I’ll be at the 2006 International CES in Las Vegas next week. If you’re attending and would like to chat in person, email me: brian at comparisonengines dot com.
Since I have a feeling most of you aren’t subscribers, I wanted to post Froogle’s most recent quarterly newsletter which was sent to merchants on Thursday, December 22 (odd timing for a merchant email as everyone is busy fullfilling orders).
A couple interesting items:
-Google now wants everyone to submit their products to Froogle through Google Base as “Google Base will gradually replace the Froogle Merchant Center.”
-Froogle expanded it’s product feed and now includes a ton of additional attributes Google Base/Froogle even accepts custom attributes. SMART…Google wants as much information as possible.
-Froogle wants to understand if the service is useful as they are “looking for a limited number of partners who’d be willing to let Froogle analyze their store’s click and conversion statistics.”
Now, onto the newsletter…
Read the rest of this entry »
Shopzilla currently powers AOL Shopping’s comparison engine listings. AOL promotes these listings through AOL Search – there’s a Shopzilla content module at the top of the search engine results page (SERP) for most product searches:
With the AOL/Google deal signed, I wonder if Froogle might eventually replace Shopzilla in AOL Shopping. While I don’t think Froogle is anywhere near as easy to use at Shopzilla and is therefore a bad match for AOL users, this could be an opportunity for Froogle to step up.
I haven’t seen any comments from analysts covering Scripps, but I’m obviously wondering what kind of traffic AOL drives to Shopzilla and what % of Shopzilla’s revenue comes from it’s AOL deal.
RedCarpet, the IAC shopping search engine, was supposed to launch before the end of the year. No official word yet, but many medium and large retailers have told me that RedCarpet has been actively spidering their sites.
Here are some other tidbits which have been confirmed by 3 or more people (who hopefully aren’t just screwing with me)…again, there’s no ‘official’ confirmation by IAC.
-IAC bought a company in Boulder, CO called Semantic Discovery (SD). SD is enabling RedCarpet to crawl sites and extract meta-data about prices and products. When I called up SD for comment, the representative said he didn’t know what I was talking about.
-RedCarpet’s comparison shopping engine (via a small client application) keeps track of the sites you are looking at. As you are about the buy something (when you are looking at a product details page), the SD/RedCarpet “engine” does a quick search in its database for a lower price.
-As opposed to the PPC model most shopping comparison engines work through, RedCarpet is currently joining affiliate programs through Commission Junction (CJ) and will most likely make money on every sale it refers. In CJ, RedCarpet is referred to as a subsidiary of InterActiveCorp.
I guess this is the longest I’ve gone without a post. Sorry ’bout that.
-I’ve been thinking a lot about the PriceGrabber acquisition and will write up my thoughts soon.
-I’ve been thinking a lot about travel search/travel meta-search engines. Been researching the DCA 3-year agreements which come up for renewal in 2006 (if anyone is interested in writing a guest post on the topic, please contact me).
-And of course, I’ve been thinking about what to expect from the shopping comparison engines in 2006. The industry landscape has changed so much over the last 7 months with 3 major acquisitions, Shopzilla overtaking Shopping.com as the #1 shopping comparison engine in terms of revenue, Froogle making strides to become more comparison engine-esque, Yahoo! Shopping waking up and transforming itself into a major player (adding lots of features, working on comprehensiveness, creating the Shoposphere), Become surpassing 1mm unique users/month, and Smarter.com skipping over Europe to launch in Japan and China.
I’ll write up a year end review and my expectations for 2006 before the end of the year, but I’d love to hear your thoughts. Please comment below.
From an estimated 2006 earnings perspective, Experian’s acquisition of PriceGrabber doesn’t look that expensive:
Shopzilla est. 2006 earnings = $50m
Shopzilla deal value = $560m or 11.2x est. 2006 earnings
PriceGrabber est. 2006 earnings = $35.25
PriceGrabber deal value = $485m or 13.8x est. 2006 earnings
Shopping.com est. 2006 earnings = $22.8m
Shopping.com deal value = $476m or 20.9x est. 2006 earnings
How I estimated the 2006 earnings…
PriceGrabber’s estimated 2005 earnings are impressive: $25m on revenue of $60m (for a 42% profit margin). Assuming PriceGrabber can grow earnings at the same rate as Shopzilla – 41% (see below), 2006 earnings will be $35.25m, The Experian acquisition is therefore valued at aprx. 13.8x PriceGrabber’s 2006 earnings. [Please note that increased exposure through Experian's network should significantly boost PriceGrabber's revenue at a low cost, but I have a feeling PriceGrabber will become more active on the PPC engines which again will increase revenue, but possibly hurt margins.]
So how does this compare to the Shopzilla and Shopping.com deals?
Shopping.com was bought by eBay on June 1 for $620 million. With Shopping.com’s aprx. $144 million dollars in cash in the bank at the time, the ‘real’ price of the deal was $476m. I estimate that Shopping.com will have aprx. $130m in revenue for 2005 which means the deal is valued at 3.7x revenue.
Shopzilla was bought by EW Scripps on June 6 for $560 million ($525m in cash plus “net working capital of about $35m“). I estimate that Shopzilla will have aprx. $144m in revenue for 2005 which means the deal is valued at 3.9x revenue.
PriceGrabber is being bought by Experian for $485 million. Experian says that PriceGrabber is expected to have revenues of $60m which means the deal is valued at over 8x revenue.
From a revenue perspective, this deal looks extremely expensive:
Shopping.com was valued at 3.7x revenue
Shopzilla was valued at 3.9x revenue
PriceGrabber is valued at 8.1x revenue
Looking at this from an earnings perspective might tell a different story.
Next post coming soon…