Doug McCormick, Chairman and CEO, iVillage, Inc. translated lessons learned from cable to the Internet at the iMedia Summit.

Doug McCormick is Chief Executive Officer of iVillage, Inc., a position he has held since August 2000, at which time he was elevated from President. McCormick also serves on the company’s Board of Directors, to which he was appointed in February 1999. He was elected Chairman in April 2001.

In 2001, McCormick engineered the successful merger of two public companies, iVillage Inc. and Women.com Networks, Inc., creating the number one online media company for women. Today, iVillage is one of the most visited sites on the Web in the U.S., providing practical information to an audience of more than 35 million unique visitors each quarter.

McCormick brings to iVillage a 20-plus year track record of entertainment, broadcast and new media success. McCormick served a six-year term as President and CEO of Lifetime. During his tenure, he and his team established Lifetime as the number one women’s brand in electronic media, growing Lifetime to the ninth most profitable network (cable and broadcast) in the U.S. In addition to coining the branding phrase, "Television For Women," he is credited with raising Lifetime’s market value by more than $3 billion in five years, growing prime time ratings by over 100% and quadrupling revenues. Prior to Lifetime, McCormick held executive positions with The Samuel Goldwyn Company, Cable Health Network, Petry Television and KCOP-TV, Los Angeles

Here's the first third of his keynote address to the iMedia Summit in Scottsdale, Arizona earlier this month:

I believe that many of the issues that are facing the Internet industry right now are very similar to the ones we faced in cable before. And they could be summed up into what I would like to call the 3 Bs. And the 3 Bs are Buzz, Backroom and Boca.

Now Buzz is pretty simple. There is still way too much focus on the television industry right now. And there are soft stories in the television industry. For instance, last week the big story was about Dan Rather and Tom Brokaw leaving their network anchor chairs. I don’t really think that’s a relevant story to most people. I would be very surprised if many people in this room got home at 6:30 in time to watch a network television newscast. As a matter of fact, if you asked a 14- or 15-year-old how he feels about Dan Rather leaving the anchor chair at CBS, you might get two responses: "who is Dan Rather and what is CBS?" So it’s not exactly the most relevant part. 

The other big story is of course "Desperate Housewives." And we will talk about the real story behind that in a little bit.

Unfortunately, a lot of people, when they think of the Internet though, when they think of the Buzz, it's all about search and direct response. And it’s really no surprise Wall Street seems to be in love with Google. And there’s a lot of things going on there and the market cap of Google itself is equal to the market cap of GM and Ford combined. So it’s a big story on Wall Street and it’s going to attract a lot of attention. But because we are so good, a lot of the ability to deliver on a direct response site gets actually held against us. The reason for that is our accountability. What seemed really as something good, I think, really invites a lot of people and a lot of advertisers to insist what I call a free gift with purchase. They want a name. They want an entry. They want some kind of interactivity. Just because we are capable of doing it.

And I think that kind of flows out of proportion to the branding aspects of what it is we are doing. And of course there’s a phenomenon going on right now where people really have taken a fair amount of inventory and given it to resellers to sell. Now what that means is the resellers are selling it to someone on a cost-per-thousand basis. That does a fair amount of business on the direct response side. And that instantly turns our product into a commodity. So one of the things that happens in this phenomenon is that we have all of this inventory that is unsold, which usually happens in a new media, a new medium, I should say. And that unsold inventory pushes out in the direct response area and we become overly known for our direct responsibility. Again, I think this clears up over time. It’s nothing that we didn’t see in the cable industry. In the early days of cable, you saw 800 to 900 numbers all over the place. That simply means that sales managers were not doing the job and getting the premium for the inventory they had. They simply moved out all of this inventory and was sold 800, 900, and of course, the half-hours. Remember the short guy with the British accent and the red suspenders selling everything to everybody all the time?

Well, it’s interesting. Because the direct response business, in most other mediums, is restricted to the wee hours of the morning and it is restricted to the back of the magazine pages. And all of a sudden it becomes the big story on the Internet. Again, I think this is a passing fancy. But clearly the over-emphasis on the direct response part of our business, if history repeats itself, will seem to be something that will move.

The second B is the Backroom. We all know the difficulties that we have in the backroom. New products are always the most difficult to integrate into existing buyers formats. Nothing different from what we had in cable. Just think, the difficulty, in fact, was even more stark. When cable came out, it was dealing with a marketplace where there were about 100,000 thirty-second announcements. And everyone, every year had nice little parties and we all had our broadcast up fronts and basically each of the networks had somewhere around, you know, 30,000 great units. When cable came on the scene, it brought 4 million 30-second units on. 

That created a lot of hard work for a lot of people in the short run. Over time, that got handled. I don’t think that’s a really big deal. I think smart people are working on that. It behooves both agency and clients and obviously the media to handle those issues in the long run. However, I think some of this problem, some of the back room problem, we actually visit upon ourselves. Going back to the old days in television, Jaclyn Suzanne wrote a novel about the TV business. She had a great quote: “We buy today for tomorrow on yesterday’s numbers.” Which was, you know, kind of interesting. I would say if she were around writing on the Internet business today, she would say we buy this morning for this afternoon and change the buy tonight. You know, there is an awful lot of activity. Again, because they can, people change the buys all the time. People look at buys as if they are a fever charge. We don’t have media buyers anymore. We have day traders on our inventory. 

I think that if we really address this kind of issue and say hey, enough is enough, that the extra time is giving us a black eye because of all the changes; that's something that I think is actually contributing to our problems. Just because you can do something doesn’t mean you have to do something.

The third B is Boca. Now Jeff Simalian from Emmis Broadcasting was the first guy to introduce me to this concept of Boca when he was talking about some of the difficulties he was dealing with. Boca simply means that the guy on the other side of the desk is saying yeah, yeah, I know it’s a problem, but, you know, frankly I hope to retire and be in Boca by the time it hits the fan. We see an awful lot of that. Some of the people we call on just don’t want to hear it. They know there is an issue with media and they know they have a problem, but they figure when it really hits the fan it’s going to be somebody else’s issue. 

Now these people are pretty easy to spot. They have their secretaries print out all of their email. They put Wite-Out on their computer screens. They are the only people who really do care about Brokaw and Rather leaving their anchor desks.

Monday: How to grow a business and overcome these three Bs.