WebMD is laying off 14% of its workforce in hopes of saving $45 million to offset revenue losses from an ongoing advertising slump that’s plagued the portal throughout 2012.
Around 250 jobs will be eliminated in the reduction, which the company said was part of a broader effort to streamline operations, cut costs and focus on increasing user engagement.
“WebMD’s value proposition for users continues to be very strong,” said Cavan Redmond, who joined the firm from Pfizer last summer, filling a vacancy left by founder Wayne Gattinella when he resigned at the start of the year. “Becoming leaner and more nimble will enable the company to extend our leadership in this highly dynamic and increasingly demanding marketplace. In addition, anticipated changes in US healthcare will provide meaningful new opportunities to link the needs of patients, consumers and healthcare professionals to enable them to navigate their care. We are moving swiftly to implement these operational changes and new market initiatives.”
WebMD has, in recent months, initiated a redesign of its print magazine and a rethink of how its different access points fit together, with special emphasis on upping its game in mobile media, along with new apps and tools. Those moves have garnered a noticeable spike in traffic – the site saw double-digit increases in unique visitors and page views in the third quarter – but haven’t yet moved the needle on revenue, which sank 13% for the third quarter over the same period in 2011, to $117 million. Sponsorship and public portal advertising fell 15% to $96.7 million.
The decline of the big, mass-market blockbuster drugs is partly to blame for the slump, but the portal has also faced increasing pressure from more nimble competitors like EverydayHealth, which saw advertising and sponsorship revenues from healthcare companies rise 35% for the first half of the year (EverydayHealth is a private company and does not divulge revenue figures, but based on numbers they put out during a flirtation with an IPO two years ago, they remain much smaller by dollars). WebMD, having long pursued an “above-the-fray” Rose Garden strategy in dealing with the competitors nipping at its heels, has started punching back.
As part of the restructuring, the company said it will “streamline its sales and delivery processes to enable better collaboration with our sponsor and agency clients,” while watching costs more closely, with “a sharper focus on prioritizing resources and investment to key areas of future growth.”