Search Insider Summit – Jordan Rohan
Note: These comments are Rohan’s, not my analysis. Reporting now, insights later.
Key developments for 2007:
- US internet user growth decelerates, international still robust (China is "staggering")
- E-commerce stocks outperformed most ad-related (except Google and acquired companies)
- Social networks took center stage
- Ad network consolidation – portals less relevant
- Shakeout in lead generation
- Search monetization – Google increased revenue per search more than Yahoo
- Financial services downturn hit the US economy – the internet’s faring better but not immune
On Google: at $700 its stock is appropriately valued for now. If it gets closer to $600, it’s time to buy.
Best of 2007 Awards:
- Best House in a Bad Neighborhood Award: Bankrate.com (RATE) – Q3 revenue growth of 28% as mortgage business suffers
- Fixer Upper Award: Yahoo (YHOO) – "there’s such an incredible core value within Yahoo" but its stock keeps suffering. Rohan likes Yahoo as a stock though. Loss of centrality = key issue; Google, Facebook increasingly relevant among younger demo.
- Mysteriously Omitted from Sen. Mitchell’s Report on Steroids Award: ValueClick (VCLK) – had "steroidal growth" lasting into early 2007 driven by lead-gen business. FTC settlement/injunction likely soon. "Ad networks shouldn’t be growing 40% if they’re just doing the same old thing."
- Best Internet Acquisition Award: Microsoft/aQuantive – Microsoft needed it, and the aQuantive team is very strong. Runner-up: Omniture/Offermatica and Omniture/Visual Sciences – when you talk to ecommerce companies, and they’re dying to crank up post-click conversions. Second runner up: Yahoo/Blue Lithium – an acknowledgment by Yahoo that they need to sell other people’s ads, and the valuation here made more sense than Right Media.
- Worst Internet Merger Award (really 06 merger that fell apart in 07): eBay/Skype. The best thing he could say when it was announced was that if it was a zero, eBay stock would lose a couple bucks in valuation.
- Worst Internet Merger Integration Awrd: TheKnot/WeddingChannel – "total disaster."
- Lost Opportunity of the Year Award: eBay misses opportunity to buy MercadoLibre before it goes public. MELI now up 200% from IPO price in August, now worth $3 billion. (Don’t buy MELI right now as Jim Cramer just pumped it up, so wait.)
- Unbundling a Strategic Mess Award: Barry Diller and IAC – taking one pile of assets and cutting it into a five.
- All Sizzle, No Steak Award: Google Audio (a bit of a disaster); Google Print (limited efficacy); Yahoo: Lloyd Braun and "original programming"; Marchex’s Local Domains effort (people aren’t going to 10010.net)
- Greatest Products Yet Unseen Award: Hulu, Ask 3D, Joost – great products, slick, they work; Ask has some of the best universal search he’s seen but no one’s using it
- Good but Unseen: Kevin Lee’s book The Eyes Have It, but it ranks below 500,000 on Amazon
- Hit the Road, Jack Award: Too many execs to name
Predictions for 2008
- AT&T Reset pushes Yahoo into play – MSFT is the favorite due to resources, fit; eBay will put up a fight
- Facebook and its Issues and Opportunities –
- Too much to-do over Facebook’s misstep with Beacon – and the under 25 set doesn’t mind so much
- Most interesting part of Facebook story is local angle (Crest WhiteStrips, Wal-Mart use Facebook to target students)
- Microsoft investment not a vlidation of $15B value for all Facebook
- Marketers might be asking the wrong questions and using the wrong data (more important to know when/where someone wants to transact than whether they’re an auto enthusias
- eBay continues to decelerate un-victoriously
- Company needs to make wholesale changes to auction platform, etc
- Ad networks thrive, fail based on technology – advertisers trust networks to plan media buy – weird dynamic. Recommendation to advertisers: mandate to networks to know where ads are running, see if you agree with plan
- Consolidation in domain aggregation, ecommerce, niche content: GMKT (Gmarket), NILE (Blue Nile), TTGT (TechTarget), CNET
- Lead generation to continue, data licensing to be scrutinized
- New developments in lead gen:
- Matchpoint.com – user-initiated, user remains anonymous, compares offers; this will change lead-gen altogether
- SilverCarrot – iFlipIt, if you hover over it, it unfolds (sort of like expandable banners), captures lead within ad unit, leads are veritfied against different databases, no data resale, creative controlled by lead gen company and agency
Today’s stock Recommendations from across RBC analysts, not just Rohan:
- LulULemon (LULU, target $47) – stylish yoga apparel
- Silicon Valley Bank (SIVB, target $57) – for value-oriented investors
- Apple (AAPL, target $215) – iPod halo effect driving Mac sales
- GMarket (GMKT, target $32) – leading Korean eCommerce player
- MDC Partners (MDCA, target $17) – 9th largest agency holding company, owns 77% of Crispin Porter