Wednesday, October 21, 2015

Ancestry.com at Banking Conference – Part 2

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.

Content

Content is KingWhile 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.

Other Offerings

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

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).

13 comments:

  1. First of all -- thanks for your dedication and excellent reporting, Insider.

    As to Ancestry's "progress report," it appears to be largely codswallop.

    Because we're not all canceling our memberships en masse, Ancestry claims this means it's retaining its "core base," and everything's just fine, proceed full steam ahead with forcing everyone onto a "visually appealing" redesign.

    Just a quick scan of comments, past and current, on Ancestry's Facebook pages and forums show the tip of an iceberg of discontent. We've all been assured over and over that if we just put up with the "development" in progress, participate in continual, constructive "feedback," and send our concerns in private emails to their tech support folks -- oh, and watch those important videos showing us to do those simple things we used to be able to pull off far more simply -- that everything will be just swell.

    Those of us who put years of effort into our records on Ancestry hang on for the most part because we don't have a better option. That doesn't mean we don't have any options. That doesn't mean there won't be better alternatives in future. Again, a even a quick scan of comments on the relevant sites reveal that Ancestry's best long-time customers are currently engaged in looking for a good option, if not a better one.

    I've already ordered a couple of Family Tree Maker 2014 programs, and have a MyHeritage software program to experiment with, as well. Ancestry has obviously made up its mind, and now I've made up mine.

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  2. "When you radical change your product, you run the risk of aliening your core base and that hasn’t happened. "

    Hasn't happened???? What are you smoking?? Even a half price offer from ancestry did not entice me back! It's pretty easy to abandon ancestry once it's out of the mix. There are other sites with the same information and there is other software that works just as well. The sync feature is probably the only reason anyone would stick with ancestry but you don't have to pay for that privilege........so far. Ancestry is reaping all the information anyone puts in their tree so they'd shoot themselves in the foot if they start charging for trees to be on their site. I will never pay anything to ancestry again, including more DNA kits for them to sell the results.

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  3. In the first paragraph you report that Ancestry's trees have "seven billion nodes". I would love to know how they define a node. Is that a person, a piece of information (like a birth year) or something else?

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  4. Darris - as I recall their definition of node is an individual in a tree. So if my 3rd great grandfather is in 40 trees, that's 40 nodes.

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  5. Since one cannot simply cancel a subscription with Ancestry--that is, one is locked in for a time period--I have no idea how they would even know what one ultimately intends to do. I have not cancelled my subscription because I know I signed up again for a year right before they hit us with this. I have clung to Classic Ancestry. I jumped right back when they tried to push me out when I made the mistake of clicking the new wills section, and I have hit the X button every time they have tried to lure me in with an ad. Are they counting all those refusals to engage with New Ancestry? Yes, there does not seem to be a good alternative, but that one is hanging on only because stuck in a contract, refusing the new product, and looking for something else hardly seems to define one as "not alienated." I am VERY alienated.

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    1. My renewal isn't up until next year and, believe me, I've got a clock ticking ready to sound the alarm before Ancestry can stick me again.

      Have subscribed to MyHeritage.com with the hope it will be a reasonable alternative to Ancestry. So far, seems to be a very basic, user-friendly design. Also bought Family Tree Maker 2014, looked up the FTM 2014 users page on Facebook for future support, and gonna get out of Ancestry entirely as soon as I can.

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    2. FTM 2014 is simply a desktop software program it is NOT a replacement for Ancestry. It can be a replacement for your Ancestry member tree as long as you don't want to share the info on line. MyHeritage is OK, I have both memberships (records and trees) but so far I have not found near the content that I have with Ancestry. Also there family tree option is extremely limited not near as robust as Ancestry's.

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  6. The report about new ancestry is total hogwash. Maybe the insider should start reading the ancestry blogs and facebook comments posted by real customers. This is a one-sided, ancestry influenced report. Pretty transparent.

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    1. Well, there, I've gone and tried to state this twice and it just didn't feel right both times so gonna try this again: The Insider's report is just about what Ancestry claims, not what anyone else does or does not know to be true. It's what Ancestry is claiming at a meeting at which it obviously hopes to look good to people it wishes to impress. Which is not long-time customers. It's the kind of thing I'd expect a company to say that is short-changing its customers but wants to reassure potential investors that all is well.

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    2. As Charmaine says, I'm reporting what Ancestry claims. I'm well aware of what is being stated elsewhere. This article is not a report of the situation, it is a report of a particular presentation.

      When interpreting what you're seeing, remember that satisfied people rarely, rarely come out and state such. While I can't remember ratios, as an insider I've witnesses the phenomena. For each dissatisfied comment you're seeing there may be 500, 1,000, perhaps 10,000 satisfied customers who remain quiet. Whether or not you believe Howard, believe me that Ancestry is watching renewal rates very, very closely. They're in this for the money. If New Ancestry increases their profits, they will adopt it permanently. If it decreases profits, they will act accordingly.

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  7. This sounds more like ancestry.com using your platform as an advertisement...it is definitely slanted and is NOT the truth...

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  8. HUH most my comment did not publish--let's try one more time--I don't know where you get visually appealing and people are happy---I correspond with a LOT of ancestry.com subscribers and have YET to talk to one person who likes the NEW version.

    Ancestry is not seeing mass cancelations only because people have to figure out if they are going to move their trees and if so whwere to put them and how to move all the stories and photos--this takes time.

    Some of us with large trees simply cannot leave--moving the mountain of information would take many, many years--so just cuz we have not canceled our accounts does NOT mean we are happy with the NEW version.

    I would bot rely on what ancestry says as they are trying to "sell" their new product--of course they are going to say people like it---but if you follow blogs and the petition to keep the old interface so we can use whichever one we prefer is growing daily--the MAIN problem is word of the petition is getting around slowly.

    http://www.thepetitionsite.com/600/803/575/save-ancestrycom-classic/

    One of the MAIN reasons they see many people using NEW is that they are not permitting NEW customers to use the old--another reason is that many work "off line" and use FTM to do most their work. Many people are still unaware of the NEW version, and many get inbto the NEW version and don't know they can go back to old.

    Ancestry.com's comments are hogwash-plain and simple...

    Out of hundreds of people I have talked to I have foudn ONE person who says they like the NEW version...BUT she keeps most her tree info on familysearch so is not feeling the repercussions of NEW and how awful it is.

    This sounds more like ancestry.com using your platform as an advertisement...it is definitely slanted and is NOT the truth...

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  9. "They have tried forcing people into the New Ancestry to see if cancel rates change and have seen it doesn’t." If Ancestry has exclusive content that people can't get anywhere else, the customers have to hold their noses and re-subscribe, or they can't access the content.

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