BUSINESS BLOGS
BUSINESS BLOGS
category: business
22 Feb 2007

Smart move by FIM today.  I am not at all familiar with Strategic Data Corporation (SDC) but I was expecting FIM to make such a move once it became the top network as measured by impressions… note that Yahoo! bought 20% of Rightmedia… this is in the same vein:

SDC’s technology will enable FIM to deliver highly-targeted graphical performance-based advertising on literally billions of Web pages viewed each day across its growing network. Fox Interactive Media is among the most visited networks on the Internet with more than 135 million worldwide unique visitors each month and is the number one most viewed network in the U.S. with over 40 billion pages viewed each month.

40 billion page views.  That’s a lot.  Look at it this way, a company realistically makes 80% of their revenue from the top 20% of their inventory.  Assume in this case than 50% of FIM’s impressions go wasted, that is 20 billion page views a month that yield low CPMs, or only attract CPA or CPC deals.

Peter Levinsohn - who replaced his cousin Ross - correctly stated that this was something they wanted to own and not lease.  Looking at the numbers, you understand why.

For the sake of simplicity, say that by running an ad network, they get $0.25 CPM on those 20 billion imps, that is $5M per month.  But if they own the partner, they probably double up the revenue to $10M.  This also assumes that it’s a 50-50 share, it rarely is, the companies doing the selling (the network) gets 60% and more because the 50-50 share is net of hosting, serving and agency fees… and, more importantly, I would guesstimate that much more than 50% of FIM’s impressions are under-optimized.

All to say, this is a very smart deal.  Whether or not SDC is the best fit remains to be seen but FIM is certainly well on its way to be a behemoth befitting the parent company’s offline strength during the 20th century.