D.C. Drama Has Been Very Good for Politico

Its online explosion has led the organization to launch two new initiatives in the past year — a premium content service and an events business

The long, politically heated summer has been very good for Politico.

While many news organizations have benefitted from three months of scandal, budget crises and campaign intrigue, few welcome it as much as the four-year old political site, which has become a go-to destination for up-to-the-minute political news.

Though it also produces a physical newspaper in the D.C. area, the online edition in 2011 underwent its strongest period of growth yet, reaching what it claims are new highs in online traffic.

Certainly, its rivals in the pure-play politics arena do not compare online. According to comScore, Politico.com has drawn more than 4 million unique visitors for months, rising from around 3.8 million monthly uniques earlier this year.

That's far more than notched by TheHill.com or RollCall.com all year. In July, the most recent month available, traffic shot up at TheHill.com to 1 million uniques, but still lagged behind the 4.2 million at Politico.com.

And RollCall.com? It attracted a mere 69,000 uniques in July (though it is a subscription service).

Politico's success has validated two new initiatives launched in the past year — a premium content service and an events business.

“We were blessed that even in a tough economy in a pretty tough industry we were able to reach profitability and net profitability last year, so we went into this year looking to take our expertise and brand and make more money,” Jim VandeHei, Politico’s co-founder and executive editor, told TheWrap.

Launched in January 2007 by two former Washington Post staffers, VandeHei and editor-in-chief John F. Harris, and with the backing of Allbritton Communications, Politico already has made its mark in a crowded field. 

“Politico is the premiere site for the internet’s consumption of political news,” said Brian Montopoli, senior political reporter for CBSNews.com. “They are always first with stories, and they’ve redefined the way I do my job and the way the internet-based journalists work.”

Its daily newsletter Playbook, written by chief White House correspondent Mike Allen, is a must-read for everyone inside the beltway. 
“Playbook is essential,” Montopoli said. “When I write a story or if I get mentioned in Playbook I’ll get 10 emails from people saying ‘I saw you in Playbook.’ It becomes a measure of success."

“They’ve been doing quite well, not only in terms of numbers but in terms of being able to establish an almost purely digital brand,” said Eric Hippeau, former CEO of the Huffington Post and current partner at Lerer Ventures. “A brand that had no prior legacy has established itself as a real player in the media business in [Washington, D.C.], which is really quite a feat.”

Of course, Politico is not a purely digital brand. One of the questions surrounding the company has been exactly how much of its revenue comes from the print edition, which has a circulation capped at 33,000.

The newspaper, which like the web edition generates almost all of its money from advertising, initially brought in 80 percent of the organization’s revenue. However, VandeHei says that balance has shifted each year, and that in 2011 it became an even split.

“Obviously our growth is online — nationally and eventually internationally,” VandeHei said. “If the question is, ‘Are we continuing to see steady growth in revenue online?’ there is no doubt about it, to the point where it’s starting to surpass print.”

The basis for its advertising revenue has never been a secret. Issue advocates turn to Politico because its readers tend to be well-educated, wealthy and powerful. As VandeHei puts it, “We might get fewer eyeballs, but we’re getting a very elite eyeball.”

But no matter how good the advertising numbers may be, many analysts do not believe that is enough.

“If you are not charging for online subscriptions and are totally dependent on online advertising, the problem is that every year that goes by there are more and more websites, more and more places to advertise and thus more and more supply,” Craig Huber, an equity research analyst at Access 342, an independent research firm, told TheWrap. “That puts further pressure on pricing for online display ads.”

The need for multiple revenue streams is one reason for the launch last February of Politico Pro, its online premium-content subscription service. Right now, subscribers can pay $2,500 a year to get extra information on three topics — energy, technology and health care.

“We’ve had a lot of success and others have had a lot of success in picking a niche and dominating it,” VandeHei said. “Ours is politics and governance, The idea with Pro is to go niche inside of a niche, to take slices of what we do and try to create a little politics for people who care just about energy or just technology and charge a large premium.”

Add on a new events business, in which Politico started flexing its muscles this year. The initiative officially began in February, and some of the more recents events include a panel on "Energy and the Presidency," hosted by Tim Grieve, the editor-in-chief of Politico Pro, and a "Playbook Breakfast," where Allen interviewed one-time presidential candidate Tim Pawlenty.

Not only has Politico staked out new ventures, it has added a great deal of staff. When Vanity Fair profiled the organization in 2009, it had 80 editorial employees; VandeHei says it now has 140 to 150 on the editorial side, and over 200 overall.

That is quite an investment in talent for a company operating in between elections. Surviving the stretch after the 2008 presidential election was its first big test and continuing to grow after the 2010 midterms was the next one.

“I’m sure their business is seasonal to a degree,” said Donnie Williams, chief Digital Officer at Horizon Media.

That may be, but now that Politico has succeeded during what should have been a slow period, the 2012 election is approaching with only more politics on the horizon.

An earlier version of this story had incorrect chart information.