<<OT: eMARKETER'S ARTICLE ABOUT NBC/SNAP>>
Really am enjoying www.emarketer.com... and here's
one reason why: a little deeper analysis of NBC's Snap purchase...
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15 June 1998: Quick! What's the NBC logo? Is it a peacock, an ostrich or a chicken with its head cut off?
Last week NBC announced that it was purchasing SNAP! from C/NET. It is also buying a 5% stake in C/NET. The total investment is estimated to be from $30 to $50 million. The deal marks the first time a broadcast company has entered the competitive portal market. As a New York Times article stated, "NBC, a unit of the General Electric Company, is endorsing the view that Internet directory companies, or search engines, like Yahoo and Excite are emerging as the cornerstones of profitable on-line ventures."
There is evidence to support that view. In RelevantKnowledge's list of the 10 most-visited sites for May, five were search engine/portals (marked *):
1. Yahoo!*
2. AOL
3. Netscape
4. Microsoft
5. Excite*
6. GeoCities
7. Infoseek*
8. Lycos*
9. MSN 10 AltaVista*
Several of the other sites are genuine portals, AOL, for example, and others are wanna-be portals, like Netscape, so if traffic is what you are looking for -- and what else would attract a broadcast network? -- portals make good sense.
The question is -- does this one?"
SNAP! was just launched last 22 September (see CNET Debuts Snap Online), and amid a great deal of hoopla and PR there was no mention of it being either a search engine or portal. it was touted as a consumer online service designed to be "CNET's drive to break into the online services market and compete with the likes of America Online." C/NET claimed that the site would be "organized by channels such as business, news, health, communities, and entertainment that have deep links information." "Community" and "channels" were big buzz words back then, but Snap! had trouble building a community and its channels went nowhere, so by early in 1998, CNET -- in its own words, changed Snap! and "launched completely new search engine-like services, hoping to put a dent in both the strong search market and in online giant America Online's market dominance." In other words, Snap! became search engine #1383, or so, online.
Snap! was broken and no one knew how to fix it.
By April word was out on the street that C/NET was shopping Snap! around. Or, in a strange C/NET article that both reported and denied the fact, it was "rumored to be exploring a strategic media partnership for [Snap Online], under which the partner would take a majority interest in Snap." Snap! cost -- and lost -- C/NET some $25 million and many analysts viewed it as an expensive distraction which was begun far too late to ever be competitive, much less catch up, with Yahoo! David Simons, Digital Video Investments, summed up the situation nicely in The New York Times, "Snap was not gaining the sponsorship or franchise it had anticipated."
Last week, when the deal was announced, C/NET stock surged. The deal guys chuckled and said that Halsey Minor, C/NET CEO, had sold the peacock a turkey. In a C/NET report, Mr Halsey said, "After the deal closes, CNET will no longer have an ongoing financial commitment to the venture. We have a business plan and believe the amount of money that NBC is investing is sufficient to get the venture to break even." In other words, I'm a gonna take the money and run.
Robert Wright, president of NBC, replied that while Snap! was not well known, it would be NBC's job to make it more well known.
That was NBC's strategy.
In press releases, interviews and closed-door meetings, NBC execs hammered the point home. It had bought what many considered the least successful of the portal sites, but it was going to make it a success by constantly promoting it on television. "Nobody will miss the fact, regardless of what day part you look at [love that TV-media talk], that there's something out there called Snap," said Tom Rodgers, president of NBC's cable and internet group.
It's a typical example of mass media miscommunication. Approximately 80% of the people NBC will be talking to -- in any day part -- aren't online. The only Snap they know about is followed by Crackle and Pop.
It's the wrong strategy, at the wrong time, in the wrong place. NBC has a history of making mis-steps online -- over two years ago when it launched NBC.com, it asked (at that time the astronomical sum) of $250,000 a quarter to advertise on a site that was little more than a promo -- and, unfortunately, is keeping up its stumbling pace.
Mass media and this media are different. It's a lesson NBC will pay $50 million to learn. |
