Several factors have contributed to this year’s gusher, including a U.S. Supreme Court ruling in January that now allows unlimited campaign spending by corporations and unions. In August, a low-profile Federal Election Commission decision opened the door for donors to pool their money and give anonymously, which produced a bumper crop of ads from nonprofit political groups and committees trying to influence voters.
“The biggest factor driving the spending is the competitive landscape,” said Evan Tracey, president of Kantar Media’s Campaign Media Analysis Group. “Incumbents across the country are worried about losing, and they are not holding on to their money. And many of these statewide races are in states with expensive media markets like New York, Texas and California.”
Political spending this year should reach record levels, Tracey predicted.
Wells Fargo's Ryvicker estimates that TV stations will collect $2 billion in political money this year. Cable television systems will generate at least $150 million; radio stations will garner $250 million; direct mail efforts should consume $650 million; and billboards will receive $55 million. Ryvicker estimated that newspapers would take in $95 million in political money.
Coming in last, according to Ryvicker and Tracey, will be Internet sites. Their collective haul should be about $50 million -- less than 2% of the total.
Companies that own TV stations in the LA market include CBS Corp., NBC Universal, Univision Communications, News Corp., Walt Disney Co. and Tribune Co., which owns KTLA-TV Channel 5 and the Los Angeles Times.
For the full story in the Los Angeles Times, click here.
-- Meg James
Chicago-based Groupon is certainly one heck of a startup. Like Zynga it sort of came out of nowhere in 2009. Even last December I was sort of only vaguely aware of how fast it was growing.
But it was clear by early 2010 to the whole world that Groupon was on a tear. First a round valuing it at $250 million. Then just a couple of months later it raised new money at a $1.35 billion valuation.
And then in the last few weeks Yahoo offered something even higher for the company – between $1.7 billion on the low side and probably $4 billion on the high side. And Groupon passed.
Revenues are in the $50 million per month range, and the company has roughly 50% gross margins. By some measures, Groupon is the fastest growing company, ever.
Groupon is often said to be the next eBay at Silicon Valley insider dinners and events. But Groupon isn’t going to have the same success eBay has had.
At first blush it seems like a valid comparison. Groupon’s revenues and profits blow the early Ebay results out of the water. When eBay was three years old and going public in 1998 it had revenues of just $4.7 million. Groupon does that much in revenue every three days or so right now.
Today eBay has revenues of a little over $2 billion every three months and is worth around $30 billion. It’s not at all unreasonable to think that Groupon could eventually grow its revenues way beyond $2 billion/quarter – the local products and services category would easily bear that kind of fruit.
But there’s a couple of problems with Groupon. The first is how it scales – it needs a lot of sales people for each market it handles and already probably has more than 2,000 of them on payroll. But the real problem is the complete lack of a network effect to protect its business.
Ebay is expensive. And it has a horrible user interface. Buying stuff is a pain compared with sites like Amazon that have put real effort into making buying painless. It’s also expensive. Everyone would love a better eBay, but after ten years of people trying to kill it, it just keeps going.
Why? Because everyone’s already on eBay. And every new buyer or seller makes eBay more valuable than it was before. Anyone competing with them has to find a way to counter that, and it’s nearly impossible. Even free listings from big companies like Amazon and Yahoo flailed dramatically.
In other words, eBay would have to really work at it to destroy its core business. And since it dominates the market it can continue to charge exorbitant fees and not worry about the user experience.
Groupon has none of that. When Groupon gets a new user that’s great. But that user will quickly leave to Living Social or One Kings Lane or any of thousands of other competing sites for better deals. And when Groupon gets a new “seller,” there’s no reason why that seller won’t also go try out the competitors, too.
There’s just no network effect in Groupon’s business model. Which means competitors can flourish and margins will get crushed.
At TechCrunch Disrupt, Benchmark Capital’s Matt Cohler said he wasn’t sure if Groupon would succeed over the long term. I asked him if he wished he was an investor in Groupon:
That question keeps me up at night. the question for me is…if you look at it from a purely academic point of view, there are neither barriers to entry nor are there switching costs in that product. Typically when a product has those characteristics margins tend to collapse over time. In theory the only thing stopping that from happening is Groupon’s brand…It may turn out that daily deals are ad units, and lots of different products can apply that ad unit.
What can Groupon do to avoid having their margins crushed by competitors? Establish generous revenue sharing relationships with distribution partners, fast. And that appears to be exactly what they’re doing. In the next several weeks the company will likely announce partnerships with Yahoo and CitySearch, we’ve learned.
Oh, and one more partner, too. And that partner will be…eBay.
Update: Great email comment from Alex Rampell:
I actually think Groupon is a “winner take most” market and not winner take all. Amazon has a plurality yet a distinct minority of ecommerce share ($25B in 2009 revenue out of WW ecommerce rev of $600B) yet has a market cap of $74B, 2.5X that of eBay. No barriers to entry.
There are no barriers to entry for online commerce companies — yet Amazon keeps decimating the competition. There are, however, economies of scale. I think Groupon can be the Amazon of Online2Offline commerce, and there’s no reason they can’t get to $25B in annualized revenue like Amazon, but at a much higher margin.
Whether they’ll command the same kind of earnings multiple as Amazon is another story.
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger
Several factors have contributed to this year’s gusher, including a U.S. Supreme Court ruling in January that now allows unlimited campaign spending by corporations and unions. In August, a low-profile Federal Election Commission decision opened the door for donors to pool their money and give anonymously, which produced a bumper crop of ads from nonprofit political groups and committees trying to influence voters.
“The biggest factor driving the spending is the competitive landscape,” said Evan Tracey, president of Kantar Media’s Campaign Media Analysis Group. “Incumbents across the country are worried about losing, and they are not holding on to their money. And many of these statewide races are in states with expensive media markets like New York, Texas and California.”
Political spending this year should reach record levels, Tracey predicted.
Wells Fargo's Ryvicker estimates that TV stations will collect $2 billion in political money this year. Cable television systems will generate at least $150 million; radio stations will garner $250 million; direct mail efforts should consume $650 million; and billboards will receive $55 million. Ryvicker estimated that newspapers would take in $95 million in political money.
Coming in last, according to Ryvicker and Tracey, will be Internet sites. Their collective haul should be about $50 million -- less than 2% of the total.
Companies that own TV stations in the LA market include CBS Corp., NBC Universal, Univision Communications, News Corp., Walt Disney Co. and Tribune Co., which owns KTLA-TV Channel 5 and the Los Angeles Times.
For the full story in the Los Angeles Times, click here.
-- Meg James
Chicago-based Groupon is certainly one heck of a startup. Like Zynga it sort of came out of nowhere in 2009. Even last December I was sort of only vaguely aware of how fast it was growing.
But it was clear by early 2010 to the whole world that Groupon was on a tear. First a round valuing it at $250 million. Then just a couple of months later it raised new money at a $1.35 billion valuation.
And then in the last few weeks Yahoo offered something even higher for the company – between $1.7 billion on the low side and probably $4 billion on the high side. And Groupon passed.
Revenues are in the $50 million per month range, and the company has roughly 50% gross margins. By some measures, Groupon is the fastest growing company, ever.
Groupon is often said to be the next eBay at Silicon Valley insider dinners and events. But Groupon isn’t going to have the same success eBay has had.
At first blush it seems like a valid comparison. Groupon’s revenues and profits blow the early Ebay results out of the water. When eBay was three years old and going public in 1998 it had revenues of just $4.7 million. Groupon does that much in revenue every three days or so right now.
Today eBay has revenues of a little over $2 billion every three months and is worth around $30 billion. It’s not at all unreasonable to think that Groupon could eventually grow its revenues way beyond $2 billion/quarter – the local products and services category would easily bear that kind of fruit.
But there’s a couple of problems with Groupon. The first is how it scales – it needs a lot of sales people for each market it handles and already probably has more than 2,000 of them on payroll. But the real problem is the complete lack of a network effect to protect its business.
Ebay is expensive. And it has a horrible user interface. Buying stuff is a pain compared with sites like Amazon that have put real effort into making buying painless. It’s also expensive. Everyone would love a better eBay, but after ten years of people trying to kill it, it just keeps going.
Why? Because everyone’s already on eBay. And every new buyer or seller makes eBay more valuable than it was before. Anyone competing with them has to find a way to counter that, and it’s nearly impossible. Even free listings from big companies like Amazon and Yahoo flailed dramatically.
In other words, eBay would have to really work at it to destroy its core business. And since it dominates the market it can continue to charge exorbitant fees and not worry about the user experience.
Groupon has none of that. When Groupon gets a new user that’s great. But that user will quickly leave to Living Social or One Kings Lane or any of thousands of other competing sites for better deals. And when Groupon gets a new “seller,” there’s no reason why that seller won’t also go try out the competitors, too.
There’s just no network effect in Groupon’s business model. Which means competitors can flourish and margins will get crushed.
At TechCrunch Disrupt, Benchmark Capital’s Matt Cohler said he wasn’t sure if Groupon would succeed over the long term. I asked him if he wished he was an investor in Groupon:
That question keeps me up at night. the question for me is…if you look at it from a purely academic point of view, there are neither barriers to entry nor are there switching costs in that product. Typically when a product has those characteristics margins tend to collapse over time. In theory the only thing stopping that from happening is Groupon’s brand…It may turn out that daily deals are ad units, and lots of different products can apply that ad unit.
What can Groupon do to avoid having their margins crushed by competitors? Establish generous revenue sharing relationships with distribution partners, fast. And that appears to be exactly what they’re doing. In the next several weeks the company will likely announce partnerships with Yahoo and CitySearch, we’ve learned.
Oh, and one more partner, too. And that partner will be…eBay.
Update: Great email comment from Alex Rampell:
I actually think Groupon is a “winner take most” market and not winner take all. Amazon has a plurality yet a distinct minority of ecommerce share ($25B in 2009 revenue out of WW ecommerce rev of $600B) yet has a market cap of $74B, 2.5X that of eBay. No barriers to entry.
There are no barriers to entry for online commerce companies — yet Amazon keeps decimating the competition. There are, however, economies of scale. I think Groupon can be the Amazon of Online2Offline commerce, and there’s no reason they can’t get to $25B in annualized revenue like Amazon, but at a much higher margin.
Whether they’ll command the same kind of earnings multiple as Amazon is another story.
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger
eric seiger
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger
Several factors have contributed to this year’s gusher, including a U.S. Supreme Court ruling in January that now allows unlimited campaign spending by corporations and unions. In August, a low-profile Federal Election Commission decision opened the door for donors to pool their money and give anonymously, which produced a bumper crop of ads from nonprofit political groups and committees trying to influence voters.
“The biggest factor driving the spending is the competitive landscape,” said Evan Tracey, president of Kantar Media’s Campaign Media Analysis Group. “Incumbents across the country are worried about losing, and they are not holding on to their money. And many of these statewide races are in states with expensive media markets like New York, Texas and California.”
Political spending this year should reach record levels, Tracey predicted.
Wells Fargo's Ryvicker estimates that TV stations will collect $2 billion in political money this year. Cable television systems will generate at least $150 million; radio stations will garner $250 million; direct mail efforts should consume $650 million; and billboards will receive $55 million. Ryvicker estimated that newspapers would take in $95 million in political money.
Coming in last, according to Ryvicker and Tracey, will be Internet sites. Their collective haul should be about $50 million -- less than 2% of the total.
Companies that own TV stations in the LA market include CBS Corp., NBC Universal, Univision Communications, News Corp., Walt Disney Co. and Tribune Co., which owns KTLA-TV Channel 5 and the Los Angeles Times.
For the full story in the Los Angeles Times, click here.
-- Meg James
Chicago-based Groupon is certainly one heck of a startup. Like Zynga it sort of came out of nowhere in 2009. Even last December I was sort of only vaguely aware of how fast it was growing.
But it was clear by early 2010 to the whole world that Groupon was on a tear. First a round valuing it at $250 million. Then just a couple of months later it raised new money at a $1.35 billion valuation.
And then in the last few weeks Yahoo offered something even higher for the company – between $1.7 billion on the low side and probably $4 billion on the high side. And Groupon passed.
Revenues are in the $50 million per month range, and the company has roughly 50% gross margins. By some measures, Groupon is the fastest growing company, ever.
Groupon is often said to be the next eBay at Silicon Valley insider dinners and events. But Groupon isn’t going to have the same success eBay has had.
At first blush it seems like a valid comparison. Groupon’s revenues and profits blow the early Ebay results out of the water. When eBay was three years old and going public in 1998 it had revenues of just $4.7 million. Groupon does that much in revenue every three days or so right now.
Today eBay has revenues of a little over $2 billion every three months and is worth around $30 billion. It’s not at all unreasonable to think that Groupon could eventually grow its revenues way beyond $2 billion/quarter – the local products and services category would easily bear that kind of fruit.
But there’s a couple of problems with Groupon. The first is how it scales – it needs a lot of sales people for each market it handles and already probably has more than 2,000 of them on payroll. But the real problem is the complete lack of a network effect to protect its business.
Ebay is expensive. And it has a horrible user interface. Buying stuff is a pain compared with sites like Amazon that have put real effort into making buying painless. It’s also expensive. Everyone would love a better eBay, but after ten years of people trying to kill it, it just keeps going.
Why? Because everyone’s already on eBay. And every new buyer or seller makes eBay more valuable than it was before. Anyone competing with them has to find a way to counter that, and it’s nearly impossible. Even free listings from big companies like Amazon and Yahoo flailed dramatically.
In other words, eBay would have to really work at it to destroy its core business. And since it dominates the market it can continue to charge exorbitant fees and not worry about the user experience.
Groupon has none of that. When Groupon gets a new user that’s great. But that user will quickly leave to Living Social or One Kings Lane or any of thousands of other competing sites for better deals. And when Groupon gets a new “seller,” there’s no reason why that seller won’t also go try out the competitors, too.
There’s just no network effect in Groupon’s business model. Which means competitors can flourish and margins will get crushed.
At TechCrunch Disrupt, Benchmark Capital’s Matt Cohler said he wasn’t sure if Groupon would succeed over the long term. I asked him if he wished he was an investor in Groupon:
That question keeps me up at night. the question for me is…if you look at it from a purely academic point of view, there are neither barriers to entry nor are there switching costs in that product. Typically when a product has those characteristics margins tend to collapse over time. In theory the only thing stopping that from happening is Groupon’s brand…It may turn out that daily deals are ad units, and lots of different products can apply that ad unit.
What can Groupon do to avoid having their margins crushed by competitors? Establish generous revenue sharing relationships with distribution partners, fast. And that appears to be exactly what they’re doing. In the next several weeks the company will likely announce partnerships with Yahoo and CitySearch, we’ve learned.
Oh, and one more partner, too. And that partner will be…eBay.
Update: Great email comment from Alex Rampell:
I actually think Groupon is a “winner take most” market and not winner take all. Amazon has a plurality yet a distinct minority of ecommerce share ($25B in 2009 revenue out of WW ecommerce rev of $600B) yet has a market cap of $74B, 2.5X that of eBay. No barriers to entry.
There are no barriers to entry for online commerce companies — yet Amazon keeps decimating the competition. There are, however, economies of scale. I think Groupon can be the Amazon of Online2Offline commerce, and there’s no reason they can’t get to $25B in annualized revenue like Amazon, but at a much higher margin.
Whether they’ll command the same kind of earnings multiple as Amazon is another story.
eric seiger
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger eric seiger
eric seiger
eric seiger
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger
<b>News</b> on Feliciano and Upton at GM Meetings - Pinstripe Alley
News on Feliciano and Upton at GM Meetings. ... Do you like this story? More from Pinstripe Alley. The Tools of Ignorance: Saturday News. Nov 2010 by jscape2000 - 31 comments. Analyzing Joel Sherman's Post On The Catching Situation ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
eric seiger
No comments:
Post a Comment