8 Comments

ValueClick as a Publisher

Jul 16, 2007
by

ValueClick announced this morning that it is acquiring Mezimedia for $100 to $352 million. Mezimedia owns and operates Smarter.com, CouponMountain and a slew of other sites (e.g. Shopica and ToSeekA) that are used for search arbitrage.

WOW! I may add commentary in the comments but for now, I’ll leave it at that and let the conspiracy theorists have a field day about the conflict of interest for ValueClick / CJ and why ValueClick would buy businesses that duplicate what it already owns.

[Note: Commentary added in, well, comments.]

About David Lewis

David Lewis is the CEO and founder of 77Blue which operates online shopping websites. Prior to that, he worked in business development at GoTo / Overture. David was a product manager and accountant in past lives. In 2006, David won Commission Junction’s Horizon Award for Innovation and was a finalist for Linkshare’s Golden Link Award. You can find David on Twitter @thedavidlewis.

Twitter: thedavidlewis
Filed under: Affiliate Marketing
  • Jonathan (Trust)

    No need to wait, what are your views on it, you must have some?

  • http://www.Keycode.com Kurt Lohse

    After the PriceRunner acquisition it was clear that VC/CJ was interested in accumulating top web publishing companies. There were/are lots of potential conflicts as I have pointed out in at least one other post here. VC/CJ's success will depend greatly on how those conflicts are managed.

    I think we will see the trend of acquisitions of top sites increase rather than decrease. It seems natural that the networks be the first to snatch up the top performers as opposed to letting other media companies who are capable of making direct advertisier agreements take control of the networks' biggest sales producers.

    Moves like these make all top publishers more attractive as acquisition targets. I think each of the big networks will have to have their array of wholey-owned destination sites in order to compete.

    I am curious as to why you think this particular acquisition is more alerting than the PriceRunner one.

  • http://www.cumbrowski.com Carsten Cumbrowski

    Hehe… we think alike :)

    To heat the conspiracy think about that. If Google finalizes the acquisition of DoubleClick, they get Performics. Google runs Froogle.

    Linkshare is owned by Rakuten who is basically a huge shopping mall with some additional businesses related to what they are doing.

    This would explain, why all the network feeds suck as much as they do without ever being improved on. Imagine all of them would provide reliable feeds with clean format and quality assured content to prevent all the garbage feeds.

    I could run my large comparison shopping engine by spending an hour a day spend on checking the commissions earned for that day. :) Only the assurance that certainly one feed for at least one merchant will cause problems or fail all together every day will keep the competition at bay hehe..

    now it makes sense… because nobody can be as incompetent to get as little done in this area as the networks have over the years.

    Cheers!

  • Pat Grady

    "why ValueClick would buy businesses that duplicate what it already owns"

    i think of it a lot like real estate… once you own an apartment building and know how to operate it at a profit, you'd likely be interested in buying more to scale up your biz. not all are suitable for ownership and you don't want to own all of them in one part of town (they'd compete with each other somewhat), but if you have the cash, snapping up suitable ones that come along seems to make perfect sense to me.

    and like an apartment building, the really important part is to keep people coming into them to make it continue to make profits for you.

    so no conspiracy theories here and no additional conflict of interest either, they were already in the space and the VC companies already occupy many facets of online marketing.

    i do think $100-300+M is crazy high (but so have all the other recent M&As).

    the street chatter is that an acquisition (Mezi) doesn't happen when a company (VC) is in serious talks to be bought out – so there may be a dip in VCs stock price because people figure they're not going to be bought out soon. but i bet that'll be a short-lived dip – the yahoo rumors should crank back up again soon and drown out this tiny (relative to any prospective VC purchase) Mezi transaction.

    Little conspiracy bait… I do look forward to watching for Mezi properties to show up in Kellie's AFP reports going forward…

  • http://www.revenews.com/davidlewis/ David Lewis

    My IM clients started ringing off the hook yesterday around 6am PDT with the news. I cannot count the number of people who let me know about this. Talmadge hired me at GoTo.com. He's a bright guy.

    To address some of the comments above:

    Jonathan: The wait was do to my schedule.

    Carsten: Thanks for the conspiract theory. Connie probably would agree with you on the DFs.

    Pat: While the apartment building analogy works to some degree, it fails in the end. Apartments gain economies of scale by sharing the management infrastructure. While some of that can happen with PriceRunner and Smarter (at least after people are laid off), they are based on different technologies. This is similar to BeFree and CJ. The BF technology was cast by the wayside. VC didn't buy BeFree for its technology and I would guess that VC didn't buy Mezimedia for Smarter's comparison shopping technology. (Note: I like the redesign of Smarter. I didn't get the green Michelin Man and didn't like the original relaunch. Mezimedia has been adding content and is using video from ExpoTV (content seems bad and the implementation on ExpoTV is worse) which has been a nice spin on comparison shopping but is Smarter really about comparison shopping?)

    The other difference from PriceRunner is CouponMountain which is an affiliate of BeFree and CJ as opposed to having independent merchant relations (yes, PriceRunner and Smarter use AM as well).

    I think that Mezimedia made a brilliant move going abroad to Asia and not Europe (yes, MM has coupon sites in Europe but they don't matter that much). China, Japan and Korea are where they have focused more energy including most of its employees being based in China. Everything was built doublebyte from the start.

    No one seems to be asking why there is such a massive bonus. Base $100MM and bonus up to $252MM. Hmmmm. It's based on performance so obviously the two parties disagreed about the future. What could cause such uncertainty? Could it be the squeeze on SEM in retail? Could it be the risk of SEO? Yes, but there is a bigger factor.

    Mezimedia is (as far as I can tell) the biggest pure search arbitrager. It buys keywords on Google and MSN and lands the user on pages of its sites (Smarter, CouponMountain, Shopica, ToSeekA, PlanetCoupon and MoreRebates) with no content other than Yahoo search results. Due to the AdWords Quality Score, MM has started adding some content from other sources.

    No matter what anyone says and no matter what the reasons were for ValueClick to buy Mezimedia (no, I didn't address those as I will leave it to the conspiracy theoristas), WOW… great job Talmadge and Harry… and Paul and Richard and the rest of the GoTo alums in Monrovia! Next up: SpotRunner, Veoh, Helio…?

  • http://www.flamingoworld.com Connie Berg

    Wow, cheating really does pay. In talking to a few affiliate managers, they were some of the biggest rule breakers. They bid on trademarks when not allowed, stuffed cookies, posted unauthorized coupons. The list of things they did/do that they shouldn't is long. I wonder how CJ merchants will feel when it will now be a part of the parent company who is cheating them.

    Regarding datafeeds, I have been getting a lot of pressure to run PriceRunner feeds instead of my usual CJ feeds. Is it a coincidence that at least several times a month my feeds break, they aren't updated and they have to have their engineers work on it?

    So what do those of us who play by the rules get? Not a damn thing.

  • http://www.cumbrowski.com Carsten Cumbrowski

    Amen, Connie. I chatted a bit with your developer. What was his name? Damn, if I wouldn't be so bad with remembering names. He did not give me his business card though, but I know where he lives. great :) .

  • Heather Paulson

    Shmuely broke the news to me when it happened, I must have stood thier stunned with my mouth hanging open for at least a full minute while he waited for my reaction.

    I always liked the game Monopoly, but I never liked playing with my brother he cheated all the time..