Is Steven Spielberg scripting this shit?
He must be. I had to re-read the headline 4 times… I pressed refresh wondering what date this was all from: April 10th. This got even odder when I realized we are the 9th of April.
Anyway, this is getting interesting:
Microsoft Said to Be Talking With News Corporation About Joint Yahoo Bid
This does not even make sense, in some ways. I mean: MSFT is in bed with Facebook, Facebook is gunning for MySpace, owned by… you guessed it: News Corp.
Anyway… to me, this is akin to shoving 9 pounds of meat in a 5 pound bag. The result is interesting but lord knows what the bag - and its contents - will look like. Mind you, over at Alley Insider, Henry Blodget just took a hit off the pipe and seems to like the high:
Would this combination make sense? Sure it would make sense. Owning MySpace standalone isn’t doing Rupert any good–he’s getting his clock cleaned by Facebook. MSN’s dead in the water. But throw all that together with Yahoo and you could build a pretty honkinging global communications, social networking, and advertising platform.
Hmm… I’m not sure about that… but it shows that YHOO remains the best positioned company in display banners and video… and those are the “hot” growth areas in digital media. Perhaps, News Corp. is more concerned with a strengthened Time Warner. Or, maybe, seeing how Google complained loudly about “challenges in monetizing social networking sites (aka. MySpace)” this is Mr. Murdoch’s way to strike back at Google…
I don’t know. But this is getting really interesting.
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April 10th, 2008 at 10:08 am
When you say Yahoo is the best positioned company for display ads and video, I assume you are comparing to MSFT and News Corp only? Or were you actually including Google in that statement?
April 10th, 2008 at 10:14 am
I include Google as well. Bear in mind, if Google can successfully execute the promise of YouTube and deliver results, that can change. Please note, I am rather bullish on YouTube and we (WatchMojo.com) provide content to YouTube.
But Yahoo! is already very well entrenched in display and banners and I think Google is just starting to figure the space out. the bigger problem is that Google generates $17B per year in revenues so it’s hard for them to push something new (such as display and banners) when initial revenues will be tiny,
As per Doubleclick, yes, that is a gateway to display ad revenues, but DCLK is a software to serve ads, it’s not a media play with upside in the display advertising business…
Admittedly, this (video and display) is Yahoo!’s game to lose…
Between Google and News Corp., however, News Corp. is probably the better positioned in the short term to win in video ads due to their ability to leverage News Corp.’s TV sales machine to monetize MySpace, FOX Sports, etc.
But over time, YouTube is so massive that Google should be able to catch up both Yahoo! and News Corp.
Oh, we also provide clips to News Corp.’s MySpace TV.
April 10th, 2008 at 10:43 am
Ok, I get the ‘display’ side of the equation, Google is a small player and Yahoo has considerable more girth in this space. However, isn’t Google knocking on this door? Their acquisition of DoubleClick almost gets them an instant 15% market share in display ads (up from about 2-3%), and Google is now clearly in a great position to grow that 15% wedge into a sizable chunk of the display ad pie given that they have all of the advertisers and publishers in toe already thanks to their dominant position in the text ad business. It sure seems to me that Yahoo’s lead in display ads is precarious going forward ie, they have a lot to lose and Google has a lot of room to grow here. You’re either betting that Yahoo can hang on to their display ad lunch money, or you’re betting that Google will steal it from them. In my view, I’d bet on Google here.
re: video. While I won’t belittle News Corp’s assets or their ability to leverage them to capitalize in the video space, I just don’t see how Google isn’t the elephant in the room. Google is the leader in video delivery and attention, and in the mid-long term, I don’t see anyone making more money from delivering online video than Google. Yahoo’s video strategy seems very inconsistent and misguided. I think Flickr’s recent implementation of video is a microcosm of the overall lack of focus and coherent unified strategy at Yahoo when it comes to video. I just don’t see Yahoo as a major player in video, but maybe that will change over time.
You have mentioned to long YHOO, however, I can’t help but feel that the real savvy play is to long GOOG. Especially given that GOOG’s stock is discounted right now, and much of that discount is due to overall economic issues, not major corporate weakness. Just sayin’
April 10th, 2008 at 10:49 am
All good pts, I sold 87% of my YHOO stock… so that should say something. Yes, Google is tempting at an $110B enterprise value…
That being said, DCLK is a gateway to display. Doubleclick is a software entity now, it sold all of its media interests ages ago.
aQuantive is a technology and media company, and frankly, it is far better positioned to benefit from the rise of display advertising than Doubleclick ever was since it got out of the media business when it sold that unit to MaxOnline.
In other words, saying that Doubleclick is in the media business is akin to saying that Microsoft is really in with ad agencies because ad agencies use Powerpoint in their client pitches.
I agree with your assessment on Google, however, its main challenge is the law of big numbers: Google needs instant hits to really push something. I am not sure it will get short term numbers to really drive things like display or video… I could be wrong - and as a partner via YouTube, I HOPE I am wrong.
April 10th, 2008 at 10:56 am
I think your point about ‘instant hits’ to move Google’s needle is spot on correct. That’s the rub for Google and it won’t be easy to make those happen. If Google is unable to seriously grow their display ad marketshare quickly, then we’re really just waiting for the video revenues to pour in, and the video market is not mature enough yet for this to happen.
Having said all of this, many suspect DoubleClick could add 2-3 Billion to GOOG’s annual revenues pretty quickly and while they did pay a massive premium for it, 2-3 billion is nothing to sneeze at.