Much like an auto race where the top few cars battle it out for number one, the fight for other positions can be as exciting, if not more so, than the one going on at the front of the pack. It’s like the Masters golf tournament. Being number one is what you want, but as long as you finish high enough to get the automatic invite next year, that’s almost as important. So, if by chance you are a little too focused on the battle for number one, you are missing some amazing positioning. In other words, while many watch what Google, Yahoo, and Microsoft do, others take advantage of the distraction caused by the top media guys to gain significant ground without drawing too much attention. Chief among them is GUS plc’s Experian Interactive who as early as today (but most likely Wednesday) will announce the purchase of Price Grabber.
With the purchase of PriceGrabber. Experian now owns, this year alone, one affiliate marketing company, Affiliate Fuel, one of the most prolific online mortgage lead generation companies with LowerMyBills, a premier online education lead generation company, ClassesUSA, and soon one of the more sophisticated comparison shopping sites. The rumors of the acquisition have been several weeks in the making and a cryptic FTC document supports those rumors. The price is not known but expect it to top LowerMyBill’s $380 million. It should; however land south of the $620 million paid for Shopping.com. Our guess is a cash deal of $470 million in all. It’s a lot of money, but GUS plc, the parent company of Experian Interactive has one major advantage – a favorable exchange rate.
With Price Grabber off the market, it’s time to look at what other companies possess similar assets to Experian Interactive. The first is Valueclick. They too have an affiliate network, Commission Junction, which powers some of the nets biggest brands. Advantage Valueclick in the affiliate arena. Valueclick also has Websponsors, whom they purchased this year in a $140 million dollar deal; it’s a unit that operates as a cross between MetaReward and Affiliate Fuel. It runs a publisher network that relies heavily on incentive promotions, an area that MetaReward helped pioneer. Valueclick has the volume advantage, MetaReward the maturity. Call it a tie on the incentive promotion front. Through Websponsors, Valueclick also has the ability to do large-scale lead generation. Unlike Experian, Valueclick does not possess any strong, consumer facing brands. Their leads come mainly from email and co-registration, giving value but not necessarily the same level of quality. The win goes to Experian with respect to lead generation, although Valuelick operates in more verticals at the moment.
Valueclick has a few assets that that Experian Interactive does not, one of them being that they are among the largest online advertising networks. With their purchase of Fastclick, Valueclick Media will show more than 10 times the number of ad impressions that Experian’s LowerMyBill’s does. The other asset, while currently a major one is a Tier 2/3 paid search engine, Search123. By default, ValueClick takes the lead. Both companies, however, run comparison shopping sites. Not to be confused with Price Grabber, Valueclick operates Price Runner, a leading comparison shopping site in the UK and select European countries that they hope to expand to the US. A query for “Sony Bravia 40” brings up the exact product in PriceGrabber but only category listings in Price Runner. Experian wins hands-down in this segment.
When compared in total revenues from online operations, Valueclick certainly wins. The company earned $170 million last year and should top $250 million this year. That puts them at least $100 million ahead of what Experian Interactive will do. Both companies have one thing that very few others currently have; the ability to market to customers at all phases in the purchase lifecycle. But, if it comes to a showdown, Valueclick’s revenue lead might not insulate them for long, as Experian’s parent company has a stronger track record of integration and a core competency of customer data servicing that puts them in a league of their own. Don’t count out lead generation giants Quinstreet and the quite profitable NexTag. Both will be seeking some capital event very shortly, and will need to in order to go head to head with Experian.
Regardless what Experian does with PriceGrabber, the company shows one thing. They really “get it” and realize just how significant a company they can put together. The data they have combined with their reach makes even Claria seem trivial. In May, the company was the 15th largest Internet company by revenue. Now, they might have broken the top 10. Don’t expect them to stop anytime soon. If they can execute on closer to 100%, then they might just vie for a space at the top and not just as the leader in the race for second. On a final note, this acquisition also shows the value of connections. LowerMyBills’ Matt Coffin was friends with Experian Interactive’s Ed Ojdana, and if you look at the PriceGrabber deal, you’ll see similar connection. Building a great business works wonders, but already knowing the potential suitors; that’s like getting to play in the Masters.
That was an well written email.. Well done Jay.
Posted by: Josh Stomel | December 13, 2005 at 01:24 AM