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ConversionRater A discussion of online advertising, web entrepreneurship, and personal ramblings from Pat McCarthy.

Category Archives: Acquisitions

Microsoft Moves to Behavioral Targeting, Will They Acquire Help?

December 31, 2006 12:44 am / 31 Comments / Pat McCarthy

A space that’s been full of promise for the past few in the online advertising world is behavioral targeting. It’s actually probably been talked about far more than it’s been put into practice, but most studies and tests seem to show that it always provides much better results than showing users random ads.

Who’s been doing it? Well, Yahoo has been a leader due to all the data they have on a user as well as the massive reach, and a couple of ad networks with a focus on it are Tacoda and Revenue Science. You could make an argument that Google is doing behavioral targeting by showing you ads based on what you’re searching for, but I’m not sure it fits the standard definition perfectly.

The concept is great. You store data on users and where they go and what they do, then find them in other places and show them ads related to what they are interested in. The problem is that to work effectively companies end up needing a lot of data and a massive reach to find users they have information on in the right places to show them ads. It’s really been the primary reason that this type of targeting has been slow to pick up.

Now comes news that Microsoft is getting serious about it. I guess they’ve been testing it for over a year, but I was surprised that they weren’t already offering this to advertisers. After I got over that, I read an interesting post on HipMojo.com that theorizes that Microsoft will acquire an advertising network to expand it’s reach. Being that reach has been a problem for behavioral marketers, this seems to make sense. Especially when most people think AOL’s purchase of Advertising.com was a smart move for AOL. Who does HipMojo.com suggest they might acquire?

  • aQuantive
  • Valueclick
  • Tribal Fusion
  • Revenue Science
  • Tacoda
  • etc.

aQuantive is the operator of ad server Atlas DMT which is heavily used by agencies and large online advertisers. That could potentially provide a lot of reach in some ways, but Atlas has not been that known for having publisher relationships, although they recently acquired ad serving company Accipter which is more known to be an ad server for publishers.

Valueclick operates a number of businesses such as Commission Junction so it might be more than Microsoft needs if they’re looking for reach, but Valueclick’s ad network is one of the largest.

Tribal Fusion is more of a pure play network and may have a higher inventory quality than Valueclick, but it’s reach is most likely less.

Revenue Science and Tacoda are both leaders in behavioral targeting so that may make sense for technology reasons, but they also don’t have the reach of the larger players mentioned above.

Many interesting options, and it’s the first prediction I’ve seen that suggests Microsoft would acquire an ad network. In some ways I think it’s unlikely because Microsoft may figure they have the reach they need with all their properties, but I’m not sure they really do on the level they need to make it work. I’m not sure advertisers are thinking of going to Microsoft today as much as Microsoft would like, and maybe an acquisition like this would make them more of a player in the online advertising space.

Posted in: Acquisitions, Ad Networks, Advertising, Microsoft, Yahoo

A Paraphrased Conversation with Ross Levinsohn of News Corp

November 9, 2006 12:54 am / 2 Comments / Pat McCarthy

levinsohn.jpgPerhaps one of the most well-known acquistion guys in the Web 2.0 world is Fox Interactive President Ross Levinsohn. The following is a paraphrased conversation he had with John Battelle at the Web 2.0 Summit earlier today:

JB: So you bought Myspace, it exploded. Google bought YouTube. You said that if YouTube had shopped themselves maybe they could get 2 billion, is that what you’d pay?

RL: No, I went on to say we probably wouldn’t participate at the price they sold for. YouTube is a fantastic property. It would have been fun to be involved. It went very fast, and perhaps it was the right deal for both companies.

JB: Give us some insider information, what happened when you heard about the deal? You and the folks at Fox weren’t pleased?

RL: No, that’s not fair. Pre-Google I had always expressed my support and had spent some time wtih Chad and Steve and the VCs there, and expressed an interest that we’d like to be involved if they ever wanted to sell.

JB: So after they sold they made a visit, did they have to make nice since Myspace provides so much traffic to YouTube?

RL: No, they didn’t need to make nice. Google is a large strategic partner for us, they are our largest partner really, and we are a big partner of theirs. When you look across the web, those who are your biggest partners are often your biggest competitors. You just have to manage these relationships and make them work.

JB: So the deal you did with Google and Myspace. $900 million deal across Fox Interactive. What is that $900 million for?

RL: It’s for Google to power search across Fox properties except FoxSports due to our MSN deal. It’s a pretty simple deal although the negotiations were fast and complex. People were saying years ago I was the dumbest guy on the planet and that News Corp was crazy for paying what we did for Myspace. You’re neither as dumb or smart as people make it seem. This is a hard business, nothing is as it seems. It wasn’t as bad a deal as it seemed at the time, and if we don’t pay 100% attention to it and grow it, it won’t be as good as some think it is now.

JB: Myspace streams more videos than YouTube, so really that price tag for it’s worth is now over 1.65 billion. Do you plan on ever selling it?

RL: You’d have to ask Rupert, but we have no plans to do so. But never say never.

JB: According to Nielsen, traffic declined at Myspace from August to September. Are you worried about that?

RL: I’m not worried, most sites are down at that time of year, it’s seasonal, and we had a similar dip a year ago. We’re launching internationally, Myspace Japan, etc. We added 320k profiles yesterday, that’s like the size of Buffalo. Time spent on the site has grown 30% in the last 6 months, and we’re up to 38 billion page views a month.

JB: What do you look for in a company when you’re thinking about an acquisition, and are you still looking?

RL: IF we’re not looking we’re not doing our job. we haven’t bought a single company in the last four to five months however.

JB: Does that mean there aren’t any good companies now? Have they all been bought up?

RL: No, I’ve been here all morning at this conference meeting with people and my head is spinning. It’s a great time in this business and media. I get excited about new things. It’s much easier for us to integrate companies into Fox now than it was a year ago. When I look at acquisition targets, I look at the people, and you can see their passion. I’ve met with people who I could tell they were just buliding to sell.

JB: Barry Diller said yesterday that an entrepreneur with a great idea shouldn’t sell. Do you agree?

RL: I disagree. Not to hedge, but in some cases if you’re building a really good feature, it may make more sense to sell. If you’re building the next Google, then obviously you don’t want to sell too early.

JB: One of the previous founders of Myspace keeps suing you guys. He’s now suing you over censorship because you are blocking his sites apps from being shown on Myspace. What can you say about this?

RL: It’s Brad Greenspan, and every motion he’s filed against us has been thrown out. It’s like a boxer who fought Mike Tyson who kept getting knocked down and then getting back up. He got thrown out of the company years before we bought it, and he made $40-50 million in the sale but won’t let it go. Life is too short.

Question from an audience member: Will Myspace open up it’s data like Facebook?

RL: Email Tom Anderson. It’s a good idea and one we’re thinking about and talking about.

Posted in: Acquisitions, Advertising, Conferences, Random, Web 2.0

Fat Elvis Sighting and Halloween

November 1, 2006 4:40 pm / Leave a Comment / Pat McCarthy

Fat ElvisHalloween was a blast, both in the office as seen above and taking my kids out and about.

It was interesting to note the acquisition announcements as both Jotspot and Reddit were acquired by Google and Conde Nast respectively. I used both services on occasion and liked them both. I was reading Jotspot founder Joe Kraus’ blog back before he actually started Jotspot, so it was good to see it run the life from startup to acquisition.

I think the lesson is that if you build a great tool and technology that is useful and easy to use, you’ll have success whether you’re acquired or not.

Posted in: Acquisitions, Personal, Web 2.0

Obvious Corp. Buying Odeo Interesting, But Not Common

October 26, 2006 10:12 am / Leave a Comment / Pat McCarthy

Evan Williams and other Odeo employees buying control of Odeo back from their VCs is definitely an interesting piece of news because it’s not that common, and it says something interesting about what some companies are experiencing right now. Williams sees that putting out quick products with small teams and seeing what becomes a hit is a better strategy than planning and growing some specific and larger application, and perhaps things weren’t going as fast as the investors wanted.

Mark Evans theorizes this may become common to Web 2.0 companies who aren’t seeing the amount of progress their investors want.

I disagree, I think that this is a pretty unique case as Evan Williams happens to have millions of dollars to pull such a thing off, while the majority of investors don’t have that kind of money sitting around. Sure, there are a few companies out there that have been started in the last couple of years by entrepreneurs who have had previous successes that may give them that kind of capital, but I think generally it’s not going to be something we see on a regular basis.

Posted in: Acquisitions, Random, Web 2.0

Will Digg Be Acquired?

October 24, 2006 10:28 pm / Leave a Comment / Pat McCarthy

Techcrunch breaks another “scoop” that Digg may be in acquisition talks but it could end up being a 2nd round of funding. The number being thrown around is a minimum of $150 million. Whew. That’s a lot of cash when you consider their traffic and the rumored revenue of about $3 million per year.

Good for them if they can pull it off. It’s amazing that companies can talk about such valuations these days without unique technologies or true competitive moats. True, Digg has a powerful community and I’m definitely not one to underestimate the value in that, but there are many examples on the web of communities disappearing quickly for the next greatest thing.

Posted in: Acquisitions, Random, Web 2.0

And The Deal Is Done

October 9, 2006 1:40 pm / 1 Comment / Pat McCarthy

Still shocks me, but the Google purchase of YouTube is official. PaidContent has more details.

Posted in: Acquisitions, Google, Random

GooTube Looking More Likely

October 9, 2006 9:31 am / Leave a Comment / Pat McCarthy

Apparently Google is ignoring my advice and has continued with their quest to purchase YouTube.

Also, Techcrunch points out that there could be copyright technology involved that could help the fight against being sued left and right. Both Google and YouTube are putting together deals with many of the major studios and music companies which could also help protect them, but I still think there could be significant legal hurdles in the future.

It may be a big blow to large competitors of Google as they’ll have a pretty big hold of the video space with YouTube and Google Video combined.

Another interesting note is that the NY Times post mentions that Google sped up the pace of negotiation after Techcrunch initiall announced the rumors.

Posted in: Acquisitions, Google

Does Google and YouTube Make Sense?

October 6, 2006 10:02 am / Leave a Comment / Pat McCarthy

Techcrunch and the Wall St. Journal are both talking about a potential Google acquisition of YouTube for 1.6 billion. Before I comment further on this, let’s review a few things:

1. YouTube has been reportedly losing money due to bandwidth costs.

2. Much of YouTube’s use is driven by content it doesn’t own, and could potentially (and probably will be) sued for.

3. Much of it’s traffic and usage is driven by a competitor (Myspace) that could at any time block YouTube videos from being posted on its site, and people from Fox have made comments about making Myspace less of an enabler for other companies. That’d be a mistake on Myspace’s part in my opinion, but it doesn’t mean it wouldn’t badly hurt YouTube if they did it.

4. Google already has a competing service in Google Video.

5. Google normally buys small companies for their technology, not large established ones for insane amounts of cash.

Does that equal a 1.6 billion purchase?

However, of the likely companies to buy YouTube, Google would be able to handle the bandwidth costs and the possible legal issues the best as they are experts in both areas. They also have spent a lot of money on properties like AOL and Fox Interactive in order to secure advertising rights. This could be a similar move to assure that they get a lot of ad placement on YouTube, and it could possibly push them farther with video advertising.

I think the bottom line is that it would shock me if Google did this. The price is very high, and it just doesn’t seem like a Google type of deal.

Posted in: Acquisitions, Google

Yahoo Video Jumps and Cuts

September 27, 2006 9:23 am / 3 Comments / Pat McCarthy

Jumpcut, a multimedia upload/share/edit/mashup site that launched about six months ago, has announced they’ve been acquired by Yahoo on their blog, and the Yahoo Search blog has confirmed it. No terms have the deal have been reported.

Along the lines of Sony acquiring Grouper a few weeks back, this appears to be an acquisition for the people/technology opposed to buying a site with a large and established user base.

Early theories are that Jumpcut technology could be integrated with Yahoo Video, as well as other Yahoo-owned properties like Flickr and Upcoming.org.

Even though it seems pretty clear Yahoo will want to use Jumpcut’s technology, it’ll be interesting to see if Jumpcut remains a standalone site. I imagine it will because Yahoo has left it’s previous acquisitions in the social media space relatively untouched, and as delicious recently announced their growth since being acquired by Yahoo has been tremendous.

Posted in: Acquisitions, Random, Yahoo

Facebook and YouTube Want Top Dollar

September 21, 2006 10:44 am / 2 Comments / Pat McCarthy

New rumors/reports are out that Facebook is talking to Yahoo along the lines of a $1 billion acquisition, and that YouTube is only for sale if you’re talking about buying them for $1.5 billion.

I guess there is really power in eyeballs again as both sites don’t have much in the way of unique technology, just a whole lot of eyeballs using their services. One side of me says they’re worth it as it looks like News Corp got a bargain in buying Myspace for $580 million.

However, the other side of me would be very scared about spending that much money on either company. Facebook has a strong grip on the college market, but there isn’t much of a defensible moat to their business. College students are fickle and if Facebook becomes uncool, that uncoolness can spread just as fast as their coolness did in the first place. Also, if they piss off their audience like they did recently by changing the way users can see information, they could see large groups of users leaving. There are also some interesting stories about Facebook founder Mark Zuckerberg and how he has been handling the talks as highlighted in this Techcrunch post, it sounds like he might be a little full of himself and Facebook’s place in the world.

YouTube also has problems in not having much of a defensible moat, and they also face some serious problems with copyright that could be a big legal mess for whoever would acquire them. Imagine if someone had spent $1 billion to buy Napster a few years back, how would that investment look now?

It used to be that to be acquired for numbers like this you’d need to have world-beating technology. Do Facebook and YouTube really have something here that can’t be ripped away from them quickly? I’m not so sure.

Posted in: Acquisitions, Yahoo

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