(by Tolman Geffs, The Jordan, Edmiston Group) November was active for smaller online M&A transactions, with 21 media and services deals worth about $400 million, plus another $500 mm Yahoo spent to buy out Softbank’s stake in its European operations. Headline is that the push to acquire original online content is in full swing, and reaching further down the food chain from About-sized deals, as a flurry of small to middle-sized online consumer and B2B content sites traded hands.
As I wrote last month, we think 2006 will be all about online content as major media companies look to become content producers and programmers for the web. Driving this is viewers taking advantage of broadband pipes and new forms of content such as online video, games, aggregation and social networks on the consumer side, and lead generation and directories in financial and business services.
On the consumer side, it was game time as MTV bought GameTrailers, AtomShockwave acquired AddictingGames.com, Disney purchased German games developer Living Mobile, and Ziff Davis picked up FileFront.com. Ziff made a big push into online game coverage with 1UP, an internal startup, and traffic has been modest. So in September Ziff acquired GameTab, and now with the larger FileFront acquisition hopes to juice some growth.
Lead generation and listings deals included BankRate’s $40 mm acquisition of Mortgage.com and FastFind, both lead generation outfits for consumer finance, Primedia’s acquisition of Automotive.com for $75 mm (surprising given that Primedia is otherwise shedding assets) and News Corp picking up Propertyfinder.com, a homes-for-sale listings service in the UK, for $25 mm. In B2B, Moody’s bought Economy.com for $27 million, and Intuit bought MyCorporation.com for $20 mm.
B2B is picking up nicely (memo to Rafat: while the consumer stuff looks sexy, B2B online businesses often have better legs, pun intended. Ed: I am a B2B company :)) Search is the driver, reworking the economics of targeting and acquiring business customers. JEGI’s annual B2B Information Executive conference was dedicated to search; speakers included Steve Berkowitz from AskJeeves, David Moore of 24/7, Fredrick Marckini, founder of SEM specialist iProspect, and Daniel Morel, CEO of Wunderman, the largest direct marketing agency. The consensus was that search-enabled B2B marketing, particularly lead generation and directories, will accelerate the shift of B2B ad dollars online from traditional media. Several CEOs of large media companies noted that figuring out vertical lead generation in the B2B world is a top priority.
Oddly, the major advertising agency holding companies like Omnicom and Interpublic have been mostly quiet so far, largely leaving search marketing to specialist firms. Carat bought iProspect, but the big guys have otherwise stood back as their customers shovel dollars into search. Some may be due to cognitive dissonance at an advertising model that is not driven by creative and where little players can compete head to head with the big brands for search placements and keywords. And some may be the challenge of finding search firms that do something distinctive; many look alike. But the big guys are starting to move – last month Omnicom bought SEM group Resolution Media, and several others are in negotiations with the major ad holding companies. So expect some consolidation in SEM.
Tolman Geffs is a managing director with The Jordan Edmiston Group (JEGI), a New York-based investment bank founded in 1987 and focused on the media and information industries. Tolman was previously CEO of Internet Broadcasting Systems (IBS), the largest online television network. You should assume that Tolman and his firm have or will do business with companies mentioned in this column.
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