On 30 September 2015 Ancestry.com’s Howard Hochhauser gave a presentation at the Deutsche Bank Leveraged Finance Conference. This is the second part of my report. I reported the first part last week.
While helping acquire new customers, new content is also what it takes to retain existing customers. About 70% of Ancestry’s content is unique to them. That content is divided between content under exclusive contract and content that has been contributed by subscribers. They have 70 million trees with seven billion nodes and a million DNA profiles. This year Ancestry will spend $30 to 35 million to digitize new content. They digitize the content and put it on servers in Salt Lake City. Ancestry has spent $10 million on the probate and wills collection to digitize and index it.
Today they are digitizing content in Mexico and Germany. The content they digitize there (Germany? both?) is exclusive to them for 40 (14?) years, creating a huge barrier to entry for other companies.They’ve invested $30 million in content there.
They have acquired or built adjacent properties: Archives.com (acquired), Newspapers.com (built), fold3 (acquired), and Ancestry ProGenealogists (acquired). About 5 to 6% of their subscribers buy a super-subscription including the first three for an incremental cost of about $10. They bought ProGen for just a million dollars but have grown it into a $10 million business.
He estimates that Ancestry.com is about 80 to 85% of their business, but it depends on how you calculate the other business units.
New Ancestry took about a year and a half to build and is designed to add value, retain existing subscribers, and get more people into the service. The old site appealed to genealogists. The new site is more visually appealing. The old site was, essentially, a spreadsheet of the facts about an ancestor. Using machine learning, the new site is essentially a story about an ancestor. When you radical change your product, you run the risk of aliening your core base and that hasn’t happened. Test data shows that it has increased retention among their core base.
About half of their subscribers are using New Ancestry. They have tried forcing people into the New Ancestry to see if cancel rates change and have seen it doesn’t. They will not force a hard cutoff [near term]. Eventually they will. There have been complaints, but overall it’s been a net positive.
People are uploading photos and accepting more hints in a dramatically higher fashion with New Ancestry. They think that will increase the amount of bill through.
Health and DNA
Ancestry built their DNA offering from scratch. This year it will roughly be a $70 million business. It will be profitable this year. Roughly 10% of kit sales convert into an Ancestry subscription. That will be 60 to 70 thousand new subscribers.
They also want to launch a health product and a licensing business for research companies to mine the DNA data without personally identifiable information. (Doesn’t our DNA uniquely identify us? Hmmm.) This provides a new avenue of growth for Ancestry. They signed their first licensing deal this year. It is a multi-million dollar contract.
They launched a family health history beta website this year (https://health.ancestry.com/). From the beta site they will learn if customers will trust them with their health history. The customer will be able to store their family’s health history for free.
That’s it for my report. Listen to the presentation for yourself at http://ir.ancestry.com//eventdetail.cfm?eventid=165073.
Image collage originals accessed 3 October 2015: Douglas County, Nevada birth certificate (https://familysearch.org/pal:/MM9.3.1/TH-1942-25463-34374-38), false colored. Weber County, Utah marriage certificate (https://familysearch.org/pal:/MM9.3.1/TH-1951-45089-28892-91). Sacramento County, California death certificate (https://familysearch.org/photos/images/5290561).