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WatchMojo Newsletter$87 million? What could you possibly need $87 million for? Off Bambi Francisco’s blog on Shutterfly.com:
You don’t raise nearly $100 million just to sit on cash. Shutterfly (SFLY) raised $87 million in its initial offering last week leaving open the question of who they will go after, given the plethora of emerging online photo and video sites out there. Then again, Shutterfly, at less than $400 million in market valuation, may just be an acquisition target for someone else. It doesn’t matter that it just debuted. In fact, getting a public valuation is sometimes a precursor to getting bought.
Read more.
Interesting to see all of the feedback and comments on our post about YouTube’s potential revenue and its potential eCPM of $0.75. It should be noted that unlike some, we did not come out and throw out a random valuation for the company, or say “this is what they make.”
What we are suggesting is that YouTube can easily be very profitable if they manage their ad inventory properly, even without running pre-rolls.
For purposes of illustration, YouTube can sign up 1-5 ad networks, give them each 20M impressions or so and serve, say 2 ad impressions per unique user per day and charge $0.75-1 CPM; this is very easily attainable.
In this case, it would not let its inventory suffer from a “diminishing return” phenomena (charging $0.10 - $0.25 CPM for its impressions). Under this scenario, ad network 1 (the one paying out the highest CPM) would pay YouTube for the first two ad impressions a viewer generates, ad network 2 (the one paying out the second highest CPM) would pay YouTube for the second two ad impressions a viewer generates, etc.
By setting it up this way, it would not, like some suggest, have to charge so little for its inventory and indeed generate an eCPM of $0.75 - if not more. This is precisely a technique I employed at my old company, where I headed up sales. It worked then like it could now for YouTube.
Furthermore, on the issue of charging whatever eCPM for its main page, the fact of the matter is that fixed placement ad deals - much like the ones that Yahoo!, MSN and AOL sell to large advertisers - always yield a high CPM. But, the fact remains that in today’s environment where ad agencies and online marketing divisions of major companies are looking for reasons to obtain larger online budgets, getting someone to sign off on a $175,000 one-day placement on one - if not the - hottest online media properties is not that far-fetched.
In this context, MySpace too could generate a lot more revenue that it does (and no one is saying that YouTube or Myspace is not doing this). This is not to take anything away from FIM’s great management team, it simply suggests that given MySpace’s massive reach and impressive pageview count, it too should better manage its impression portfolio and sign up a basket of networks to raise it eCPM to really make Rupert Murdoch’s promise of FIM generating $1 billion in revenue come to fruition; after all, there is only one main page and limited valuable real estate but almost an infinite number of pages and ad impressions.
“There’s a lot less money in the market than there was in the bubble,” he said. “We have seen this before, but we were putting out about $100 billion a year at the height of the bubble, and this year we’ll be lucky if we invest $27 billion.”
Mark Heesen, president of the National Venture Capital Association.
Interesting to see how many executives are leaving IT firms for the world of venture capital. Oddly enough, the trajectory is a two-way street; InterActive Corp. recently lured VC Kara Norman from Battery, for example, to spearhead acquisitions for Barry Diller’s company.
What’s odd to hear is that the IT executives mainly list the excitement of new companies VCs tend to work with as a reason for the exodus away from the technology sector - which begs the question, since when did IT firms become mature companies with no “excitement?”
Read more.
MOUNTAIN VIEW, CA — (MARKET WIRE) — October 04, 2006 — Become.com, the only vertical search engine to combine product-focused Web search with comparison shopping, today revealed the results of its consumer research that showed a clear consumer preference for Become’s solution vs. Google’s for online shopping search. While industry data shows that most consumers begin their shopping searches with Google, Become.com’s study proved that when given a choice, respondents chose Become.com’s solution by a significant 55-45% margin.”We were excited to put Become.com to the test against Google, the default shopping leader, and find such a clear and enthusiastic preference for Become.com’s integrated relevant research and comparison shopping service,” said Become.com Founder and CEO Michael Yang. “We have worked very hard to deliver a better way to search and shop for products online and this study validates our efforts to give consumers a superior experience.”
Online survey participants searched three products using both Google and Become.com. After each search, they were asked which service provided better results across a range of criteria including site organization, bringing relevant information together in one place and ease of navigation. Participants were demographically and geographically balanced and had no ties to either company but were experienced online shoppers.
The survey was conducted by Cascade Strategies of Seattle which specializes in market research for Fortune 1000 and Internet businesses. Jerry Johnson, CEO of Cascade Strategies, noted that the preference for Become was even more striking when his team reviewed the enthusiastic written responses of those who chose Become versus those who preferred Google. “It’s rare to find a new solution receiving such enthusiastic endorsements and they were in sharp contrast to the Google hold-outs whose preferences were more based on familiarity than on delight with the results.”
Respondents were asked to compare results for searches for digital cameras and DVD players and then were invited to do their third search from a list of top 100 product categories from Shopping.com. For all three searches, Become’s results won favor with the majority of respondents.
Following is a representative sample of respondent remarks:
Become fans: "As much as I like Google, I think Become.com is better organized and easier to navigate." "Become is a much easier and more useful search engine than Google." "Best all around for shopping..." Google fans: "Because I am more used to it." "Because I am able to search everything on Google." "Because I'm not always shopping for something."
Yang concluded: “We recognize that Google does a good job for general research. However, what we set out to prove was that Become.com is a better solution for shopping search. And we proved that by a wide margin. This is great news as we head into the all important holiday shopping season.”Become.com’s integrated search and shopping service is unique in a market saturated with general search engines that deliver increasingly irrelevant results and with comparison shopping sites that give prices without providing independent product information and reviews to help users make better buying decisions. BusinessWeek Online readers recently ranked Become.com the top Buying and Selling site in their “Best of the Web” competition.
Copies of the Summary Research Report are available for download at http://www.become.com/challenge.html.
About Become.com
Become.com is a powerful search engine and comparison shopping service. Founded by industry pioneers Michael Yang and Yeogirl Yun, creators of MySimon, Become.com helps people make better buying decisions and purchases online. Become.com searches over four billion web pages and uses its patent-pending AIR™ (Affinity Index Ranking) search technology to provide the Internet’s most useful product reviews and guides, and then makes it easy to find and buy products from brand name retailers at the best prices. With over 20 million products from 5000 merchants, Become.com provides the Web’s most robust and easy to use combination of relevant product research and comparison shopping. Please visit us at www.become.com.
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My, my… who knew YouTube would get people so excited.
Following up on my previous post on YouTube definitely being profitable, but why they prefer to keep mum, I have added the breakdown of what YouTube’s average CPM should be.
If you are not getting at least this much… call me. For more on how YouTube can manage its relationship with ad networks, click here.
Enjoy:
