By Rebecca Thornton, co-founder, City Treats

‘We’re going to start the next big internet magazine’, I vowed to my friend Phil. We had both quit our jobs to start the venture: Phil, as a well-paid employee at Google and me, a journalist.

The idea was to create a digital mêlée of political satire: videos, articles, polls, interviews and news. We would interview celebrities and politicians, creating unique content and turning the magazine into an online empire.
Hiring a host of writers and implementing the design, we launched Eyebrow Magazine six months later.

Initial visitors would be signposted to the site via Google Adwords, which was Phil’s speciality in his previous job. The users would then subscribe to our newsletter and we would be able to sell advertising space at a cost of £10 per thousand views. We were confident that the numbers we had forecast would be repeat visitors and thus, the magazine would gain natural traction.

After depositing the initial investment (which came from family and friends) into our business account we were all set. We filmed interviews with the likes of George Galloway, Ann Widdecombe and Dom Joly, we were written about in the national press and although the long hours were brutal, it was exciting.

A year later, our initial investment was wearing thin. We were spending most of our money on editorial and Adwords but by this point we didn’t have enough visitors coming to the site to be able to sell our ad inventory. We cold called a few companies to test the waters but the conversation went something like this:

-‘Hi, I’m calling from Eyebrow Magazine. Would you like to buy some advertising space?’
-‘No thanks.’
-‘OK. Terribly sorry to disturb you. ‘

We laboured away at other ways to make the business work: we slashed our writers’ pay; put in longer hours; tried different advertising campaigns; were more aggressive in getting people to subscribe to the newsletter (mainly our friends) but something was still not clicking, least of all, new users.

During this time, though, we noticed lots of internet traffic for articles where celebrities were mentioned; most notably ‘Britney Spears’ and ‘Lindsay Lohan’, followed by adjectives which would shock even the most depraved internet user.

It dawned on us that we could try and make money on these search terms, advertising items that were within the realms of these marketing parameters. We tried everything: celebrity autobiographies, fashion items, make up and even advertising titillating celebrity sites which paid us every time a user signed up to view a celebrity sex-tape.

The latter made us some money; we realised we might be on to something and we didn’t even need to cold call anyone: all the advertising was done digitally. Using ‘affiliate marketing’ we would pick up a link for any product we wanted to sell from a third-party ad network, code it into our site and converting users would be automatically tracked, giving us a percentage of the sale.

By this time, we had gauged more of an idea into how the consumer works.

We read relentlessly and learnt how to code, how to sell on line and how to use affiliate marketing effectively. I was working night shifts at one of the newspapers but it wasn’t enough to cover my rent; I was teetering towards bankruptcy.

After trialling and testing different selling different products online, we managed to find some that converted well — we would send a user to a product, the user would be tracked and if the final commission of the sale we made was greater than the cost of using Adwords to send the user there, we would be in for the win! With a meagre few hundred pounds in our account, it was risky business (by that point we had stopped running the magazine) but at least we knew exactly how much we were making in return for our outlay.

We managed to build up enough money to do something substantial and a year later, we started City Treats, an online aggregator of daily deals, which allows you to personalise deals from group buying power providers.

We had failed so spectacularly at our previous venture that we already knew of potential pitfalls, which was a life saviour for City Treats. Now we employ people, pay ourselves a good wage and are increasing a fast-growing database, meaning we can concentrate on the areas where we know we can succeed.

Five of our tips for using failure to leverage success:

1. If you’ve laboured at something that’s failing, use it to see what’s succeeding: Do a bit of number crunching and look at all the figures in detail. Have a look at where your business is failing and use that failure to compare to its successes. Don't be afraid to radically shift your focus and even the identity of your business, to take advantage of what is working and cut your losses; the quicker the better. This might be the difference between being a dismal failure and a cracking success.

2. Outsource: Phil and I failed in selling advertising space. Although that wasn’t the only reason for the demise of eyebrow magazine, we may have been able to find a way round this. There are lots of resources which allow you to hire people on a commission basis or on an hourly pay rate. Odesk, for example, allows you to hire staff remotely to carry out even the smallest of tasks.

3. Succeed in being proactive: If you’ve failed at being proactive in an important area of your business, keep a follow up ‘tracking system’. Use areas of failure to determine which parts of the business need monitoring. Setting up a tracking system can be as easy as writing a ‘follow up’ task list to refer to every morning

4. Don't be distracted by what your competitors are doing: If you see competitor X taking a certain route, it doesn't mean it's working for competitor X, let alone that it will work for you. While it's vital to be flexible, it's also important to be focused - only change direction when you have a reason to do so. Phil and I created a lot of unnecessary changes and even built entire sites learning this lesson.

5. Experiment, Experiment Experiment: Experimentation is also key to a successful business. If something has failed, it will serve as a great comparable in user testing.

Join us on
Follow @freshbusiness