I'll Take A Shot At This One...
Uhhhh... not having seen the interview, it's tough to discern EXACTLY the context or how hardened were his categories.
But, SEEK is not solely dependent on advertising per se... it
has a very nifty Ultraseek server product that now contributes
(probably) OVER 12% to its bottom line. (There are further refinements of this product in the pipeline that should, if anything,
boost sales.)
But, what is 12% you may rightly ask in the grand scheme
of things? Not a tremendous amount. But, the figure used to
be just 6% so there's quite a ramp up there.
Now, as to the categories. CPM-based advertising is
ONE THING... and SEEK, I think, (and this is from memory) gets
about 60+ % of its revenues from this source. However, more
and more, SEEK is getting revenues from REVENUE SHARING
arrangements. And while these are premised on the presence
of advertising on SEEK's site... these aren't your standard advertising
revenue model by a long shot. Depending on how these things
get structured, SEEK gets a cut of ANY transaction that it refers
to the advertiser.
Now, to my knowledge, SEEK has yet to sign a PURE
REVENUE SHARING arrangement... preferring mixed CPM
and REVENUE SHARING deals. However, one could think this
will be more the order of the day. An XCIT executive had predicted
at BARS this year that very soon his company would generate
"$3 of revenue sharing for every $1 dollar of CPM-based banner
sales." (Whether this prediction is panning out fo XCIT in the light
of its recent moves with NSCP is very debatable. I doubt, they
are doing much other than CPM deals right now.)
( Now, was this ex-Wired executive from the MAGAZINE
side or the Digital? Was he implying that advertising on the Web
was going away? Or was he just observing that advertising-based
revenues are tough to count on... and are thus not a stable base
upon which to build...? It'd be helpful to know more context.)
So, in sum, SEEK's got a nifty product that is increasing its
contribution to the bottom line. Further, SEEK is, at least on a
limited basis, participating in sales made by virtue of its referrals.
The final point for now. The Web business model that
IS working and has proven itself is DIRECT MARKETING.
And given SEEK's advantages--its work with Aptex Software
to develop ways to profile users which results in more clickthroughs
and better-quality leads for advertisers--SEEK should be confident
going forward in its role as an ENABLER of direct marketing and
e-commerce.
Hope this helps answer your question...
Best Regards,
c m
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