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Killing The Goose That Laid The Interactive Eggs



By Andy Beal
Expert Author
Article Date: 2007-09-24

It appears Scripps-the 100+ year old media company-isn't having the level of success with online media it had hoped.

Acquiring online comparison shopping site Shopzilla for $525 million in cash in 2005, Scripps indicated it expected great growth from the company. Unfortunately, it appears tougher competition and increased costs have thrown them of course and now Shopzilla is struggling, according to Portfolio.com.
Shopzilla's revenue in the second quarter fell to $59 million this year from $65 million last year, and profits were down to $6.8 million compared with $16.5 million a year ago.
Adding to Shopzilla's woes are reduced referral revenue from the search engines and costs associated with management changes.

So, does this suggest dark days ahead for online comparison sites? Maybe not. Compare Scripps doom and gloom with ValueClick's upbeat report.
ValueClick's comparison shopping segment, which includes PriceRunner.com and Smarter.com, generated $8.2 million in revenue in the second quarter of 2007, up 37 percent from the second quarter of 2006.
ValueClick does admit that a strong European market helped lift its business, but Scripps uSwitch.com is UK focused, and that didn't help them much.

Could it be that online media companies are simply better at running, erm, well, online media companies? Scripps certainly has a diversified portfolio of media companies, but ValueClick is all about interactive-they know the business intimately. Perhaps this statement from Scripps is revealing:
"Follow the eyeballs, follow the money," said Scripps President and Chief Executive Kenneth Lowe.
Hmm, isn't that like a city-slicker buying the goose that lays the golden eggs, and assuming he can care for the goose as well as the farmer? Maybe Scripps should have watched Green Acres before deciding they could easily run the interactive farm. ;-)

Comments

About the Author:
Andy Beal is an internet marketing consultant and considered one of the world's most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at andy.beal@gmail.com.

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