Niche focus: Internet advertising
Obviously a large focus of this thread is the internet. Why? Because for those seeking short to medium term gains, their volatility provides greatest opportunity. But the internet is not one "category" but instead many niches... and that is why my spreadsheet is broken out by niches, so you can compare and contrast different companies within a specific niche. Some companies (i.e. the new AtHome/Excite) will fall into more than one category of course...
An adage on Wall street is to buy market leaders... and that is for many reasons... word of mouth and reputation is very important in a psychological sense, and technology lead and R&D spending (or total budget) usually gives an advatage to the leaders in the field. Ask any person off the street about ISPs.. and if you mention AOL, he will know what your talking about... if you mention Mindspring, he will give you a clueless stare most likely.
So what I try to do, is stick to #1 or #2 in each field... yes occasionally a #4,5, or 6 will come out of left field and join the top few.. but that is hard to predict and by the time Wall Street recognizes it, you could have dead money for months.
Below is a post I stole off the DCLK thread... yes, it is biased because he is a DCLK long.. but it gives some interesting insights.
From what I see in this niche, DCLK is #1, TFSM is #2, and NETG is possibly #3.
Not only does market cap indicate this (Wall street ranks them this way), but on every single web page I go on with advertising I see at the bottom of my browser:
Connecting to ads.doubleclick.net
Never with the other two....
Price /Mkt Cap /Float /Industry /Major Events /Opt?
TFSM /$38/ 589 /3.3/ Advertising/ Lock-up period ends 2/15
DCLK/ $96/ 1,836 /9.4 /Advertising /* /?
The post:
Message 7479126
Hello Everybody. I am posting a synopsis of the notes I keep about DCLK. This is
material that I gather from many sources including various BB's. The two million shares
registered for sale are by 24/7 insiders and not NETG. I have not digested todays press
release from NETG.
It would be naive to think that DCLK will never be challenged by other companies, but
at present they seem to be far ahead of anyone.
I hope you find the following information usefull. :-)
NETG is in direct competition with DCLK's DART. Doubleclick has been stealing web
site clients from Netgravity right and left. In the last conference call, O'Connor stated
that DCLK had notched 90 steals from competitors. Although he did not mention how
many had come specifically from Netgravity, in past conference calls it came out that
about a third of all steals were former Netgravity clients. As for the size of the clientele,
Doubleclick recently stole huge (100 million impressions +) Quote.com from Netgravity.
Doubleclick does CBS, NBC, PBS, and A&E.
Doubleclick and Alta Vista have renewed their relationship for another three years.
Neither side can terminate the agreement
EBAY has signed to use DART. Can you imagine how BIG that will be once EBAY
starts putting ads on every page (600 million per month)?
They stole 90 DART clients from competitors. Closed-Loop marketing has gone from 0
to 200 million ads per month in one quarter.
Top ten advertisers accounted for only 16% of business, so there is very little
concentration risk.
They are hard at a work on a new technology for the coming year.
Doubleclick just added a lot of international sites to the network. Here's the list :
DCLK Finland: arvopaperi online, investori, kauppateht, taloussanomat, duuni.net,
kinopalatsi, inet pelit, Boxman.
DCLK Denmark: Copenhagen stock exchange, erhvervsbladet, jobnet, jobguide,
E-S-E, jobs Danmark
DCLK Norway: Eyeone, Butikken, Opera Software, opera mall, scandinavian tourist
guide, Bergensvarvisen, democrokita, frenover, hamar arbeidenblad, muss-dagblad,
namdalsavisa, nordlands framtid, nordlys, oppland arbeidenblat, rogalando avis,
sarposborg arbeidenblet, telemarksavisa, oshandposten,
DCLK Italy: meridiani, How, secondomano
You might wonder if Doubleclick ever loses sites to offset the gains. The answer is "very
few." Whereas new sites constantly join the network, only a small handful ever leave. In
the past few months, I've noted fewer than 10 defectors--all smaller foreign sites, like
Immedia Press, TSN Scout, Meristation, ABC Startsriden, internet expo, and battle of
the sexes (australian)--as compared to hundreds of additions. Overall, the Doubleclick
network has shown remarkable stability--especially in comparison to rival network
24/7, which recently lost over 50 sites, including most of its biggest.
Many sites are abandoning 24/7--big sites, little sites, every type of sites. Notable
defectors include The Mining Co. and Spinner. I regard it as not entirely unlikely that
24/7 will finally write off its disastrous "adfinity" software and sign a DART contract with
Doubleclick. If not, 24/7 will be out of business soon (Note that 24/7's insiders have
filed to sell 2 million shares in a secondary. They want out while the getting is good!)
If you haven't already, you should go to doubleclick.net and read the
announcement of Doubleclick Select and Doubleclick Expanded. The original network
will be known as Select, while the Expanded network will include other sites that will
have Doubleclick sell some, but not all, of their inventory.
It is a strategic and clever move:
1. Other ad servers, such as NETG, can say to sites, "Hey, we've got great ad serving
software--why not use us?" Doubleclick, however, can say "Hey, we have a great ad
serving technology, AND IF YOU USE IT WE WILL HELP YOU MAKE
MONEY--RISK FREE--BY SELLING YOUR UNSOLD INVENTORY HERE
AND ABROAD. WE HAVE A SALESFORCE OF OVER 200 AND
RELATIONSHIPS WITH OVER 2,300 ADVERTISERS." Now, which is the better
sales pitch? This will help Doubleclick's DART put Netgravity, Accipiter, and Adforce
out of business because they simply cannot offer anything like what Doubleclick has in
terms of hybrid relationships.
2. It enables Doubleclick to extract greater profits from existing DART customers. The
old Trojan horse strategy: "Hey, seeing as you are already using DART, why not let us
sell some of your unsold inventory?"
it doesn't take much to see how the expansion of the Doubleclick network will add
rocket fuel to the network's growth. Here is a sampling of names that have already
signed on, each and every one a biggie:
PC Quote
USA Today
Garden Web
Prevue.com
Court TV
Daily News
Internet Movie Database
Lots of other companies (such as Flycast and Adauction) make their bread and butter
selling unsold inventory in relationships like this. Now Doubleclick will be taking over
that market.
Have a good evening
Robert |
