Ancestry.com, whose main service allows people to research who their ancestors were through online databases, is definitely a leader in this market.
Founded as Ancestry, Inc., in the early 1980s, the company started out in publishing and moved online in 1996. It was renamed Ancestry.com in 2009 a few months prior to its IPO in November of that year. It has around 850 employees in 10 offices, including 7 outside the U.S. The company runs international genealogy sites in countries including Italy, Germany and the U.K.
But Ancestry.com doesn’t even have outside ads on its site (see screenshot above). So how does it make money? The company has a diversified ecosystem of different products around the globe that make money both individually and by feeding off each other.
Ancestry.com’s main products include:
- Subscriptions to the site that allow members access to searachable records and archives.
- DNA testing to find out more about your ancestral heritage and possibly connect with others related to you genetically.
- Family Tree Maker software.
- Self-publishing products, such as family history books, posters of family trees, etc.
- Hiring an expert who will research genealogy records for you or provide other services such as translation.
Subscriptions to Ancestry.com are available for both individuals and for institutions (such as libraries) and groups (such as genealogy societies). Subscriptions are by far the biggest source of revenue for the company. In the third quarter of 2011 (the latest quarter for which full data is available), subscriptions were more than 95 per cent of Ancestry.com’s revenue.
Subscriptions for insitutions and groups are available through a partnership with ProQuest. For individuals, different plans are available. In the U.S., individual rates start at $12.95 per month for access to all available U.S. records (the “U.S. Discovery” package), and from $24.95 a month for access to all global records available on the site (the “World Explorer” package).Once users have signed in, they are able to begin building family trees, connect with other members looking for their relatives, use sophisticated search tools to find relatives they know of, or to whom they may be related, add pictures and view images of original source materials such as scanned pages of census records or military documents.
The paid monthly subscription gives users access to either all available U.S. records or all global records — and there are millions of records available. Some of them are available elsewhere on the web for free, but to find all of them, and have them in a searchable and downloadable format, would be much more difficult. Using a service that aggregates search results and allows users to save items they’ve found and build personalised diagrams going back generations, is a service many people are willing to pay for. In other words, it makes genealogy research and information collection easy and shareable (see screenshot below).
Ancestry.com has been steadily growing its number of subscribers. Although it has not yet released a full report for fourth quarter 2011 or the full year, its latest numbers put its subscriber base at around 1,703,000.
With so much revenue dependent on subscriptions, it’s important to look at churn, and the possibility of retaining and expanding the customer base.
Ancestry.com’s subscriber churn rate has hovered around 3-4 per cent per month for more than two years. Its latest figures show an average monthly churn rate of 3.8% for Q4 2011. Those averages work out to a high churn rate for the whole year– possibly up to 40-50% overall. This can be explained at least in part by the fact that many of their subscribers are monthly, and drop in and out of subscriptions. In 2011, it appears that overall churn was down, but this is something to watch as the company grows its overal subscriber base.
Reported YE subscriber numbers were higher than Street expectations. Additionally, a survey by Citigroup showed that 66 per cent of subscribers said they were either “extremely” or “very” satisfied with their subscriptions, and that 40 per cent of former subscribers said they would rejoin later (a very positive sign — and Ancestry.com saves your old data so you don’t have to rebuild from scratch).
What about those other products and services?
While only about 5 per cent of Ancestry.com’s business, the other products the company offers are a good complement to its subscription-based research service and have the potential to grow quite a bit as the subscriber base grows.
Among other products and services the company offers:
- DNA testing: customers can send in a cheek swab for more information on where their ancestors may have lived, or if their DNA matches other potential living relatives who have also submitted DNA. Costs start at $149 per person.
- Family Tree Maker is software that allows users to build and expand their own personal family trees on their personal computers. Prices range from $39.99 for the Windows version to $69.99 and up for Mac. (Ancestry.com also offers free mobile apps for exploring the web version of its databases.)
- A publishing service that allows customers to print family history books; posters and prints of their family trees; and more. Prices start at $14.95 but can go much higher depending on the product and how complex it is.
- A separate but affiliated service also allows customers to hire experts to assist with consultation, record searches, research, and translation. Costs are expensive and range from $55 to $115 an hour, with a several hour minimum usually required.
Ancestry.com also hosts other sites such as MyFamily.com, which allows users to build a family website, and RootsWeb, a free message board site for people to discuss genealogy and follow up on research leads. Ancestry.com has also acquired other sites and companies in the past, notably including Fold3.com (formerly known as footnote.com) in 2010, which houses a large collection of military records.
Don’t other companies do some of the same things?
Yes. Two other notable sites are MyHeritage.com and Geni.com. Both offer free versions (along with paid versions with more features). FamilySearch.org is run by the Church of Jesus Christ of Latter-Day Saints (a.k.a. Mormons) and is entirely free. There are also free resources from government agencies and local historical societies, as well as less sophisticated free sites.
Which sites a user choose may partially come down to aesthetics (ancestry.com has a particularly clean layout) and the number and type of available records (the company says it has over 7 billion records in its databases, a fact probably helped because the company is among the oldest genealogy search sites on the web). Ancestry.com also partners with other genealogical organisations at times to combine resources (instead of competing). With so much left to be digitized (the majority of records are still offline), this can only be a positive thing.
While it’s too soon to tell if Ancestry.com will ultimately beat all its other competition, it’s certainly one of the strongest contenders.
Why do we think Ancestry.com has a positive future?
- The relatively low rate of penetration thus far among the overall population.
- The vast amount of historical and genealogical data that has yet to be digitized.
- It’s expanding globally (but not at an excessive pace), especially into countries where many Americans have ancestry (China, eastern Europe, England, etc).
- The increasing interest in genealogy and personal history as more records become available and people become connected online.
- The company partners with a wide variety of organisations including libraries, historical socieities, other genealogical research companies and groups, and, perhaps most importantly in the immediate future, an NBC television show called “Who Do You Think You Are?” By providing research and being a visible sponsor for this program (as well as at various conferences), Ancestry.com will undoubtedly gain more exposure and users.
There is theoretically no limit on how much the company could expand its archives and databases, with the potential to draw in even more users as more records become available and easily searchable. An ageing baby boomer population, as well as natural population growth in the U.S. will also likely spur more interest in genealogy. A clean interface and an extensive amount of available archives makes the site an appealing choice. Ancestry.com has clearly positioned itself as a leader in the ever-expanding genealogy market and has a solid grip on its position.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.