XO Group: The Yelp, OpenTable And Netflix For Weddings

Most of the 2 million couples who get married each year in the United States visit XO Group’s The Knot website when planning their big event.

So how does a company that’s already cornered the wedding-planning market grow?

XO Group wants to move from inspiring brides to helping them coordinate their weddings. It hopes to broker connections between brides and their DJs, florists and venues while taking a cut for making wedding planning easier.

“The question is how do you grow the business if you aren’t growing the brides?” CEO Michael Steib said. “If the wedding business is $60 billion-$90 billion, and a middleman could take something like 10% if they are successful at making those connections, it’s a large opportunity.”

Compared to most media companies, which focus primarily on national advertisers, XO Group’s revenue streams are highly diversified. Last year, transactions accounted for 15% of XO Group’s revenue, third after local advertising revenue from DJs and photographers (46%) and national online revenue (26%).

AdExchanger talked to Steib about how he’s growing XO Group’s business.

AdExchanger: When you joined three years ago, what was your vision to take the company forward?

MICHAEL STEIB: On the earnings call when I joined, we said we are going to be making a significant investment in product and technology, and the stock went down 20% the next day. If the market’s mindset is that you are a legacy media company, they don’t believe there is growth. So if you are investing, you make the company less profitable.

What’s different about how a bride plans her wedding on The Knot today?

If you came to our website four years ago and lived in Wichita and wanted a venue, you could have read an article about what to look for in a venue, how to form a contract and the etiquette for whether or not to invite mom’s new boyfriend.

We knew the moment in your overall planning journey when it’s time to look for a venue, but we weren’t very good about connecting you to the right venue.

Now we can connect users to solutions, and we can tell you what venues are right for you, see if they are the right price and schedule a tour like OpenTable. What used to be solely content is now a content and tech-driven marketplace.

Are changes in how millennial brides plan weddings helping your business?

Today’s audience finds it intolerable to pick up the phone when there is an alternative, which is to do it online. Imagine if you were just starting to plan a wedding and wanted to go online to find good DJs in your price range. They’d have to pick up a phone.

Our users had become significantly more mobile and wanted to get the job done on their mobile device. And weddings have become a very personal experience, so there is the expectation of the digital products being a personalized experience as well. We’ve taken all of this horrible analog behavior and shrunk it down.

We saw a significant opportunity to take these beloved brands and make an investment in product and technology to enhance the experience of the user, but also to create more transparent value for our advertising partners.

XO Group used to have a commerce business, but exited that – a decision made by many other publishers recently. Why wasn’t it right for you?

We had a warehouse that printed “Mike & Kim’s Wedding” on napkins and matchbooks and engraved mason jars. I don’t know how many make money in that business other than Amazon. We exited that, but we have a Knot Shop. We work with a third party that manages the shop, Wedding Star. All we do is manage the software.

Compared to other media companies, your business is much less dependent on national display advertisers. Do you view that as a strength?

Most companies have a tendency to organize around whatever they tell themselves is their most important metric or indicator. And for legacy media companies, that has been online page views or eyeballs. They set up their business to maximize eyeballs and then sell them at as high of a price as they can to the advertiser.

If you’re a company that says, “Our job is page views,” they get into an arms race about who has more uniques, and that leads to click-bait. We are not an eyeballs business.

So what’s your primary KPI then?

Our priority metric is having connected the user to the business they needed. We don’t talk about views, we talk about transactions. If we didn’t create a wedding website or registry for the couple or their guests didn’t buy the Cuisinart they registered for, we didn’t help them.

What’s the data play for you?

We are using data less like a programmatic ad company would use data and more like a Netflix. They are planning a wedding with us and their wedding date is May 7, 2018, in Tulsa, Okla. Their budget is X, and they’ve invited Y people to the wedding, 55 of whom have RSVP’d. And they should have picked a dress and venue by now, but this couple hasn’t done it yet. We are matching people based on their requirements or how they are similar to other users in the past.

What makes XO Group appealing to national advertisers and keeps you on the media plan?

Psychologists teach us you are more likely to switch brand preferences than anyone when you are going through a big life change. When I got married, all of a sudden I couldn’t buy chemicals to clean. When I had a baby, all of a sudden I needed an SUV.

At every one of these life stages, you switch over. The makeup you wear on your wedding day is the makeup you will be using from now on. If you are a fashion, automotive or beauty company, you are trying to reach this demographic, [which is] psychologically inclined to meeting new brands. It drives more brand lift than less-focused tonnage.

This interview has been condensed and edited.

 

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