Senior.com Eyes Services; Analysts Question Focus
It may be only appropriate that Irvine-based Senior.com,a Web site for seniors,says it’s taking it slower than other Internet start-ups.
As online hopefuls fall off by the day, Senior.com Chief Executive Craig Schub said he’s pursuing a conservative tack and aligning with other businesses in the hopes of capturing a slice of what could be a big potential online market as baby boomers enter the senior ranks.
“We’re not trying to dazzle anybody in the short term and raise money on some wild expectations,” Schub said. “We’re continuing to plod along with a long-term view.”
Newly formed SeniorCo acquired Senior.com, a five-year-old Web site, in June. Later that month, the company attracted $11 million in funding from two high-profile corporate backers: Compaq Computer Corp. and PacifiCare Health Systems Inc. As part of the deal, the two companies have pledged an additional $8 million in funding if Senior.com hits sales milestones next year.
So far, Senior.com has spent about $5 million of its initial funding, Schub said. The company has no plans to expand its 18-member staff, he said, and is on track to hit sales targets and receive the rest of its financing.
Senior.com is billed as an online senior community, with services, information, chat rooms and forums for about 50,000 registered members. The site is targeted at those 50 and over. Non-members have access to some services.
Senior.com, which Schub said hasn’t generated a profit yet, aims to provide seniors access to insurance providers, health companies and other business partners. Along with advertising, the company is looking to receive commissions from service transactions. Schub said he anticipates that Senior.com will break even by its second or third year.
By offering a variety of services that appeal to seniors, Senior.com is looking to build a steady flow of visitors to its site, which the company hopes will lure advertisers and drive transaction revenue.
But one industry observer contends Senior.com lacks focus. Ekaterina Walsh, a senior analyst at Cambridge, Mass.-based Forrester Research Inc., said the site lumps too many things under one name.
“There’s no expertise and that’s a severe limitation,” Walsh said. “They’re never going to grow much. Many companies have already gone through that. Some have folded. Some are about to fold very soon.”
Senior.com’s success rests with its ability to be seen as an expert, Walsh said. The site should focus on one activity,like senior insurance, for instance,to establish credibility and earn the trust of users, she said.
Rance Piatt, an editor at New York-based Internet research firm eMarketer Inc. said he believes Senior.com’s strategy could work, but only if the company can distinguish itself from a host of other sites looking to tap the online senior market.
Rivals include the similarly named San Francisco-based Seniors.com Inc., which Web surfing seniors could inadvertently access with just a slip of the keyboard.
Piatt gives Senior.com good marks for ease of use and its slew of activities for seniors. But that’s just half the battle, he said.
“They’re not zeroed in on one particular (age) demographic within the senior demographic,” Piatt says. “While that may be good to get first-time users to click through the site, I don’t know what effect it’s going to have on retaining those users.”
Senior.com’s Schub said he’s looking to lure and keep users through a combination of online and offline services, something that could appeal to less-tech-savvy seniors. Right now, advertisers such as Compaq, PacifiCare’s Secure Horizons and AARP make up a big part of Senior.com’s sales. But, Schub said, he sees that changing in favor of service fees.
“Sponsorship and advertising is now 50% of our revenue,” Schub said. “But going forward we see it becoming a smaller and smaller portion of the business model.”
At Senior.com, visitors can click on links and purchase life insurance from John Hancock Financial Services Inc. (Senior.com is a licensed insurance broker). They can follow other links to book a tour through Pawtucket, R.I.-based Collette Tours, or access Irvine-based AccentCare Inc. for in-home caregivers. They also can get travel health insurance through Radnor, Penn.-based Highway To Health Inc., an online provider of health information, medical assistance and insurance services.
Senior.com is betting on a market that has statistically been described as one of the fastest-growing segments online. But Forrester’s Walsh is quick to qualify that growth: “The reason for that is they’re starting from nothing,” she said.
According to eMarketer, in 2001, 9.1 million, or about 15%, of the 58.8 million Americans older than 55 are projected to be online. By 2003, the number of online seniors is expected to hit 17.3 million, while the total number of seniors is expected to grow by 5 million over the same period.
“There is a viability to this market,” eMarketer’s Piatt said. “You’re looking at a demographic that has disposable income, the propensity to go online and stay on for a while. The challenge is how you capture that market and set yourself apart.”
Still, Walsh said she believes Senior.com has its work cut out. The future of the Internet is niche-oriented Web sites with smaller bases of users who frequent sites and trust their content, she said.
“Perception is huge. If Senior.com is not perceived as the best, they’re not going to go anywhere,” Walsh said. n
