Just An Online Minute... It's a Sign of The Times
As we mull the implications of the Times' acquisition and consider the opportunities, we see the move as only the latest in a surge of market enthusiasm for the online sector. Consider America Online's pickup of Advertising.com for $435 million in cash, and aQuantive's $160 million acquisition of SBI.Razorfish, both of which occurred last June. Or, how about the $520 million Dow Jones & Co. surrendered to buy MarketWatch.com last November? That deal was finalized in recent weeks.
The interest is back, the money is back. Bets are being hedged and old media sees that new media and the Web, in particular, is the linchpin and often, the key driver of revenue growth. They see the Web as the hub for any manner of advertising services whether via straight advertising, search, directory, and Yellow Pages listings, or sponsorships. The opportunities that sponsorship of original content can bring are also figuring into these deals in a big way. If there was any doubt that the Times' digital unit is driving the company's growth, analyze this: The Times Co. posted a 30 percent increase in revenues from online advertising in the fourth quarter of 2004. Newspaper ad growth is around 2 or 3 percent.
About.com is an interesting gambit for the Times Co. It's essentially an information and directories portal that offers consumers a searchable database of topics ranging from health to travel. About.com labels its content "guides." The Times Co. will most likely increase content on About.com and raise its brand profile. About.com, with nearly 22 million unique visitors per month, will help boost traffic for the Times; the NYTimes.com and Boston.com (the site for The Boston Globe) attract about 13 million unique visitors.
While the Times Co. says the acquisition is not expected to boost its bottom line until 2007, look at aQuantive. Yesterday, the online advertising services company reported fourth quarter revenues increased 228 percent to $60.7 million. Net income increased 74 percent to $7.1 million, while earnings before interest, taxes, depreciation, and amortization came in at $13.4 million. Seattle-based aQuantive gobbled SBI.Razorfish last June. One of the most important things the About.com deal does is give the Times an opportunity to diversify its advertising mix, getting popular cost-per-click advertising into the equation.