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To: V$gas.Com who wrote (37574)1/9/2000 1:20:00 PM
From: ztect  Respond to of 44908
 
Interesting read from Redherring.com...
(an oldie but goodie)

relevance: compare to tsig's b-model

redherring.com

CAN INTERNET COMPANIES MAKE MONEY?

By David Simons
Red Herring Online
November 16, 1998

Will Internet companies ever make money?

That's the question of the '90s, and one that cuts to the issue of how much it costs to buy branding and customer loyalty. .....

But holiday shopping alone does not automatically guarantee a happy bottom line. In fact, according to our research, aggressive spending on marketing -- and we mean big money -- could make the Internet stocks more ho-hum than ho-ho-ho.

Mega-marketing trend

It's not news that many Internet companies' lack of profit is due to marketing spending. However, the trends of spending in search of branding reveal that the hole has been getting deeper.

The table below shows marketing spending as a percentage of gross margin for prominent electronic retailers, or e-tailers, over the past four quarters. (Gross margin is revenue less cost of goods sold -- such as payments to wholesalers for books, CDs, software, etc.)

MARKETING EXPENSE AS % OF GROSS PROFIT

quarter ending.. 9/98 ..6/98... 3/98... 12/97

Amazon......... 107% ...101%... 101%... 125%
Beyond.... .....533%... 350% ...210% ...135%
CDNow......... 448%... 450% ...587% ...527%
OnSale......... 105%... 102%... 128% ....70%

As any good MBA should know, these numbers suggest a classic blunder of over-expansion in name of market share. Yet the stock market has elevated such spending to the essential business model of the Internet -- and the more headlong, the better.

Indeed, Amazon (AMZN) and others have said they will increase marketing spending beyond levels of the September quarter. CDNow (CDNW) [is]raising spending to not only keep up with their own branding efforts, but to also help stave off competition from Amazon in the music space.

The stock market, however, has chosen to view this as investment. So what if profit is delayed? What's a year or so, or a few cents a share less in earnings, compared to eventual tidal waves of profit? Market share, mindshare, and top-line growth are the primary concerns.

And until the July-October market meltdown, investors eagerly funded outsized marketing plans, whether they even realized it. Not only was mega-marketing a necessary cost of doing business, but if one Internet company was doing it, they all had to do it, financially safe or not....

...In fact, implicit in today's notion of establishing an Internet brand and gaining market share is that, once gained, the branding and customer loyalty have permanence, as if bought off the shelf. BUT nobody's proven that consumer behavior on the Internet won't require perpetual nurturing and nourishment, and therefore, perpetually outsized marketing budgets as a percentage of gross margins."



To: V$gas.Com who wrote (37574)1/10/2000 2:31:00 AM
From: Renamed  Read Replies (2) | Respond to of 44908
 
Bravo V$gas

From: Renamed Monday, Jan 10 2000 2:18AM EST
-Preview-

V$gas v/s Sam

Right on V$gas,WOW keep up the good work. !

I guess I'm not the only one to go public nor have negative feelings for his highness(sam) who seemingly has this thread spellbound. Wake up people and don't tell me to shut up !
This guy(sam) has had a lot of people fooled for quite a while.

BTW Sam I hope your son made "wigger" status as you said he was looking to be one. You must be one proud dad. ???
Could you please explain exactly what a "wigger" is to the rest of us uninformed people out here in cyber land.? What is a wigger ?

AND NOW TO THE YEARS BEST POST !

From: V$gas.Com Sunday, Jan 9 2000 12:24PM ET
Reply # of 37595

Please don't forget to place links to your hype posts from December 1998 thru April 1999, your inside information to PR's and how you claimed you set up the Babe Ruth deal with TSIG. And please make public your Private Messages from last May when you received information on the demise of Hwang and the others, prior to it happening, and then you recommended that everyone sell TSIG.

It still amazes me that you can set up the Babe Ruth program with TSIG, self professed, have your son named the very first Player of the Month for the Babe Ruth deal and then turn around and claim to be suing TSIG for not paying off your team for a contest that you admitted you couldn't tell if you won or not.

You are a real character and a sad example of a member of the human race. I do hope you look into and receive Psychiatric help. Not only for you, but for your family and friends. The second of which you probably have very few.

Peace, and I sincerely hope you find serenity and harmony.

V$gas

.Want some info on wiggers........PM me