JayWeintraub.com - Internet Advertising Analysis and Commentary

Quinstreet

April 25, 2008
Quinstreet update. The company has begun to invest heavily to expand its operations into verticals outside of education. They have this year finalized two acquisitions, one in the home services sector and the other which gives them a foothold into insurance. The former is a pure play lead generation shop with rather higher barriers to entry, i.e. a strong deterrent for QS to try and build up internally. The latter is a marketplace but fits very well into their focus of owning and monetizing organic content. Companies names withheld at this time.

June 26 2006:
As one reader pointed out, it is now June, and no filing has taken place.   The Advertising.com deal combined with the large percentage of revenue that came from University of Phoenix would seem to have played a role in the delay. The company has also struggled to break into mortgage, and I imagine any exit would require them to better diversify their earnings. While they have had sizable churn, they still have some strong talent. who, unlike other companies in this space, have the operational expertise that suggest they should pull through. I predict them trying to go public in Q2 2007.

11/11/2005 - (original post)
Quinstreet will file to go public in January 2006 and is on track to do more than $200 million in top line revenue for 2005. They've done well despite their draconian tactics, i.e., they have not won many fans in the industry.

On the acquisition front - Quinstreet has quietly purchased two companies. The first is Deep Star Interactive - operators of onlinedegrees.com, nursingdegrees.com, and nursing-schools.com among others. They have high page rank sites and receive quality organic search traffic. Purchase price between $3 million and $5 million. A great win for them.

The second is World Wide Learn, one of the best at organic search. Along with ClassesUSA and eLearners, arguably no company has a better grasp of SEO than they do (re: education). I believe the purchase price was around $8 million, which is a steal and quite a coup.

Adteractive in Brief

September 29 2007
One time online advertising performance leader Adteractive has experienced better days; still significant revenues but weakness in EBITDA has some wondering. They see the iceberg ahead. Have they hit it or can they still avoid an impact? Loss of talent / layoffs have plagued them throughout 2007. I've always liked them / had good experiences and wish them and those there the ability to come through this stronger than before.

Vendare / Netblue - Another Week, Another Merger

I haven't seen any formal public mention (see update at end) yet, but today should be the day that Vendare and Netblue announce externally a merger. Netblue, formerly YFDirect made its name and some healthy returns by popularizing incentive marketing. YFDirect stands for YourFree and the company under Ken Chan was among the net's largest advertisers offering users free dvds (free with an "*"). If memory serves correct, the company took in funding from Oak Ventures, around $18 million in 2005. Not long after, it saw a departure of some of its key executives and long-time stakeholders.

Vendare has a longer and even more complicated history. Look out for a future post that details it. After rapid growth and two rounds of layoffs, they too find themselves without the original management team that helped grow the company. The company has a diverse portfolio of products / sites and in theory should benefit from Netblue's better technology platform as well as realizing other economies of scale by merging.

Update: The press release has been released and employees briefed. Read it here  http://netblue.com/june13.html . The text is below.

Vendare and Netblue Announce Merger
Strategic fit creates leading provider of performance-driven online marketing solutions

Vendare, an innovator in comprehensive media and marketing solutions, and Netblue, a pioneer in high volume, performance-based online customer acquisition, have signed an agreement to merge the two companies. The merger creates a leader in performance-driven online advertising, delivering extensive, multi-channel distribution and flexible, comprehensive marketing solutions for advertisers and publishers. The merger is subject to stockholder approval, which is expected to be obtained in early July.

"Combining Netblue's innovative product platform with Vendare's advertising and affiliate networks and strong email capabilities creates a powerful solution for advertisers," said Linda Fayne Levinson, Vendare's Chairman and Chief Executive Officer. "With these compelling assets, VendareNetblue will be the best place for advertisers looking for results online."

"As online marketing continues to grow, we believe that advertisers and publishers will want to work with a few key players who can deliver high quality, measurable results," added Art Shaw, Chairman and CEO of Netblue. "This merger enables us to deliver the scale, breadth of solutions and performance that the market demands."

Founded in 1999, Vendare provides a complete portfolio of solutions for advertisers and web publishers, including display advertising, co-registration marketing, email marketing, lead generation, promotions, advergaming, and direct navigation. Reaching more than 120 million unique consumers every month worldwide, Vendare connects advertisers with consumers and helps publishers maximize pay-for-performance revenue opportunities.

Since 2002, Netblue's online performance-based marketing platform has delivered millions of profitable customers and qualified leads to advertisers, all on a pay-for-performance basis. Netblue optimizes its proprietary campaigns across all online channels – display ads, affiliates, search and email – and manages hundreds of campaigns across 2,000+ sources of traffic.

Upon closing of the merger, Art Shaw will be CEO of the new company, while Linda Fayne Levinson will be Chair of the Board of Directors. The company will temporarily work under the name of VendareNetblue until a new name is announced later this year.

Google eyes Nevenvision

Last November, rumors circulated that Google had purchased facial recognition company Riya. (Giga Om and Search Engine Watch). The deal was not cheap at a rumored $40 million. If that transaction went through it's not obvious as Riya's whois information remains shielded via Domains by Proxy. Regardless, it's worth checking out the software, as it returns a unique viewing experience, kind of like the comments in Flickr photos only done automatically.

The new rumor: Google will shortly purchase Santa Monica, CA based Nevenvision.com, a company that has also created facial recognition software. Neat as such software is, I suspect the real power behind Nevenvision is the commercial applications they have already put in place using their image recognition software. Not some "2.0" company whose product might have a use somewhere, Nevenimages has technology that will not only help Google Images but transform how Google interacts with consumers and brands.

Nevenvision will do for mobile what Applied Semantics did for content ads. It will push Google ahead of others and could very well have Google earning more through mobile applications in foreign markets such as China than they do via PC based web efforts. One read through of Nevenvision's (confusing) product description for consumers shows how, "Shoot the CD cover of your favorite artist and get a sample MP3 or ring tone or enter to win concert tickets. Shoot an ad in the newspaper and get a coupon or product information." This is powerful stuff that not only fits well within Google's mission but can actually make them money.

Note - if this rumor proves true, this is pretty much a one off. As much as I like to see my subscriber numbers increase, it's time to get back to what I actually know - lead generation, incentive promotion, domain monetization, ad networks, arbitrage and a smattering of email.

MetaReward Layoffs

MetaReward Layoffs?

People have come looking for information on possible MetaReward layoffs. In short, it appears as though Experian Interactive, who purchased MetaReward in December of 2003, will shutter the unit as early as May 1, 2006. I cannot comment on how many of its employees will relocate to other Experian Interactive business units and how many will be laid off.  Fortunately, it's a strong market - for people, publishers, and advertisers.

MetaReward saw strong results in calendar year 2004 and through the first half of 2005 but, assuming this rumor true, either that has changed or Experian Interactive has extracted what it needed from the unit and/or has determined the unit does not fit with long term plans. Those waiting on payment or expecting payment should not worry.

Time permitting, I'll put together a history of the unit and the segment of online advertising that in which it operates to understand better this decision by Experian Interactive.

LowerMyBills pushing Cell Phones?

Actually, no, but whatever site I vist as part of my work IP, instead of the company's now famous (at least to internet ad geeks) flash creations, I see a boring gif ad promoting cell phones. At first, I didn't think anything of it - diversity makes sense, but after clicking through and seeing a page that isn't even run by LMB (it's an imphonic white label), something else had to explain for the existence of these circa 2000 banners on premium placements.

At Oversee, we run a smaller but fast-growing mortgage lead generation site, Low.com. We too rely on themed flash banners, and extensive media placements, but I'm proud to say all ideas are original. Call it pride or perhaps just prudent (who wants to worry about C&D / potential settlements). We must be doing something right though to warrant the extra effort.

I've said some positive comments about LowerMyBills, and this won't change it... call it a case where I could not cast the first stone.

For more real news - do a search on the founder, Matt Coffin, on Google and you will see an ad on the left run by Google reading:

Google Congratulates
Matt Coffin of LowerMyBills.com -
SCSC Entrepreneur of the Year.
www.google.com

The page it links to is: http://www.google.com/advertising/eoy.html
Wild stuff.

News Corp 2.0

Fox Interactive Media hints at acquisition of Web 2.0 company during conference.

The one-day Web2.0 Under The Radar Conference took place Mach 2, 2006. It featured "32 of the most
disruptive companies in this space" and took place at Microsoft's Mountain View, CA office.

The companies were divided into one of seven categories:  Community 2.0 , Connect 2.0, DIY (Do-It-Yourself) News , Make It Easy, Search 2.0, or When 2.0. 

Arguably the biggest news from the first time conference besides the winners occured during Ross Levinsohn's "Fireside Chat" with TechCrunch and Edgeio founder Michael Arrington. During the interview chat Levinsohn, President, Fox Interactive Media, announced that the newly established of News Corp, has purchased one of the 32 companies being spotlighted at the conference. The division already owns MySpace.com and IGN.com along with other internet acquisitions based outside of the U.S. What's more, Levinsohn also said don't be surprised he Fox purchased five of others in the near future.

With Viacom announcing it is getting into the social networking space and NBC Universal getting ready to unveil their Web 2.0 strategy, this will only heat up the mini-bubble faster. Not a bad time to be a startup with some momentum...

 

List of "disruptive companies":

AirSet | Box.net (Winner Connect 2.0) | Browster | BubbleShare | CalendarHub | Dabble DB (Winner Make It Easy)| Dogster (Winner Community 2.0)| Eurekster (Winner Search 2.0 - Part 2)| Flock  (Winner Smooth Surfing)| Goowy | Kaboodle | Loomia | Meetro | Mosuki (Winner When 2.0)| NowPublic | Popist | Rallypoint | Riya  (Winner Search 2.0 - Part 1)| Rollyo | SimplyHired | Simpy | Skobee | Sphere | Spy Media | TagCloud | Tagged | TailRank (Winner DIY News)| The Form Assembly | Top 10 Sources | Wink | Zoho| Zvents

Also see:
http://www.techcrunch.com/2006/03/02/fox-interactive-announces-acquistion/
http://blogs.zdnet.com/BTL/?p=2648
http://hq.meetro.com/blog.php?p=102

Related Articles:
Web 2.0 Article in DM Confidential
The Ownership of Traffic
Digital Thoughts - Following the Money, An Investment Recap - Part 1  and Part 2.

Vendare Execs Fired?

2/7/2006: Keith Cohn and David Burcham fired from Vendare. Keith was President and CEO, David EVP of Operations. More to follow...

2/8/2006: Correction. While I include David Burcham as one who was terminated, people at the company say this is false. My apologies to Mr. Burcham and Vendare for posting any incorrect information.
(With respect to rumors, if any future errors are seen, please contact me directly for prompt action.)

2/9/2006: ClickZ confirms the departure of Keith Cohn saying
Cohn will be replaced for the time being by Linda Fayne Levinson, a venture capitalist who joined Vendare's board in April. Levinson is a former partner at management consulting firm McKinsey & Co., and has sat on the boards of several Internet companies, including Overture, Lastminute.com and Cybersource.

"Linda Fayne Levinson's extensive strategic and operating experience, particularly in the Internet space, will ensure a smooth transition for Vendare," Bill Gross, founder and CEO of Idealab, said in a statement. The start-up incubator is Vendare's largest shareholder.
Link: http://www.clickz.com/news/article.php/3584021

2/13/2006: I say above that Mr. Cohn was fired, but I do not know whether he was technical fired or resigned. Vendare is moving forward without the man who led them for 5 years, which is the real story.

3/22/2006: I notice a lot of people stopping by this post, so I have decided to include an update. Brett Cravatt, Chief Product Officer, has decided to leave Vendare and will be "starting a new company specializing in online marketing, list management services and lead generation solutions on behalf of both advertisers and publishers." Additionally, I am told Chad Grohman, former head of the affiliate division eMarketMakers is no longer with the company. The weeks following the resignation of the CEO and subsequent reorganization have probably made for challenging times at the company.

LowerMyBills Revenue

LowerMyBills to do north of $160 mm for 2005

Josh Stomel is once again the talk of the lead gen world with his recent post on LowerMyBills revenue projections. Given that the company did less than $100mm in 2004 and less than $50mm in 2003, upon hearing that number I initially assumed it was for all of Experian Interactive. (NexTag, number 2 or 3 in the mortgage/refinance space does less than half of LMBs projected 2005 number for mortgage.) Given that Experian Interactive has a strong affiliate play (with Affiliate Fuel and MetaReward) and that until the purchase earlier this year, LowerMyBills was absent from affiliate marketing, it is possible that the $160mm+ number is accurate. I wouldn't have expected $2mm+ monthly from the affiliate channel, but that is what I would have to guess that channel's contribution is. Impressive and sure to serve as a distraction for a few others in the space.

Adteractive Debt

Quite a few visitors have come to this site searching for "Adteractive Debt." While, no one has written in specifically on that topic, it has been said that in lieu of taking in private equity money the company did do an eight figure debt financing. Given what was said in my Quinstreet IPO rumor post, I will speculate that the funds were used that m&a activity. I would also hypothesize that the company has aggressive plans to beef up its infrastructure and media buying.