IAC earnings, Todays Online Economy
April 30, 2008 – 12:23 pmIAC reported its first quarter earnings today, with revenue up 22% and income up 15%, you could say that they had a very good quarter considering the gloomy shadow over the economy in that period. Most of this is due to their Media & Advertising division which saw a 192% increase in income. The Media & Advertising division consists of ask.com, CitySearch and Evite along with their other online properties (exluding Match.com). This substantial growth can be contributed to a few things, but most notably I would point out this shows that the online advertising space is positioned to grow very nicely, particularly in the current economic climate.
The fiasco resulting from comScore’s under reporting of Google’s clicks was a good representation of how the internet is still new to many big players. ComScore, regarded as the primo player in online measurement published a report that tanked Google stock, sent online agencies and publishers into a panic and threw a shroud of false gloom over the entire industry.
While our company has seen a cutback in spending from some of our advertisers, and hesitancy from new clients to invest their marketing in a new space, for the most part we have seen healthy earnings growth, an expanding customer base and a large increase in traffic. A good friend of mine running a leading e-tailer of health products and services saw revenues up 38% yr/yr in Q1 of ‘08. Our company doubled revenues over first quarter 2007. Online is up and its good.
Today the US economy reported a modest .6% growth. “NOT TECHNICALLY A RECESSION”, “THE US ECONOMY SLUMPS THROUGH 1ST QUARTER”, “INVESTORS SEE RECESSION, WALL STREET DEPRESSION” - those were the various headlines across the internet. I did a quick search and found that every major news outlet had some sort of dreary publishing of this not so bad news. The Dow is up .9%, the NASDAQ is up .4% but everyone is running around declaring the bad news.
People are smarter than this (some people anyway) but its hard to ignore the warnings. I see people making smart decisions with their marketing money, which is basically me saying “I see people spending their marketing money online.” The yellow pages are dead, and even the YPs are building their online presence. Google’s huge numbers are back in peoples mind and small businesses want to be a part of that success. Money is being spent, and thus money is being made - online. Thats where the people are going and thats where the budgets are beginning to gravitate.
I saw a segment from Lewis Black last night where he was mocking the younger generations for spending hours online each day. I like Lewis Black, but he went on a rant that just was not funny to me. He sounded like someone from the Prohibition era talking about how young people spend all their time in bars, drinking. Well Lewis, its not just young people, and we aren’t just making fake friends on MySpace. We (meaning people who use the internet) are finding information, researching purchasing decisions, exploring entertainment (music, video, even TV) and building our network of contacts. I find it ironic that you can watch Lewis Black on YouTube, talking about how people waste their time on YouTube. Hey Lewis, how would you feel if I told you that 30% of the people who watch you speak, are watching you online??
Lewis Black has nothing to do with what I’m talking about, but everything. The online economy is heating up, profits are up, more people are online and more transactions are being made and researched online then ever before. The majority of these companies are seeing great profits and surging business opportunities. The old market is not what it used to be - The World is Flat and we can’t just keep measuring things they way we used to, otherwise everything will look all messed up.
Kind of like when the economy shows a better than expected growth rate, and thats a bad thing… what if we excluded all these online and new media companies from that number - how bad would it be then?
