Asserting that content has “passed the crown” from traditional media to online, Wall Street equity researcher Pivotal Research Group initiated coverage of three ad-supported jewels -- Google, Facebook and Yahoo -- with strong ratings. “The adage ‘content is a king’ was always somewhat subjective,’” writes Pivotal’s Brian Wieser, a long-time Madison Avenue forecaster who authored the report, adding: “But on the Web, the argument content is king is difficult if not impossible to make in the long-run, in our opinion: what is important are infrastructure, platforms and tools controlled by Google, Facebook and others.”
Wieser assigned “buy” ratings to Google (his top Internet stock pick), and Yahoo, and hasn’t put an explicit rating on a still-pre-IPO Facebook yet, but estimated its “target value” as $81 billion.
What those Big 3 Internet players have in common, Wieser said, is that they are not simply content–dependent, but are superior platforms for users to consume content, and have the best technologies for monetizing that with data about the users.
“Advertisers are increasingly indifferent to the context in which messages appear, at least when compared with other media,” he explained, adding: “Vast and growing arrays of data ensure that audiences (or at least the data-driven attributes which imply the characteristics of any given advertising impression) become the most important basis for delivering commercial messages in the long run. Efficient re-aggregation of fragmented audiences also becomes increasingly critical.”
Wieser said Google was Pivotal’s top pick among Internet stocks, because while “paid search remains a juggernaut,” he believes it is actually Google’s “strategic dominance in ad-tech” that makes it most valuable to investors.
“Future growth of Internet-related advertising will ride on infrastructure, and Google owns much of it,” he asserted.