Mirror, mirror on the wall…
What does the future of display ad units bear for us all?
Will behavioral targeting make ad rates plummet?
Will e-Commerce widgets force buyers to open up their wallet?
Or will in-video ad units turn me into a prophet?
All right, enough rhyming… but I do think that the best way for publishers to turn their real estate historically attributed to display ads more valuable is by pushing user-initiated, video ads. That seems like a no-brainer to me. Read more here.
Barbie turns 50 tomorrow. Here are a couple of videos we did on the famous doll:
Business of Barbie
History of Barbie
Barbie’s Biography
With our 2009 predictions out of the way, we’ll be publishing a number of previews per sector and by theme over the next few days to close out the year. For the last item, we’ll exceptionally look back at the year that was for the company and look ahead for 2009.
Here’s the tentative list:
Monday December 22 2008 - Video
Tuesday December 23 2008 - Online Advertising
Wednesday December 24 2008 - Social Networking
Thursday December 25 Wednesday December 31 2008 - Venture Capital
Friday December 26 2008 TBD - Mergers & Acquisitions
Saturday December 27 2008 TBD - Search
Sunday December 28 2008 TBD - Digital Music
Monday December 29 2008 TBD - Wireless
Tuesday December 30 2008 TBD - The Economy
Wednesday December 31 2008 TBD - WatchMojo.com 2008 Year in Review and 2009 Preview
“eBay announced that it had aquired Bill Me Later for $945 million. Bill Me Later raised about $200 million and it sold for a valuation of 6.5 times 2009 revenues.”
IAC separated its vast arsenal of assets into five companies.
Yahoo! is under pressure to streamline its portfolio of assets, too.
The need for clarity and focus is not limited to new media companies only. Venerable 121-year old retail empire Sears is planning to give a lot more autonomy to its various units, as well.
Sears Holdings Corporation, the publicly traded parent of Kmart and Sears, Roebuck and Co., is the nation’s fourth largest broadline retailer with over $50 billion in annual revenues and approximately 3,800 full-line and specialty retail stores in the United States and Canada.
Maybe it’s time to spin off StreetMojo.com, MetaMojo.com from WatchMojo.com?
The financial crunch might force a bunch of mergers and acquisitions, but after a heady period of consolidation in numerous other industries, it is possible that we might see some divestments, too.
Amazon.com is taking on Ze French by trying to offer consumers free shipping. On the surface, you wonder, why is the French government upset? But looking at the nuances in the matter, I agree with the French.
Booksellers have complained about Amazon.com’s decision to waive S&H, the matter has gone to court and Amazon has lost. It has been forced to pay a $1,000 fine every day for 30 days, after which point the Courts could lower or raise the fine. Amazon is trying to reverse the rule:
Cédric Manara, a law professor and e-commerce specialist at Edhec, a French business school in Nice, said he would not be surprised if the court raised the penalty, and that Amazon “had no chance” with its appeal.
The law is “really clear,” Manara said. “There is no way you can read the text to find a different result. And the court would have evidence of the firm’s deliberate will to violate the law.” A similar law regulating the price of books in Germany does not affect free shipping for Amazon.de, Mantello said.
The 1981 Lang law was passed at a time when booksellers were losing sales to supermarkets and other new competitors. It was meant to assure that the French public had equal access to a wide variety of books, both high-brow and low-brow, not just heavily marked-down publications.
The law has twice come before the European Court of Justice and both times it has been affirmed. The law is not considered anticompetitive because all book retailers are held to the same standard, Manara said.
Is it just me or should Amazon simply offer a bigger rebate to offset the S&H fee?
On the one hand, I like that Amazon.com is sticking to its guns and trying to lower price and what not, but at the heart of the ruling is a mechanism to protect competition, so I think Amazon.com is not helping itself with its arrogance in the matter.
They are helping in the short-term but in the long-term they will end up driving many of the small, mom and pop-style booksellers out of business and in turn, Amazon.com would control what books the French can and cannot read.
For this reason, Amazon.com will lose the case, again.
The risk it runs, frankly, is to come across as a “arrogant American company” telling France what to do… and that might create much more badwill than Amazon.com bargained for.
What ever happened to think global, act local Jeff?
Late last year, Friendfinder sold its adult operations to Penthouse for some $300-500M. The deal size was nothing to sneeze at, but the deal came in at a paltry 1x revenues. One reason for this low multiple had to do with the fact that the owner is looking to IPO and wants to get out of the seedier side of the business.
Another reason was that the online personals space is largely a mature, shrinking business. Online personals - the original ones - were all subscription-based businesses powered on monthly charges.
Plenty of Fish, a Canadian site that offers free online personals, has certainly disrupted the market and become (if not the) largest player in the space. I wrote about my experiences dealing with online personals site and offered 10 tips / lessons here. I wrote that when Spark Networks (folks behind the AmericanSingles property and many private label sites such as TheOnion, etc.) were all early on disrupting the newspaper, magazine and TV personals services. Many of the online personals companies were in fact repositioned companies from old media (Lavalife, for example). But now you are seeing a site like Plenty of Fish disrupt the disrupted.
It’s interesting to examine the main reason for success is not a better user experience, or superior customer service. It boils down to one word: free.
The NY Times rightfully makes the parallel to Craigslist, who also free has disrupted the classifieds industry enormously. But it is very interesting that one of the main pluses of Craigslist (which is customer service) is nowhere to be seen on Plenty of Fish.
This does destroy the myth that CSR is all that valued across the board. I think as the article suggests, because the site is free, people put up with a lot more… maybe this is just one more nail in the coffin for anything paid.
We already know consumers do not want to pay for content, but not for services either?
The following is a perpetual-work-in-progress. Once you start to compile a list of mergers and acquisitions, you realize why it’s nearly impossible to have a complete list. We are quite confident that the following is a very good, comprehensive list of the largest, more notable deals… but it is not - and no list will be - fully complete because there are too many countries around the world and too many industries to report (it is highly possible that the Wall Street Journal or Financial Post, for example, has such a list… but it would be thick and unwieldy).
We have included:
- many industries
- have not adjusted for inflation
- mergers (be it all cash, cash/stock, or all stock)
- acquisitions (we have excluded partial acquisitions)
- private equity deals.
It is certainly not complete, send me any ones you think I am missing or industries you want us to add next to ash@mojosupreme.com or leave in the comments.
Trivia:
- In 1981, when DuPont acquired Conoco for $7.8B, it was the biggest deal of all time. But adjusted for inflation, that remains a $20B deal by 2008 standards.
- KKR’s private equity deal for KKR remains the biggest buyout when adjusted for inflation, but in actual dollars it has been long surpassed.
Related on HipMojo.com:
Spark Networks is looking for a hookup. Spark Networks runs many online personals, back in the day, it differentiated itself with offering publishers a private label service.
When I was a sales executive for a men’s online magazine, I had the pleasure of closing a lot of advertising deals with the online personals sites: Match.com, Date.com, Friendfinder.com, AmericanSingles.com, Love.com, etc. All of them. In fact, they were some of our biggest clients. Spark would repeatedly pitch us to have a private label version.
Indeed, some of these sites were doing a killing. To publishers, they represented a welcome revenue stream: at a time when no one was advertising (2001-03), the online personals sites were; either through:
- affiliate marketing programs that paid out a CPA (cost per action, in this case a signup) or
- online advertising deals.
Their business model was lucrative in that people paid them monthly fees AND they gathered a lot of data on end-users.
In fact, oftentimes clients would forget to cancel their memberships even if they found a match, so the recurring fees would repeat many times. Ultimately, the average client would remain for 2 to 3 months, providing lucrative and recurring revenue. Over time, the user data would also prove valuable.
But, I personally think most of these sites lost out on the bigger opportunity, that being said in hindsight of course. The industry makes for a great case study in just how much times change and offer a lessons for today’s high-profile social networking sites.
1 - Once the online advertising market turned around, a lot of these online personals found that obtaining high-quality, low-cost advertising real estate to promote their sites and acquire users proved hard. While previously these marketers were welcome by publishers, by 2004 a lot of demand from global advertisers and agencies created inflation in advertising rates and online personal services - always fickle and very ROI-oriented - could not compete for prime real estate.
2 - Fake profiles. All online personals sites knew that they had some fake profiles. I’m not exactly publishing news by saying that. Very few did anything about it… and ultimately, a lot of users were turned off because of these fake profiles.
3 - Social networking sites such as MySpace, Facebook and what not ended up becoming competitors and eating into the online dating sites’ raison d’etre.
4 - Free dating sites have garnered market share, much the same way that classifieds have taken a hit from Craigslist.org.
5 - Craigslist.org itself launched Missed Connections and Dating categories which further eroded online personals share of the pie.
6 - But the biggest missed opportunity was by these same sites, because many had adopted and fine-tuned a strategy based on subscriptions, none of them really managed to generate sizable advertising revenue despite having a lot of data on users. This was very foolish.
7 - Over time, the emails many of these online personals sites became dated and lost value. After all, say I use an online personal in 2000, I would have used my old email account. I was also single and 22 then. Today I am not really using my old email addresses and I am married and 29… the point is, not all user data is created equally… which takes us to the next point:
8 - Today investors and media are drooling over user data on MySpace and Facebook, but I doubt how valid and accurate most of that data is, and what shelf-life most of that data has anyway. This is a lesson for investors and management at such companies who mortgage their company on user data.
9 - Advertising is the more lucrative business. Spark Networks boasts a market cap of $130M on shrinking revenues of $15M. It’s nothing to sneeze at, but it’s not where it would be if it was an ad-supported model… because a) revenues would not be shrinking and b) the multiples would be higher.
10 - Most importantly, you should sell when you are hot. Online personals would have fetched far higher multiples a few years ago, but today many are seen as passe for the reasons outlined above.
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