This was presented at TED conferences.
I was going through the latest AdMedia Partners report on the prospects for Media Mergers and Acquisitions (you can find it here ).
Out of the fact that the underlying message is pretty much the same as what you can read in any newspaper or the likes of PaidContent (bleaker economy outlook, low multiples, at least 4 quarters of recession coming up etc.), the interesting piece is the consensus to say that online targets are overvalued(55% of respondents).
And the growth opportunities for online are also seen as overrated, specifically for social media networks (71%), user generated content (51%) or ad networks (41%).
The good news for any buyer who has the cash and the guts to acquire now is that multiples are down from last year: Online media is valued at 9 to 10x EBITDA in 2009 (to be proven) vs. 12 to 15x in 2008.
But we all know that this is not going to help the tradional media players which are all crawling back into fetal positions. I was listening to a panel at Gridley Conference in NYC featuring media companies corporate dev executive (Jessica Schell from NBCU, Bill Mills from Forbes, Michael Zeisser from Liberty Media and John Zieser from Meredith) and the general feeling was that they were all going to pause for a while on the acquisition front. Maybe go after alliances but, at least Forbes and Meredith, rule out straight acquisitions for Q1 and Q2 2009. Another discussion I got with an executive at Conde Nast also confirmed that the usually lavish company decided to limit or even discard its internet investments for 2009.
So strategic buyers are probably not going to be some much more active that the bleeding financial guys for now…
Good recap from Ad Age on the tensions underlying the online advertising. Basically, when a traditional publisher finally get to identify a high quality audience, that he managed to brought on his site through content investments etc., he’s only getting the smallest piece of the pie (the amount monetized on the site itself)…
The “long tail” of the monetization is then usually captured by the ad networks for a cheaper rate, helped on that by the many behavioral providers (Revenue Science, Tacoda etc.). It’s ironic because what makes these users valuable to advertisers is precisely the fact that they’ve been through and interact with the original publisher site.
The only way to escape the vicious circle is for publishers to concentrate vertically. That’s what we’ve done at Hachette with the acquisition of Jumpstart Automotive that offers behavioral targeting solutions, enabling us to capture most of the monetization long tail.
Here’s the full article: http://adage.com/digital/article?article_id=133523