Interactive and Integrated Marketing
Fiscal 2000 marked the creation of our Interactive and Integrated Marketing Group, although several of its operations are far from new to Meredith.

Over the past few years, we have built an Internet presence that includes 26 branded Web sites. We are industry leaders in integrated marketing based on the number of clients, depth of services and measurable results we have achieved. We also have developed one of the media industry’s most extensive consumer databases – a critical asset for supporting the growth of all our businesses.

The strategic alignment of these operations sharpens our focus on their significant revenue and profit growth potential. Our strategies for realizing this potential include:

• Expanding and accelerating our Internet-related efforts on a company-wide basis.

• Adding new marketing clients and expanding our relationships with existing clients.

• Enhancing and leveraging our consumer database.

Accelerating Internet-related efforts
We are very optimistic about the success of Meredith’s interactive media operations and our ability to develop a business that generates significant revenues and profits. Based on our Interactive efforts to date and a comprehensive Internet business assessment, we see many opportunities for cost savings and revenue growth.

In addition to shifting subscription and renewal activities from direct mail to the Internet, we can significantly reduce costs through Web-enabled self-service features such as address changes and other account maintenance.

Our Internet initiatives offer significant potential for advertising and sponsorship revenue, particularly as we continue to build traffic and compelling interactive applications. We also can increase e-commerce revenues through customized arrangements with manufacturers and retailers. Another significant way to monetize our leadership position in consumer media is to perform direct marketing services for clients.

As consumers register on our sites, we are able to supplement our existing database and build digital marketing applications with unparalleled depth.

With these cost-saving and revenue opportunities in mind, we have developed our Internet strategy with four fundamental initiatives.

First, we are creating the premier home and family Internet site, with extensive and unique content and applications in our core content areas of decorating, food, home improvement and remodeling. Employing a modular architecture, we will use our flagship site – bhg.com – as a launch platform, with branded content available for our other publishing and broadcasting sites. In addition to generating significant revenues and cost savings, this initiative focuses on broadening the consumer experience.

Broadening the consumer experience involves deepening our content, increasing functionality and making navigation easier. We plan to further “version” the site – building some sections with free content, and other areas where we will ask the consumer to register before accessing the content. We are also creating communities, in the form of discussion groups and message boards, to stimulate use of the site and retain visitors. In addition, the site enables visitors to take action by conducting e-commerce transactions such as purchasing Meredith products and services.

As a second initiative, our group is working closely with the Broadcasting Group to build a credible Internet presence for each of our television stations, to extend their brand identities and local news programming.

A third initiative involves expanding our program of strategic alliances and equity investments in Internet partners. We already have established important alliances with HomePortfolio.com, XSAg.com, ThirdAge Media, golf.com and America Online, and we continue to pursue additional opportunities.

As we develop these alliances, we ensure they include e-commerce and interactive applications to enrich the content on our sites, extend our brands, and drive traffic and revenue to Meredith sites. We include magazine advertising in many of the agreements as well, helping drive business to our publishing properties.

Finally, we are focused on acquiring significantly more subscriptions online. We have challenged ourselves to generate 1.5 million magazine orders through the Internet during the next three years.

We are encouraged by our progress. While absolute numbers are still in the tens of thousands, magazine subscriptions generated through the Internet are accumulating quickly. Even small shifts to the Internet can have a significant profit impact. Notably, we would not have reached many of these subscribers through traditional mailing sources, and we are capturing them at a relatively young age. This efficient source for attracting new customers bodes well for the future.

Expanding our marketing relationships
Our Integrated Marketing business is expanding our relationships with existing clients and adding new marketing clients. We have established relationships with more than 60 of the country’s leading companies and brands, including Kraft Foods, Nestlé USA, The Home Depot, Lutheran Brotherhood and Iams. These relationships are important because they provide additional revenue sources to complement our traditional advertising and circulation revenues.

Our ability to pull together numerous resources and build complete “concept-to-doorstep” programs sets our integrated marketing business apart from the competition. We work with our clients through every phase of the process – from sophisticated up-front planning, market analysis and research, customer segmentation and strategy development, to creation of superior content-driven communication programs and measurement of results.

Our effectiveness is evident from the significant growth of existing relationships. Our work for The Home Depot and Kraft Foods, for instance, began with single custom publishing projects. Our relationships with both companies have evolved into sophisticated, multi-element brand-building programs. In fact, revenues from our five largest relationships grew fourfold from fiscal 1997 to fiscal 2000.

In fiscal 2000, we also added several clients to our roster, including United Healthcare, The Principal Financial Group, Kodak and ConAgra’s Healthy Choice brand. Our success has continued into fiscal 2001, as we have added programs with Hershey Foods and The Home Service Store. We expect to continue the rapid growth of this business.

Leveraging the database
A third initiative of the Interactive and Integrated Marketing Group is enhancing and leveraging our consumer database. Our database, which contains more than 60 million names and contains information on seven out of ten home-owning U.S. households, is the largest domestic database among media companies. We can take advantage of this resource by developing best-customer profiles and extracting highly targeted consumer segments for our own products and in concert with our Integrated Marketing clients.

Because of the significant depth and breadth of the data – an average of 300 data points for each of the 60 million individuals – we can identify, select, market to and retain customers more efficiently and effectively than ever before. By aligning this resource with our Interactive and Integrated Marketing businesses, we are able to further expand the database and make it an integral part of our direct marketing initiatives. Its value in targeting specific products and services to individuals with corresponding needs and interests serves our publishing and broadcasting businesses, as well as our advertising and marketing clients. As a result, the database will continue to drive important revenue and profit margin growth for the entire company.

We are enthusiastic about the significant growth potential of this new operating group. Our more aggressive pursuit of these Internet, integrated marketing and database opportunities demonstrates our commitment to remaining a key content provider in the new economy and solidifying our position
as a leading media and marketing company.

NEW INTEGRATED MARKETING RELATIONSHIPS
Our integrated marketing business generated significant new revenues by launching custom and integrated communication programs with a diverse group of new clients in fiscal 2000, such as:

• United Healthcare, including the “Truly Yours” magazine and “Tapestry” newsletter. “Truly Yours” is mailed to 3 million customers three times per year. “Tapestry” reaches 200,000 customers three times per year.

• The Principal Financial Group, including the publication of “Plan Ahead, Get Ahead” in conjunction with Family Money magazine. The magazine is distributed quarterly to more than 1.2 million Principal Financial Group customers.

• Kodak, including a custom magazine called “Everyday Pictures.”