typical Indian vegetarian dishes.

Foodnetwork claims the top spot among all food Web sites in the US, capitalizing on its TV popularity and developing deeper relationships with its viewers. Allrecipes.com receives, on an average, 5.5 million unique visitors every month and has over 45,000 recipes available for download. Allrecipes.com, Foodnetwork.com, Cooks.com, Epicurious.com and Recipezaar.com are the top five websites in food and cooking, according to Alexa traffic rankings.

The business model

Advertisement and online shopping of food and cooking related items are the main sources of revenue for the food and cooking websites. Advertisements of various shapes (expanding bar, floating ads) and sizes (300×250 or 160×600) are found on these websites and they are either GIF, HTML or Flash files of 10 to 15 seconds and are mostly of premium food companies, travel companies, health and fitness companies or consumer brands like Kraft Foods, Sheraton Hotels, P&G, Campbell’s, etc., targeted at the more affluent section of the society. Kraft Foods is the largest advertiser, as it has partnership with most of the major food and cooking websites including Yahoo! Foods, allrecipes.com, foodnetwork.com and many more. Foodnetwork.com leads the food and cooking websites by being the number one ad-supported food website.

Advertisements can be targeted by frequency, time-of-day or geography. Advertisements can also be posted on particular segments like low calorie segment, desserts and so on. Some of these websites do publish food magazines, cookbooks and DVDs, which help in generating additional revenues. The advertising fees are high, and these websites aid in pinpointed advertising. Most of the advertisement slots on the cooking websites were booked indicating a very high level of interest, and potentially room for new entrants.

Allrecipes.com was recently acquired by The Reader’s Digest Association, Inc. (RDA). Foodnetwork.com is owned by The E.W. Scripps Company. Chowhound.com, a grassroots community for serious foodies was recently acquired by CNet. Most of the food and cooking websites are being acquired by the larger media companies.

The success recipe

The cooking websites are targeted at the young professionals of today, both men and women. Women, though, are the primary targets. The main source of revenue for the websites is advertisements and therefore, driving traffic to the websites is a key to the success of these companies. Big players like Yahoo! are in a better position to promote their website due to the network of websites they own, as they can easily tie one site to many other sites.

Yahoo! has tied up with Martha Stewart Living Omnimedia, as well as posts from 13 food bloggers and one new Web-based cooking show “Cheap and Easy”, for the content of the website. Yahoo! has roped in Kraft Foods Inc. and Sheraton Hotels & Resorts as marketing partners, who will advertise on Yahoo! Foods.

With hungry advertisers looking for unique websites and a laser-sharp target segment, this could be a potential money spinner for Yahoo and other food and cooking websites. As all advertisers would like their ads to be better targeted, food and cooking websites provide an opportunity to the various food manufacturing companies, grocery stores, and kitchen merchandise retailers to better target their advertisements and generate a higher ROI on their marketing investments.

The websites have to be innovative in their offerings and the quality of the content and its presentation will play a key role in generating traffic. Word of mouth and social networking is the best way of promoting these websites. Those that are able to provide unique content and have a high interactive component (different communities), with different forums for sharing views and recipes with regular new recipe additions, product reviews, and free downloads of recipes, will be able to grab eyeballs and have a larger share of the advertising pie.

Though subscription is not a very common form of revenue for these websites, they should consider subscription as it will give them stable revenues but it is only possible if the company is able to provide a differentiated service. One such innovation could be offering unique recipes (researched and developed by the website) through email for a minimum subscription on every Friday evening, which would be fun to cook and would revolve around some theme depending on the season. Celebrity Chefs could also attract subscription fees.

Gazing at the crystal ball

A study conducted by Nielsen in the summer of 2006 on the demographics of allrecipes.com revealed that more than 23% of the visitors to the website either seek or post product reviews on the allrecipes website, which indicates that the website is a major source for product related information and this sharing of views will making it an important forum, which can make or break a new product launch. The fact that around 77% of Allrecipes.com cooks visit the grocery store the same day they visit the website is of significant importance to the marketers in the food industry.

These food and cooking websites are going to play a major role in the decision making of a large cross section of the educated and affluent society. Web advocacy and product reviews are going to make the advertisers warm up to these websites and this could mean long term partnerships among manufacturers and the websites for product and concept testing as well as advertising which could earn these websites significant revenues in the medium term.

The food and cooking, lifestyle segment is here to stay and with growing penetration of the Internet, these sites are going to gain more and more popularity, which will result in the entry of many large media players. The industry will witness a lot of consolidation due to the increasing competition in the lifestyle segments and the smaller payers will be gobbled up by the large corporates.

In terms of new investment opportunities, the market for food websites is already crowded and there is not much to differentiate one from the other and the only way one can make presence felt is by bringing about a disruptive innovation. In my opinion, such innovation will be less technology-oriented, but more merchandise / recipe oriented, as in the ethnic & packaged foods category, there is still much, much to be done.