Octavianworld

Beyond The Click-Rush Climax: Content As The Once and Future King

Following last week's post, this week's news:

AOL buys Third Screen Media, WPP buys 24/7 Real Media, and now MSFT buys aQuantive for an 85% premium (congrats to my old Razorfish friends).

VLCK's out there if you have, oh, $4B lying around.   However, I'd be surprised if we saw another 2x deal, since it takes a lot of cash and a big market cap to absorb that kind of dilution.  OMC's a possibility given the logic of the WPP-24/7 deal, though it would be a more complicated deal, and like WPP, OMC might be tempted to look "deeper in the draft".

These moves by the big portals clearly raise the stakes for the big online publishers.  Not only do the portals control how traffic gets to them, but now they control even more of how ads are placed on them.

How Sad For Us All

Via my log files, this result when you Google "web application ideas"...

Google: A Contrarian Perspective

Given the preceding post describing the  hype around ad networks,  I thought a closer look at the uber-network might be useful.  What I found surprised me. 

Google reported $10.6 billion in revenue for 2006.  Of this amount, $4.2 billion came from placing ads on non-Google-owned sites.  They paid those sites' publishers $3.1 billion in "traffic acquisition costs", resulting in a gross margin from their AdSense ad network business of $1.1 billion.

In 2006, Google spent $1.2 billion on R&D, a little more than $800 million on sales and marketing, and a little less than $800 million on overhead, for total operating expenses of about $2.8 billion.

A simple allocation of this $2.8 billion to Google-as-media-firm versus Google-as-ad-network based on each's contribution to total revenue puts 40% of these operating expenses, or $1.1 billion, onto the latter.  The resulting math makes Google's ad network business a break-even proposition in 2006.

The Great Click Rush of 2007

Ad networks are hot, and in many cases highly-profitable businesses right now.  On the heels of Google's snapping up DoubleClick for $3 billion, Yahoo! bought (the 80% it didn't already own of) 4 year old  online display ad exchange Right Media last week for $680 million.  So, a logical question to ask is, who buys whom next?

Octavianworld up 1000%, Self-Esteem Soars

In a narcissistic moment of weakness, I trolled through my stats to find that a Blogshares industry moderator had looked at one of my recent posts, and discovered that "Single Girl Theory" has taken a position in Octavianworld and driven my price up significantly:

 

via

http://blogshares.com/blogs.php?blog=http%3A%2F%2Fwww.octavianworld.org%2Foctavianworld%2F

Thanks Single Girl Theory, I'm flattered and I'll try to be worthy of your confidence.