You gotta love James Carville, stupid. Legions of writers have inserted that tagline.
So here am I reading something on TheStreet.com, about the NYT’s online woes, as growth at its site and About.com slows down. And I am thinking to myself, why is there no ad on this page?
Of course, I was on the third page of an article… third page? No one wants sloppy seconds, let alone trashy thirds (yes, just made that up). While the “are pageviews dead” debate drags on, I think the better question is are publishers doing all they can to maximize the value of their real estate? Think about it, if I get to the second or third page of an article, I am really into the topic, so doesn’t the value of every incremental ad impressions increase?
That’s why I never sell aggressive frequency capped campaign, of say 1 ad per 24 hours, a user sees your ad and then poof! It disappears. Sorry, come back tomorrow. That’s retarded, I always urge media buyers to go for 3 imps per 24 hours, otherwise I don’t even take their money because they will waste it. Which raises another point, even if pageviews do disappear, the act of buying inventory is at least hitherto a function of where the ads go, thus impressions, thus pageviews.
In other words, trust me, no publisher wants to sell on impressions, it’s dangerous. We all want to sell off sponsorships. But advertisers don’t want that either.
I understand the need for something more, but critics of pageviews can’t have their cake and eat it too, on the one hand saying “comScore, that’s irrelevant,” only to jump out and say “look, told you, comScore says pageviews will be de-emphasized.”
These two are the major issues going ahead:
- Managing inventory, however it is measured, to maximie the value of your content.
- Determining a win-win ad structure.
Those who can master these two will win in the next round. A lot of the mojo behind WatchMojo.com is about doing just that to please both viewers and advertisers.
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WatchMojo NewsletterPaid Content is reporting that Hachette Filipacchi (a unit of French media giant Lagardere) has bought out the automotive ad network Jumpstart for $110M, $84M in cash, $26M in incentives for future performance.
This is interesting, because I have never been very bullish on an ad rep network (I think Jumpstart is more ad rep than ad network)’s prospects, but a niche rep firm has a lot of success to go deep and cover all nooks and crannies.
Clearly, that’s what HP is betting on. HP, of course, owns and operates CarandDriver.com, RoadandTrack.com and CycleWorld.com. Since these are largely online properties of offline magazines, this clearly shows that in some cases, an offline sales arm might not be best suited to sell the respective online units. This is a major myth breaker.
When I worked in the men’s publishing industry, our competitors Maxim could wreak havoc on us by exerting their print/event/wireless/online assets against my company, that was only an online property, and well, was no Maxim.
This is really a bullish sign for other niche ad rep firms… of note, John Durham, an industry veteran I’ve had the pleasure of working with over the years, joined Jumpstart Auto a few years ago… nice to see him getting this TD.
One question: why didn’t HP simply sign on as a publishing partner? I guess Jumpstart does a lot of business and this accelerates HP’s digital ambitions, as HP joins a long list of players from the old media who want to bolster their online assets.
I just hope that he and his team can navigate through the inherent conflicts now. Jumpstart sells ads for NADAguides, Vehix and J.D. Power Autos., going forward, methinks HP will want to shift more resources to their brands. And, one wonders if there are going to be publisher flights, I can see many ad reps giving NADAguides, Vehix and J.D. Power Autos. a call as we speak, but these should note that a niche ad rep is very different (pros and cons) to a general one.
The consolidation continues.
Google grew revenues 24 fold over the past 4 years. ($440 million in 2002 to $10.6 billion in 2006.) There are two reasons for this. 1) Google started small and dislodged existing large search providers. And 2) search is by far the fastest growing segment of the Internet advertising industry, which grew 34% last year.
But by the end of 2005, Google had captured nearly 2/3 of the search market. It then ran out of market share to easily poach from competitors relative to its new larger size. This is why in 2006, Google increased its market share of searches by only 5.6%, which accounted for perhaps only 9% of 2006 revenues.
One way to view this trend is that the 90%+ revenue growth days are probably over for Google. Another way is to understand that poached business is now only 9% of Google’s earnings — and its winding down can’t affect growth much anymore.
In other words, almost all of Google’s revenue growth now is from the broader demographic shift towards Internet advertising and search. These rates have been constant over the past couple years (and have even been accelerating a bit). Therefore, Google’s revenue growth now looks like it should at hold firm in the 60% to 70% range for the coming few quarters and possibly beyond.
There is also the possibility of revenue upside. Google’s growth will enter a whole new phase if any of the company’s new initiatives like IP video, or G-radio stop being accounting liabilities under development and instead become income-producing assets. Just bear in mind that combined radio and television advertising revenues are about 8 times the size of Internet advertising.
One more thing. I have previously used the word “revenue,” 9 times to emphasize that I am talking about top line growth. I want to point out that Google increased revenue by 2,415% over the past 4 years, while it only increased operating income by 1,904%. This deserves comment because fast growing companies tend to grow profit quite a bit faster than revenues — That is, unless they are ramping up capacity.
And ramping capacity/expenses is exactly what Google warned about last year. That is when the company announced that future operating income would not grow by 2005 levels because it would be increasing spending on new business. In fact, Google even said that 2006 spending growth might exceed revenue growth in a push to develop new initiatives.
So Google is growing revenues with no end in sight and investing aggressively, and Mr. Market could not care less. As a long term Google shareholder this did not bother me. On the contrary, it made me happy that I could increase my position in Google cheaply. You see, I know that: 1) Google will continue to grow revenues in the 60% range because its growth is based on a demographic shift. 2) Earnings are effectively understated because Google’s high level of investment in future growth is not broken down or clearly presented. And 3) This high level of investment will eventually have an high level of payoff.
I know what the guys at Google can do with a few billion dollars — They can (and did) build a Google. With all the new and promising add-ons now under development, at least one of these initiatives is bound to be another hit. Google earned $1.03billion in Q4 2006. The company is capitalized (net of cash on hand) at $140 billion. That comes to an annualized PE ratio of 34… and earnings come out later today.
Andrew Melcher TheOfficialBlog.com
Some time ago, rumors crept about Hitwise being up for sale, for $350M. Nothing materialized, today we hear the company is bought for $240M.
The consolidation continues!
Techmeme is a great site, Gabe Rivera is in many ways Rafat Ali 2.0. That, of course, is a huge compliment to both Rafat and Gabe. Rafat’s influence has been galvanized and being a trade publication, he is not going anywhere (harder to lose relevance, in my humble opinion, than a consumer brand that needs to appeal to fickle and ever-changing tastes). I wrote about the impressive roster of speakers that he and his team at Paid Content, Content Next Media have assembled here.
I do not think that a site like TechMeme competes directly with Paid Content, in fact they are highly complementary. Some time ago, I did write a post looking at how Digg and Techmeme could scale, expand and ultimately, exit.
But, while Rafat has had to raise outside financing, assemble a board and do a lot of great things to continue to scale his company, Gabe Rivera’s Techmeme has provided a more automated way to index the web, ranging initially from blogs to mainstream sources. At some point, you can index more sources, but you are splitting the pie in more pieces. And, since TechMeme is largely read by folks in the industry, like Paid Content, while its influence can soar, its readership might not. That does not mean it’s lights out or anything, it just means that you need to find growth elsewhere. Gabe has not seemingly raised outside financing, so he might not be in a rush or under pressure to grow.
The problem, naturally with a site like TechMeme - unlike Paid content - is that it must have a very low pageview to unique ratio. We can say what we want about pageviews, they won’t go away because it’s an easy to understand and use metric for media buyers, which I have addressed in depth here… but what I think Gabe could do that would considerably add time each user spends on his site and dramatically boost pageviews is to allow for comments on his site. Take the discussion away from the blogs to his site. Audacious, to some extent, but probably very effective. Of course, commentors on Valleywag are different than commentors on Tech Crunch etc. But more importantly, in the wake of pageviews being overshadowed by average time spent by user, is interesting.
And yes, there’s comment spam, but you have tools like Akismet.
And, while I agree that comments are usually pertinent to each underlying source’s position, who are we kidding, 50% of the usual links emanating from a leader story simply reference and link back, in other words, there’s little additional coverage or research. Before you blast me, note, I said 50%. So if you go beyond the surface, great, keep up the work.
But if Gabe allowed for comments, the (oh-oh, here’s the word) stickiness would shoot up. Of course, advertisers do not really like to advertise on message boards and comments pages, but boosting a site’s metrics by having community features like boards and comments pages is the oldest new media publisher trick in the world.
Any thoughts Gabe? Others?
Indeed, some of the valuations attributed to social news might have gotten too aggressive, but the power of social media is certainly not to be disputed.
The downside, could be argued, is that vlogging was introduced to mass murder, but the flip side is the speed that info gets out.
Look at the top results for Cho Seung-hui, the Virginia Tech shooter, Wikipedia, Digg are the top results, the third one is AOL’s Newsbloggers, followed by mainstream media’s CNN, Yahoo, FoxNews. I can’t speak for FoxNews cause I don’t read it as much… but I am sure that CNN and Yahoo! do not even archive news stories forever (probably due to the nature of their deals with AP), so that means that those will fall off even further.
Wikipedia of course will never go anywhere, and shall remain the top result forever.
I was at a shindig last night, actually left my laptop at work, get in this morning, and what did I miss?
eBay buys StumbleUpon (maybe) for $40-50M. Naturally, everyone has something to say about it.
At first glance, this is a bit of a head scratcher, but Om scratches the surface:
Look at this from the toolbar-and-Skype lens. StumbleUpon makes a toolbar that provides collaborative serendipity to find web sites. The toolbar, if you ask StumbleUpon users provides more useful and productive results, than say Google.
By marrying the toolbar to Skype client, eBay can do an end run around Google’s dominance of the search business. A simple search box inside Skype client is all it would take. It is not that far fetched: Skype has been slowly integrating various different services (including PayPal) into its client, and slowly becoming eBay’s desktop backdoor.
I’m not sure this is so much about search as it is about eBay’s core. Of course, navigation by tags became important (Delicious), as did recommendational search (SU), but this might have a lot to do with eBay wanting to use SU’s tools and know-how to get the eBay community to extend its transactional might across the Web outside of eBay, now that eBay has Paypal and everyone uses Paypal, it’s much easier for the eBay community to pinpoint bargains away from the eBay. After all, between blogs, sites with e-commerce capabilities etc. I’d guesstimate that eBay is no longer the automatic place to put up an auction or sale.
Anyway, will read up more about this. What I love about the deal is that the company never raised VC, so it’s a nice payday for the founders and shareholders.
Of course, at a $50M valuation, it does indeed suggest that social news is not as rich as some thought, and that is normal: your biggest asset is a 12 year about to hit puberty, in Digg’s case.
But, of course, we’ve written about this aplenty before. Digg might become the poster child for everything that is wrong with VC financing, having risen way too much money to make any buyout offer a reasonable one. But that’s a separate post.
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