FindWhat Buys Again...
Pretty soon I'll have to take the time to really grok FindWhat. The company has been on an acquisition tear, merging with espotting, buying Miva, and today announcing it has purchased Comet (best known for that cursor download in the late 90s, now a search/platform/web privacy company).
OK. So FindWhat, in the end, is a strong second-tier pay-per-click network. Like Overture or Adsense, they match buyer and seller via paid search keywords. They have a distribution network, and they have an advertiser base of tens of thousands. Their biggest client is Lycos. They serve a significant base of advertisers, and with the addition of espotting, which has 20,000 advertisers, they are now a force in Europe.
The also have an SEO business, and with Miva, which sells ecommerce software to small businesses, they are looking to be a force in the SME website building space. In essence, they hope to sell loads of SME services to their advertising clients. Yahoo has a similar play. With Comet, FindWhat has acquired a company in the metabrowser/privacy/OEM space. I'm not sure I get the play here, but I aim to find out when I head to the Search Engine Strategies conference next week in New York.
Findwhat's stock is on a tear, up about 110% over the past year. It's earnings and revenues are also on a tear - its last quarter revenues were up 57%, and earnings have increased for 11 consecutive quarters. The company posted about $72 million in revenues for 2003.
So...what's up with FindWhat? Any readers out there have experience with this company?
Comments
They've been flying under the radar for the past few years. I'm not convinced that all of their acquisitions add value to their business (espotting does). Will be interesting to see what they do with Comet.
FindWhat's deal with Verizon to provide contextual ads for SuperPages.com, which is scheduled to relaunch March 1, puts them in a very good position to benefit from the surge in growth of "local search" and online advertising by SMEs. There should be lots of buzz about it next week.
I just spoke with my Acct. Manager at FindWhat, and he didn't have any great information...I guess I'll be waiting to hear the buzz at SES too.
Comet's current download is recognized as adware by most adware blocking software. It will be interesting to find out why Findwhat wants them, and if it is for reasons outside of simply expanding their network of users (like the e-spotting deal).
Other info on Findwhat.com - They only publish seven of their affiliates, although they have hundreds/thousands...The ones they publish are Cnet, Webcrawler, Metacrawler, Excite, Mamma, Dogpile and Lycos.
Their old push was that they were low-cost and had great customer service. I agree with both of those points.
One has to wonder if they will be happy floating in the "Tier 2" PPC-SE space, or will they continue to acquire companies for traffic to compete with the big guys.
There is one important thing to remember about paid search. The value has largely gone to the firm with the consumer relationship (Google, Yahoo, MSN) and not the firm with the advertiser relationship (Overture, Looksmart, Findwhat). That's the reason Overture was sold. In the year before it was, Overture's revenues rose 74% but profitability halved – all because of rising distribution costs.
What you have now is two paid listings marketplaces (Overture and Google AdWords) under the control of large consumer destination sites. If they choose, they will be able to aggressively go after distribution deals, as their cost of sales is amortized across a larger network of distribution (and they have the highly profitable proprietary traffic). FindWhat will not be able to compete. There are only two forces that are keeping them in business – concerns over independence (search engine competitor is selling advertising on my site) and perceptions over quality of traffic (second tier search engines deliver lower quality traffic and hence should have lower CPC pricing). Both I see as temporary.
Their eSpotting division, who will contribute the majority of their revenue in 04, is in an even more precarious competitive position – as essentially it chased and captured the first tier deals in Europe but a combined Overture/Yahoo and an expanding Google are now chasing them down and running them over. Not to mention, they can’t seem to compile credible financial records.
Not to be too pessimistic but I think the attention is a little too "rising tide lifts all boats".
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