Cover Story : Finding the Perfect Balance

Gaiam follows its mantra with a holistic approach to marketing and close attention to sustainability and profitability

This year's economic retreat actually stands to help Gaiam, a product and information services company with a heavy emphasis on sustainability, position itself for greater growth in the near future.

Gaiam sells a wide variety of products — yoga and other fitness tools and instructional DVDs, apparel and linens made from organic fabrics, and assorted personal care products. Having decided a few months ago to reduce catalog circulation by 2.5 million, from the 16 million it mailed last year, the company is more heavily focused on integrating its Web-based prospecting efforts to gain comparable response, greater flexibility and far lower costs. This year it's focusing most heavily on organic and paid search, as well as its highly successful affiliate marketing program.

Although Gaiam's B-to-B unit distributes products through major retailers such as Target, Wal-Mart, Dick's Sporting Goods and Whole Foods — more than 73,000 stores total — the company has never entertained the idea of opening its own store chain. It also operates a solar division that sells renewable energy and solar energy systems direct to businesses.

None of these online programs are new to the Louisville, Colo.-based company. Born a traditional print cataloger in 1988, Gaiam's conversion to Web-based efforts has been going on for some time. But whereas some marketers continue to approach the online front with a bigger-is-better, Wild West approach, Gaiam's more interested in online profitability than runaway growth — at this point.

"We've focused our pay-per-click efforts more on efficiency, rather than simply driving high traffic and revenue," says Jason Marshall, vice president of consumer direct for Gaiam. "We've reset our contribution expectations and have been willing to sacrifice a little bit of revenue to get higher conversion rates on lower-cost terms. That's been really successful for us so far."

Efficient Keywords
Whereas Gaiam previously focused on more competitive and expensive search terms that weren't getting high conversion rates, it's narrowed its terms this year, substituting, for example, "organic clothing" or "yoga clothing," or even "Gaiam brand clothing," for simply "clothing."

Moves like this are consistent with Gaiam's intent to improve its cash position this year rather than focus too heavily on sales. "If most people out there were doing search focused on actual bottom-line contribution rather than top-line sales," Marshall points out, "they'd find that a lot of the terms they're bidding on, they're actually losing money on. That was the case with us: Some keywords weren't converting, or they were getting the sale but we were paying too much to get them."

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