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All Grouped Out

March 15th, 2011 Barry Silverstein No comments

I don’t know about you, but I’m Grouped Out from Groupon.

Ever since Groupon came to my little city of Asheville, North Carolina (population 83,000), I’ve been bombarded not just with offers from Groupon, but by at least three other local Groupon look-alikes. It’s exhausting just trying to decide which deal to take advantage of. I already have one Groupon that I’ll probably never use.

Now I find out (not surprisingly) that Facebook will launch a Groupon-like test in five cities as part of its existing Deals program, offering discount offers from local businesses.

And if that’s not enough, Google, Yelp, Travelzoo, and OpenTable are all working on Groupon-like features, reports the New York Times. Amazon is in the mix, too, with a $175 million investment in LivingSocial, the largest Groupon competitor.

When I wrote about 2011 being the year of the eCoupon, even I couldn’t predict the onslaught of Groupon look-alikes that we would see by the first quarter of the year. Hundreds if not thousands of companies are launching look-alike services to capitalize on the Groupon phenomenon which, at latest count, is up to 60 million subscribers. With more than $1 billion in venture capital and $760 million in annual revenue, Groupon has become the fastest-growing Web company ever, according to the Times.

What’s happened, as online marketers might have expected, is the Groupon copycats are now working below the radar; in other words, as the Times puts it, “they are relying on a strategy called fast following – the idea that copying a blockbuster start-up yields fewer risks and potentially great rewards.” Even more to the point, the bottom feeders are figuring out how to go after niches that Groupon is too big to address.

Just about any niche audience can be targeted by a Groupon look-alike – religious or ethnic groups, small businesses, the gluten-free crowd, vegetarians, pet lovers, or micro-segmented geographical areas, like Southern California’s Conejo Valley. Conejo Deals, mentioned in the Times article, was built off co-owner Rob Jaffe’s Little League team’s subscriber list. The local service now has 10,000 subscribers and more than $700,000 in revenue since starting last April. It’s unlikely Conejo Deals will face competition from Groupon, but if it does, Jaffe says he already has the loyalty of local merchants because “he visits them in person the day after a deal runs, bearing a spreadsheet and, more important, a check.”

I’m all for free enterprise, but enough already. How many discount deals can a consumer handle before he or she glazes over? And what about the merchants – are they getting a fast infusion of business that won’t last? Will it come at such a low price that both their credibility and profitability are damaged? You have to wonder.

Still, the madness continues. There’s even a secondary Groupon market – Yipit consolidates daily deal offers. So does Yahoo! and Bing Deals.

Then there’s Lifesta, a company that buys and resells unused deals from Groupon and the look-alikes. Now that’s a service I can use.

 All Grouped Out
 All Grouped Out

 All Grouped Out  All Grouped Out  All Grouped Out  All Grouped Out  All Grouped Out  All Grouped Out
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Three Major Players Come Together To Further Define Measurement Standards

March 3rd, 2011 Barry Silverstein No comments

It was last July that I wrote about the IAB’s interest in creating a standardized way of measuring online media, part of a broader goal to standardize the way all media is measured.

Then, last October, Nielsen announced that it was introducing “Nielsen Online Ratings” in an effort to wrap its giant arms around measuring all media. At the time, Steve Hasker President of Media Products of The Nielsen Company said, “Marketers and media companies alike will now have a simpler way to measure the combined reach of TV, the web and even mobile advertising.”

That was the last we heard of standardized measurement – until the IAB’s Leadership Meeting, which just wrapped up March 1. One of the announcements to come out of that meeting was – guess what – an initiative to standardize online and cross-media measurement.

But this time, it seems, the effort may have some legs. The reason? Finally the three organizations that must ultimately cooperate in any measurement venture are coming together: the IAB (Interactive Advertising Bureau), the ANA (Association of National Advertisers) and the 4As (American Association of Advertising Agencies). So now you have advertisers and their agencies, who place the media, working alongside the association that represents the majority of media and technology companies selling online advertising. These three organizations must be serious about getting results, because they have retained leading consulting firm Bain & Company and advisory firm MediaLink to assist in the effort.

The initiative, called “Making Measurement Make Sense,” has three primary objectives:

  1. Define standard metrics and measurement systems that are transparent and consistent to simplify the planning, buying and evaluating of digital media
  2. Drive industry consensus around the solutions they come up with
  3. Establish a measurement governance model that includes a governing body and standards-setting process

Nancy Hill, President and CEO of the 4As, calls the initiative an attempt to “spearhead an ecosystem-wide solution to many of the critical issues in measurement.” She says ad agencies have had to “use, subsidize and staff around increasing numbers of metrics and data” for their media buys. Bob Liodice, President and CEO of the ANA, adds, “Online media has an abundance of metrics, but none that serve as currency across the ecosystem,” while Sherrill Mane, an SVP with the IAB, says the initiative “gives the industry the opportunity to understand how to follow and connect with the consumers targeted by [interactive] campaigns, and how to measure both within digital and across media platforms.”

At this point, the lack of a commonly accepted standard for digital metrics and cross-platform measurement is an industry embarrassment. This should have been resolved long ago – way before online became as dominant as it is today. But too many stakeholders and too many separate agendas made it impossible to find common ground.

The good news is the three industry organizations that count are now on board with the idea of standardization. The bad news is there are absolutely no details available about exactly how they plan to do this. Let’s hope it doesn’t take forever to make it happen.

 Three Major Players Come Together To Further Define Measurement Standards
 Three Major Players Come Together To Further Define Measurement Standards

 Three Major Players Come Together To Further Define Measurement Standards  Three Major Players Come Together To Further Define Measurement Standards  Three Major Players Come Together To Further Define Measurement Standards  Three Major Players Come Together To Further Define Measurement Standards  Three Major Players Come Together To Further Define Measurement Standards  Three Major Players Come Together To Further Define Measurement Standards

Is There A Future For Blogs?

February 28th, 2011 Barry Silverstein No comments

As social media continues to reshape the online world, one begins to question the relevancy of websites and, more specifically, blogs.

After reading Rick Calvert’s comments about blogging and BlogWorld, which is expanding from one show to two this year, it’s hard to imagine that blogs won’t remain a key part of the media picture for the foreseeable future. As Calvert says, “All major magazines and newspapers in the country have blogs now.” But he adds, “Many of them have Facebook pages and Twitter accounts as well.”

A recent article in the New York Times suggests, “Blogs were once the outlet of choice for people who wanted to express themselves online. But with the rise of sites like Facebook and Twitter, they are losing their allure for many people – particularly the younger generation.”

Still, bloggers and blog networks are high on the continuing need for blogs. In fact, entire networks have been built around blogs, primarily to consolidate them and make them attractive for major advertisers.

Deanna Brown is the new CEO of Federated Media Publishing, an ad network for blogs that reaches some 40 million unique users. Brown tells Advertising Age that Federated Media focuses on the “independent web” which, she says, “has a lot of authors and services and applications that are not owned by major media companies.” She says she is excited about “the individual publisher” and sees Federated Media’s role as helping “branded advertisers become conversationalists in the right environments at scale.” In essence, Federated Media is matching up advertisers who want to reach specific audiences with blogs that serve those audiences.

Elisa Camahort Page, Co-founder of BlogHer, the largest blog ad network for women/mommy bloggers, sees a real purpose for blogs: “If you’re looking for substantive conversation, you turn to blogs,” she tells the New York Times. “You aren’t going to find it on Facebook, and you aren’t going to find it in 140 characters on Twitter.”

Lee Rainie, Director of the Pew Research Center’s Internet and American Life Project, concurred, but suggested that blogs are changing with the times. She tells the Times that blogs are a forum for story telling, but “it’s just morphing onto other platforms.”

Certainly, bloggers have become the new media journalists of our time, adding independent voices to traditional media and, in some cases, replacing that media. Citizen journalists and amateur reporters/commentators have cast a brash, unvarnished light on the news, which is probably a good thing. Reporters who have long worked for traditional newspapers and magazines have gotten into blogging, and some of them have jumped from offline to online publications, perhaps as a result of seeing for themselves the handwriting on the wall. If anything, it seems that blogs are evolving into the preferred means of reporting and commentary, and it seems all the more likely that this is the manner in which consumers want to receive their “serious” information.

Blogs that have established a wide audience already are self-sustaining because their audiences know such blogs offer them content they can’t get elsewhere, or offer access to information before any other news source. TechCrunch and Gizmodo are good examples of this in the technology space. Blogs that serve very specialized niches will continue to flourish, because they’ll fill in the places that traditional publishers can’t afford to cover. Look at these blogs as the specialty magazines of the future.

But when it comes to casual, quick conversations, social media like Facebook and Twitter will be more appropriate. At least that’s what the consumer is telling us at the moment. In reality, the Facebooks and Twitters of the world can work collaboratively with blogs and support them by maintaining a two-way channel from social media to blogging and vice versa.

One never really knows what is just around the corner. But if they can continue to shift to meet the changing needs of the consumer, blogs will definitely have a future.

 Is There A Future For Blogs?
 Is There A Future For Blogs?

 Is There A Future For Blogs?  Is There A Future For Blogs?  Is There A Future For Blogs?  Is There A Future For Blogs?  Is There A Future For Blogs?  Is There A Future For Blogs?
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Is There A Future For Blogs?

February 28th, 2011 Barry Silverstein No comments

As social media continues to reshape the online world, one begins to question the relevancy of websites and, more specifically, blogs.

After reading Rick Calvert’s comments about blogging and BlogWorld, which is expanding from one show to two this year, it’s hard to imagine that blogs won’t remain a key part of the media picture for the foreseeable future. As Calvert says, “All major magazines and newspapers in the country have blogs now.” But he adds, “Many of them have Facebook pages and Twitter accounts as well.”

A recent article in the New York Times suggests, “Blogs were once the outlet of choice for people who wanted to express themselves online. But with the rise of sites like Facebook and Twitter, they are losing their allure for many people – particularly the younger generation.”

Still, bloggers and blog networks are high on the continuing need for blogs. In fact, entire networks have been built around blogs, primarily to consolidate them and make them attractive for major advertisers.

Deanna Brown is the new CEO of Federated Media Publishing, an ad network for blogs that reaches some 40 million unique users. Brown tells Advertising Age that Federated Media focuses on the “independent web” which, she says, “has a lot of authors and services and applications that are not owned by major media companies.” She says she is excited about “the individual publisher” and sees Federated Media’s role as helping “branded advertisers become conversationalists in the right environments at scale.” In essence, Federated Media is matching up advertisers who want to reach specific audiences with blogs that serve those audiences.

Elisa Camahort Page, Co-founder of BlogHer, the largest blog ad network for women/mommy bloggers, sees a real purpose for blogs: “If you’re looking for substantive conversation, you turn to blogs,” she tells the New York Times. “You aren’t going to find it on Facebook, and you aren’t going to find it in 140 characters on Twitter.”

Lee Rainie, Director of the Pew Research Center’s Internet and American Life Project, concurred, but suggested that blogs are changing with the times. She tells the Times that blogs are a forum for story telling, but “it’s just morphing onto other platforms.”

Certainly, bloggers have become the new media journalists of our time, adding independent voices to traditional media and, in some cases, replacing that media. Citizen journalists and amateur reporters/commentators have cast a brash, unvarnished light on the news, which is probably a good thing. Reporters who have long worked for traditional newspapers and magazines have gotten into blogging, and some of them have jumped from offline to online publications, perhaps as a result of seeing for themselves the handwriting on the wall. If anything, it seems that blogs are evolving into the preferred means of reporting and commentary, and it seems all the more likely that this is the manner in which consumers want to receive their “serious” information.

Blogs that have established a wide audience already are self-sustaining because their audiences know such blogs offer them content they can’t get elsewhere, or offer access to information before any other news source. TechCrunch and Gizmodo are good examples of this in the technology space. Blogs that serve very specialized niches will continue to flourish, because they’ll fill in the places that traditional publishers can’t afford to cover. Look at these blogs as the specialty magazines of the future.

But when it comes to casual, quick conversations, social media like Facebook and Twitter will be more appropriate. At least that’s what the consumer is telling us at the moment. In reality, the Facebooks and Twitters of the world can work collaboratively with blogs and support them by maintaining a two-way channel from social media to blogging and vice versa.

One never really knows what is just around the corner. But if they can continue to shift to meet the changing needs of the consumer, blogs will definitely have a future.

 Is There A Future For Blogs?
 Is There A Future For Blogs?

 Is There A Future For Blogs?  Is There A Future For Blogs?  Is There A Future For Blogs?  Is There A Future For Blogs?  Is There A Future For Blogs?  Is There A Future For Blogs?
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Are You Completing the Sales Cycle?

February 24th, 2011 Barry Silverstein No comments

With all the attention surrounding social media these days, online marketers may be assuming that Twitter, Facebook and the like are doing a complete job of relationship marketing for them. The reality is, however, that it’s easy to be lulled into complacency by social media and think that’s all you need to worry about.

Yes, it’s true, social media provides a convenient and immediate way to interact with prospects and customers, and it can become the core of a communications strategy. But not everyone engages with a company via social media. Using social media to the exclusion of anything else may put a marketer in danger of overlooking the basics of relationship marketing.

Even if you are a big believer in social media, you need to have an underlying lead cultivation strategy in place. You must have a process to take a sales lead that you receive through any channel from one logical step to another. You want to qualify that lead along the way so it eventually gets classified as a cool, warm or hot prospect.

A lead cultivation strategy relies on ongoing periodic contact. Ideally, contact should be “intelligent” and recognize the specific needs of the individual at a given point in time. This could be accomplished via social media, but it could also be through a combination of email, text messages, direct mail, or even phone calls, if appropriate. Assuming every prospect responds to a single universally-applied form of communication could be too limiting.

In e-commerce, it is even more important to cultivate a sale. Responding to an online inquiry is your first opportunity to demonstrate that you care about a prospect and want their business. You should handle an online inquiry in such way as to make sure a prospective customer wants to make a purchase with you and not a competitor.

When it comes to the transaction itself, the bane of an online marketer’s existence is cart abandonment. This is the point at which an online seller is most vulnerable, and industry statistics are not encouraging. Research conducted by Massachusetts Institute of Technology found that 90 percent of e-commerce leads turn cold within just one hour. SeeWhy, a cart recovery specialist, says cart abandonment accounts for a loss of over $1 million daily for a company that sells $200 million of goods online each year.

Too many online sellers are missing out on an opportunity to convert a prospect who is on the verge of buying. A recent study conducted by digital marketing firm Silverpop found that 83 percent of online sellers wait five hours or more before sending the first cart recovery email. Over two-thirds of survey respondents send just one cart recovery email. Yet almost half of the survey respondents said their cart recovery emails resulted in a conversion rate of 11 percent or higher – nearly four times the conversion rate of their broadcast emails.

There are other times during the online sales cycle when contact is appropriate – acknowledging the purchase, asking for a positive product review, requesting a referral to a customer’s friends, suggesting a gift purchase, encouraging completion of a satisfaction survey, and so on. These types of contacts can reinforce a customer’s relationship with you and lead to increased revenue.

The bottom line: Social media is a wonderful way to keep in touch. But it should enhance, not replace, a comprehensive cultivation strategy. To be successful, online marketers need to complete the cycle.

 Are You Completing the Sales Cycle?
 Are You Completing the Sales Cycle?

 Are You Completing the Sales Cycle?  Are You Completing the Sales Cycle?  Are You Completing the Sales Cycle?  Are You Completing the Sales Cycle?  Are You Completing the Sales Cycle?  Are You Completing the Sales Cycle?

What if Twitter is Acquired?

February 15th, 2011 Barry Silverstein No comments

Reports surfaced last week that Twitter was a possible acquisition target of either Facebook or Google.

While this may be an idle rumor, it represents a merger and acquisition market that’s heating up. Of course, there was the failed bid by Google to purchase Groupon, but the recent acquisition of The Huffington Post by AOL could be a harbinger of more acquisitions to come in the online world.

This latest rumor raises a few interesting questions:

  1. Are we witnessing the emergence of a new Internet bubble?
  2. Let’s face it, these days anything labeled “a bubble” is not a positive thing (think “the housing bubble”). But if you remember the breathless days of old when we witnessed an Internet bubble with valuations reaching the stratosphere, it would actually be an economic shot in the arm if it were to happen again. In the past, online businesses couldn’t be snapped up fast enough. The problem was they made hollow promises. This time, hopefully, it would be different and businesses would be solid enough to sustain themselves. It does appear that social media in particular has piqued the interest of investors, and it is no accident that Facebook and Groupon have both been considering IPOs. Google, meanwhile, has been kicking the tires of just about anything it can get its hands on. All of these elements could be positive signs of a new Internet bubble that will hopefully last a while before bursting.

  3. Is this more evidence of an ultimate showdown between Facebook and Google?
  4. Well sure. These giants keep dancing around each other as if they are the top two sumo wrestlers on the planet. While Facebook and Google have managed to coexist peacefully, there continues to be signs of increasing competition and one-upmanship (Facebook Places and Google Places being just one obvious overlap). Movements by both parties demonstrate the inevitability of a mega-clash that can’t be far away. A fight over a hot property like Twitter will simply exacerbate the situation.

  5. Is Twitter ready to sell?
  6. When money is flowing freely, anyone will sell for the right price. The remarkable thing about a potential Twitter sale, says the Wall Street Journal, is the company’s valuation: somewhere between $8 and $10 billion. Let me repeat that: between $8 and $10 BILLION. In December, Twitter’s valuation was below $4 billion. Even that was pretty spectacular, given the company had revenue of $45 million last year while it lost money, and expects revenue this year might reach $110 million. If Facebook or Google or someone else threw billions of dollars at Twitter, it would be tough not to sell.

  7. What would a Twitter acquisition mean?
  8. It would be nice to think an acquirer would leave Twitter alone, but acquisitions usually don’t work that way. On the positive side, an acquisition by Facebook would likely present a good fit, and integration of Twitter into Facebook would offer an unequalled social media offering. An acquisition by Google, more likely to occur because of Google’s rich cash reserve, would be challenging in terms of integration. What it would do, however, is give Google the jump start it needs to get serious about social media. Still, potential problems exist, as Matthew Ingram of GigaOm points out. Google’s acquisition history, writes Ingram, “isn’t likely to fill anyone with confidence about how Twitter might fare under the Google umbrella. …For every acquisition that has paid off, like YouTube or Keyhole (which became Google Earth), the company has made a whole series of purchases that have gone absolutely nowhere.”

Despite the old adage, “Where there’s smoke there’s fire,” Twitter may not be a serious acquisition target because the price is just too high. And if it is a target, Twitter may rebuff a potential acquirer, much as Groupon rebuffed Google, casting an eye toward a future IPO instead.

Whatever happens, Twitter is riding higher than ever, as I suggested in my recent piece about Twitter’s considerable influence. Their advertising is gaining traction too; the company is selling out its “Promoted Trends” ad inventory every day, according to the Wall Street Journal. For now, Twitter seems to be doing just fine on its own, thank you. And I have to agree with Matthew Ingram when he says:

“Being bought by either Google or Facebook might bring a big payoff, and substantial financial and operational resources, but it would almost certainly dilute that focus [being a real-time communications network] – simply because it would be a small part of a much larger company – and that would be a shame just when the service is starting to show its real potential.”

 What if Twitter is Acquired?
 What if Twitter is Acquired?

 What if Twitter is Acquired?  What if Twitter is Acquired?  What if Twitter is Acquired?  What if Twitter is Acquired?  What if Twitter is Acquired?  What if Twitter is Acquired?

Super Bowl Ads Social Media Effect, Before and After

February 9th, 2011 Barry Silverstein No comments

Traditionally, the Super Bowl has been a launching pad for new products, new companies, and new ad campaigns. But because of social media, the dust has still not settled around last Sunday’s Super Bowl ads.

Thanks to social media, advertisers got an early start – many advertisers, who usually keep their expensive commercials under wraps until game time, were running teasers for the ads, and sometimes the ads themselves, via YouTube and on Facebook, even before the game started.

As it has done for the past four years, Google’s YouTube carried the Super Bowl ads on its Ad Blitz channel,  but it upped the ante this year by adding a mobile Ad Blitz site, encouraging viewers to vote on their favorite ads immediately after the game. (The contest closes on February 14.) Another new twist is remarketing: “…if you watch an ad on YouTube, it might follow you and appear again on another Web site you visit in Google’s display ad network,” reports the New York Times. Jim Lecinski, Managing Director for U.S. Sales and Service at Google, tells the Times that Ad Blitz is “a great way for marketers to extend the shelf life” of their pricey Super Bowl ads.

Facebook joined the Super Bowl party this year with “Facebook Replay,” which showed the Super Bowl ads on its Sports on Facebook page. Twitter played a prominent role as well – Visa and the NFL collaborated to create Super Bowl-related tweets from players and sportcasters. Audi and Mercedes both used Twitter as an integrated part of marketing their Super Bowl ads.

Social Media After-Effect

Most interesting, though, has been social media’s after-effect on the Super Bowl ad parade. The chatter has been at a feverish pitch all week as ads have been rated, reviewed, praised, and critiqued. Some of the YouTube view statistics are astounding. Volkswagen’s “The Force” commercial, depicting a kid dressed as Darth Vader, has gotten close to 24 million views in a week. (It’s one of the ads that ran before the Super Bowl.) Bud Light’s “Dog Sitter” commercial has been viewed 805,000 times in 4 days.

That’s the good news. The bad news is some of the ads generated unintended negative reactions so harsh that the advertisers apologized and, in some cases, revised the ads for online distribution.

For example, HomeAway, a company that represents vacation home private rentals, was taken to task by ad critics and consumers alike for smashing an “animatronic” baby against a pane of glass in its commercial. HomeAway hastily created an alternate version of the commercial which it posted on YouTube.

Tit for Tat

Super Bowl ads are sometimes destined for controversy and that’s not always a bad thing. GoDaddy has been famous (or infamous, some would say) for its racy ads on past Super Bowls, and this year was no different – GoDaddy paraded around Danica Patrick and Jillian Michaels in an ad that suggested but didn’t show nudity. It led Network Solutions to counter with its own parody starring Cloris Leachman which was largely well received. Ironically GoDaddy pulled a fast one with a Super Bowl ad with Joan Rivers which critics saw as a one note gag that got Joan Rivers more attention than GoDaddy.

Whether you liked GoDaddy’s tactic of pasting Joan Rivers’ face on a model’s body or not with high stakes placements like the Super Bowl what matters is the results. According to GoDaddy, 15 minutes after its first Super Bowl commercial aired, its domain name registrations rose by more than 466 per cent compared with last year. If that is the case then the gambit paid off in the short term.

Groupon’s Big Mistake

Perhaps most egregiously controversial, however, were the three ads by Groupon which attempted to be some kind of weird spoof on celebrities supporting worthy causes. Fanning the flames of controversy was the ad focused on Tibet. It begins with what appears to be an appeal to help the people of Tibet. Actor Timothy Hutton, says, “The people of Tibet are in trouble. Their very culture is in jeopardy… but they still whip up an amazing fish curry…” Hutton then proceeds to describe a Groupon offer about a Himalayan restaurant. As a former ad agency executive, all I can say is, “What the hell were they thinking?”

According to Brand Bowl 2011, which rated and ranked the Super Bowl ads based on public reaction from about 303,000 tweets, the Tibet ad was dead last in “Sentiment.”

Of even more significance were the widely reported reactions to the ad by media analysts and consumers; in fact, the Twittersphere was raging with vitriol. The beleaguered Groupon CEO, Andrew Mason, was pummeled by the press to the point where he wrote on the company’s blog on February 7, “I’ve been spending the day listening to the negative feedback about our Tibet Super Bowl commercial…” He closed the blog by saying, “The last thing we wanted was to offend our customers – it’s bad business and it’s not where our hearts are.” The negative impression of the campaign is said to be so severe that some reports have surfaced suggesting the controversy will actually cause a delay in Groupon’s IPO.

Groupon’s advertising misstep may be a good lesson to successful online companies whose egos get the best of them. It’s ironic that a company built on a social media platform has seen the power of social media almost bring it to its knees.

 Super Bowl Ads Social Media Effect, Before and After
 Super Bowl Ads Social Media Effect, Before and After

 Super Bowl Ads Social Media Effect, Before and After  Super Bowl Ads Social Media Effect, Before and After  Super Bowl Ads Social Media Effect, Before and After  Super Bowl Ads Social Media Effect, Before and After  Super Bowl Ads Social Media Effect, Before and After  Super Bowl Ads Social Media Effect, Before and After

AOL Buys The Huffington Post — and Why It Matters

February 7th, 2011 Barry Silverstein No comments

Hard to believe, but The Huffington Post is six years old. When it was launched by Arianna Huffington in 2005 with $1 million, it was one of the vanguards of the Internet newspaper revolution that would eventually lead to the demise of many a traditional newspaper.

Now AOL has made a bold move to acquire The Huffington Post, plunking down $315 million for the online property — $300 million in cash and the remainder in stock, according to the New York Times. This is the biggest of AOL’s buys since it parted ways with Time Warner in 2009.

There are several implications to the deal that are worthy of note. For one thing, it represents a big thaw in acquisition money and could be one of a string of mergers and acquisitions for online companies, which could be good news for the economy. Tim Armstrong, AOL’s CEO, said Sunday, “This is a statement that the company is making investments, and in this case a bold investment, that fits right into our strategy.”

For AOL, in fact, this isn’t just an acquisition – it’s the beginning of a strategy that Armstrong thinks will help reverse the company’s fortunes. According to the Times, he sees buying The Huffington Post as a way to expand AOL’s “news gathering and original content creation.”

Part of the deal is the elevation of Arianna Huffington herself. She will become President and Editor-in-Chief of the “Huffington Post Media Group,” an AOL unit that “will give her oversight not only of AOL’s national, local and financial news operations, but also of the company’s other media enterprises like MapQuest and Moviefone,” writes the Times. The risk for AOL is that Huffington has been a very public figure of the political left – even though she said her political views “would have no bearing on how she ran the new business.”

Armstrong and Huffington think there is synergy between The Huffington Post’s strength as an online community and AOL’s Patch, a local news initiative, and Seed, a citizen journalist operation. But Politics Daily and Daily Finance, two AOL news sites, may be folded into The Huffington Post.

What AOL really may be getting out of the deal is access to eyeballs. With 25 million visitors every month, and articles that draw thousands of comments, The Huffington Post could grow into an enterprise that has the potential to reach more than 100 million visitors in the U.S. on a monthly basis.

To be blunt, The Huffington Post is an online winner, adding readers and employees in the last few years. In contrast, AOL has been trying to find its own voice since 2009. The company jettisoned a third of its staff last year, ad revenue dropped 29 percent from the year before, and fourth quarter revenue was down 26 percent.

For AOL, then, The Huffington Post could be the shot of adrenaline needed to turn around its business. Tim Armstrong knows it. “The reason AOL is acquiring The Huffington Post is because we are absolutely passionate, big believers in the future of the Internet, big believers in the future of content.”



 AOL Buys The Huffington Post — and Why It Matters
 AOL Buys The Huffington Post — and Why It Matters

 AOL Buys The Huffington Post — and Why It Matters  AOL Buys The Huffington Post — and Why It Matters  AOL Buys The Huffington Post — and Why It Matters  AOL Buys The Huffington Post — and Why It Matters  AOL Buys The Huffington Post — and Why It Matters  AOL Buys The Huffington Post — and Why It Matters
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