Shopzilla Update from Scripps Earnings Call

January 31, 2008

CEO Ken Lowe said on the earnings call:

The story at Shopzilla is one of improvement. Shopzilla finished strongly in the 4th quarter, with both the top and bottom lines ahead of last year during the same period. Even better, we’ve been experiencing very solid revenue growth in the early going so far this year thanks to increased traffic acquisition efficiencies. Things are definitely looking up at Shopzilla both here in the US and in Europe.

From the Q&A session:

As far as Shopzilla, we are obviously very encouraged by the recent news there and the change of fortunes that began in the fall. We are optimistic now that we are cycling over some weak quarters from last year but the 4th quarter was a very strong quarter for us and for the first time in several quarters we were experiencing double digit growth in net revenue there. I think we’re safe to say mid-teens level on revenue growth there. As we entered the year, ’08, we continued to see that strength and we’re doing a lot of things to ensure that is sustainable for us. So we’re all very optimistic about how things are going at Shopzilla. The team out there is an outstanding job of righting the ship and getting us on the right track going forward.

And the final question: Are you looking to sell Shopzilla or uSwitch?

No, we’re not.


Stock Report – Scripps (SSP), The Future of Shopzilla

January 31, 2008

Scripps, owner of Shopzilla, announced preliminary earnings this morning:

Q4 2007 revenue for Scripps Interactive (Shopzilla and uSwitch) was $79.8m.
Q4 2006 revenue for Scripps Interactive (Shopzilla and uSwitch) was $86.6m.

Q4 2007 segment profit for Scripps Interactive (Shopzilla and uSwitch) was $25.1m.
Q4 2006 segment profit for Scripps Interactive (Shopzilla and uSwitch) was $28.3m.

According to the release, for the fulll year (2007), at Scripps Interactive, “Revenue was $256 million compared with $271 million in 2006. Segment profit was $39.7 million compared with $67.7 million in the previous year.”

Obviously these numbers aren’t going the direction Scripps was hoping for when it acquired Shopzilla and uSwitch. So is Shopzilla crumbling or is it uSwitch? Seems to be uSwitch.

Scripps said “The decline in Interactive Media revenue and segment profit during the fourth quarter was attributable solely to reduced online energy switching activity at uSwitch. Revenue and profitability improved year-over-year during the fourth quarter at Shopzilla.”

Scripps also said they will take a “charge against earnings for impairment of goodwill and other intangible assets related to losses and challenging business conditions at the company’s uSwitch subsidiary in the United Kingdom.”

Early in the 4th quarter of 2007, after Scripps announced that it was spinning out its faster growing segments (Interactive, National Cable Networks) a number of sources said that Scripps was shopping Shopzilla around. These rumors started after Scripps CEO Ken Lowe said “As far as Shopzilla and uSwitch, I think it gives us an opportunity to look a lot harder at those businesses and how they fit overall into our interactive strategy.” (Red Herring)

I never commented on the Shopzilla sale rumor as I didn’t think it would happen with the holiday season heating up. And now? If Shopzilla had tanked in the 4th quarter, I think it would have been over for Shopzilla. Lowe’s comments this morning, attributing the rough numbers from Interactive to uSwitch, seem to indicate that everything is at least ok at the shopping engine. It’ll be interesting to hear what details Scripps reveals about Shopzilla and uSwitch in the earnings call this morning.

In the long run, I think that Shopzilla can be an extremely attractive property for Scripps. Search is huge and the product search game is still being played out, with no clear winners. It would be premature for Scripps to sell off Shopzilla.

I think we’ll finally see some creative integration of Shopzilla into Scripps’ other properties in 2008. At the same time, Shopzilla will continue to struggle to break free of its PPC addiction and become a destination rather than a quick stop along the purchase path with no real lifetime value beyond a single session.

I’ll hedge my bets a bit, though, and say that if Scripps finds a buyer for uSwitch, it might just decide to offload Shopzilla as well. Scripps’ acquisition of Recipezaar was bundled under the Scripps Network brand, not Interactive. According to Paid Content, Ken Lowe had this to say of the acquisition: “Recipezaar, a $25 million acquisition, is very much in line with what the company will do going forward. Overall goal is to dominate on the web the way the company dominates certain categories on cable. The site is different form the main FoodNetwork.com, since it’s user-gen. Millions of uniques over the holiday season.”

Well, if Scripps is looking to emulate its success of cable properties like Food Network, HGTV, Fine Living, etc., Shopzilla would seem to have no place in Scripps’ future.


Ciao to Make US Debut

January 28, 2008

Greenfield Online (NASDAQ:SRVY), a Wilton, CT based company (I grew up around the corner from Wilton, in Stamford, CT) operates the Ciao Group, one of the leading European shopping engines, with operations in Germany, France, Spain, Italy, the United Kingdom and the Netherlands. Plans for entry into Japan also seem to be in the works, although that could just be on the Survey side of the business.

Ciao US is scheduled to open up for business in early February, around the time of Greenfield Online’s earnings release (scheduled for February 7th).

You might not have heard of Greenfield before, but you may have been asked to participate in their survey business, which accounts for about 75% of the company’s revenue. The comparison shopping business makes up the remaining 25% of revenues. According to the company’s most recent earnings release (November 7, 2007), the comparison shopping business brought in $8.2m in revenue in the third quarter, up 60.7% from the previous year.

While Ciao is entering a crowded US shopping engine market, there’s always room for more players if the company is willing to spend some money acquiring merchants through the PPC channels. Comments on my post about Pepperjam’s Shogging.com prove that there’s still room for new entrants.

Ciao US will be a PPC based shopping engine, but for merchants who sign up pre-launch, they’ll get free clicks for the first 3 months. Yes, I said FREE. I obviously can’t vouch for the quality of the leads or the quality of the customer service, but these guys seem serious about their US expansion plans.

For details on how to sign up for the promotion, check out the SingleFeed or LoveYourFeed blogs.


SuperBowl Merchandising

January 24, 2008

According to the Retail Advertising and Marketing Association (RAMA), “This year, consumers plan to purchase 3.9 million televisions for Super Bowl Sunday, up more than 50 percent from 2.5 million last year. In addition, viewers plan to purchase 1.8 million pieces of furniture, up from 1.3 million last year.” (via NRF via Shop.org Smartbrief)

Some shopping engines don’t run strong merchandising efforts as they are vertical search engines. It’s not as if you see Google or Yahoo! going gangbusters on a vertical experience for Valentine’s Day or Christmas. But with the shopping engines, we’re talking about products, and I think consumers are very open to, and maybe even want, a very targeted shopping experience for a special occasion.

So which shopping engines are taking advantage of SuperBowl Sunday merchandising? Become & PriceGrabber (through their websites), and Shopzilla (through their email blast).

Become promotes a HDTV section on it’s homepage. Obviously the focus is on HDTVs (allowing consumers to search by size and manufacturer), but Tivos and Home Theater Systems are also highlighted. I especially like the links to Buying Guides and Discussion Forums, but those are a little hidden at the bottom of the page.

become hgtv superbowl

PriceGrabber’s SuperBowl Shopping Guide, features 2 anchor sponsors (JC Penney & OneWayFurniture) as well links to pages for a Westinghouse Widescreen TV and a high end Tivo. The real value of the guide, though, comes from the Personal Shopper section. All PriceGrabber has done is filtered its index to grab the good stuff – so Shop for Her brings up the pink jersey, earrings, and women’s Ts, Shop for Pets brings up costumes and rubber footballs for the pooch, and Super Bowl Necessities brings up the slew of high tech gizmos and gadgets that no true SuperBowl party can be without.

PriceGrabber SuperBowl

Shopzilla doesn’t have a special SuperBowl section, but they did send out a Super Sunday themed email blast last weekend (before my Giants stunned the Packers).

Shopzilla Superbowl


SingleFeed Hiring – Business Development, Account Management, Engineering, Library Science

January 22, 2008

If you’re looking for a new opportunity, SingleFeed is hiring in all departments. We are backed by True Ventures and NetService Ventures, the VCs behind Meebo, WordPress, and Aggregate Knowledge. BTW, Automattic, which created WordPress just received $29.5m. The round was led by True and Polaris. GigaOm, another True portfolio company broke the news.

1. Account Manager. This is NOT a sales position. You are responsible for delighting our merchants, not getting an extra $1k/month out of them. Full Time.
2. Sr. Director of Engineering. ‘Get your hands dirty’ while leading and growing our Engineering team. Full Time.
3. Perl/mySQL Whiz. Help revolutionize the way merchants create, submit, manage, and optimize data feeds. Contract or Full Time.
4. Business Development Manager. Now that Version 1.0 is out there, it’s time to create mutually beneficial partnerships to grow the business. Smart, Motivated, Entrepreneur. Full Time
5. Library Science. Love taxonomies? Then we’ve got the position for you. Contract or Part Time.

Send your resumes to ‘jobs at singlefeed dot com’. We have offices in Palo Alto, CA, San Francisco, CA, and Portland, OR, but consideration will also be given to EXPERTS in other locations.


eBay Down Almost 15% YTD, Earnings Call Tomorrow

January 22, 2008

I first started talking about recession worries in September during my session at Shop.org. While the many blank stares in the room didn’t get it, stocks have been butchered of late because of recession fears.

One of the worst hit in the ecommerce/online marketing group has been eBay, which hit a new 52wk low today of 27.13 and is down almost 15% Year To Date (YTD). GSIC, down almost 20% YTD is the only other ecommerce related stock that I follow which has fared worse than eBay.

While Scot Wingo, the eBay pundit, points to Bob Peck’s ‘swing for the fences‘ analysis, I’m more keen on Jeetil Patel/Herman Leung’s (Deutsche Bank) analysis:

“We maintain our SELL investment rating on shares of eBay. In our opinion, challenging buyer demand, escalating seller economics, lack of reinvestment (to position for future growth), near declines in transaction volumes and potential operating margin pressures all represent key challenges at eBay. Upcoming fee changes may place additional pressure on operating margins and growth, while consumer spending is likely to be lackluster.”

I also think Jordan Rohan’s (RBC Capital) comments about spin-offs/sales are interesting:

“It may be early to call for a bottom on EBAY shares, in our view. The company may soon lower expectations for 2008 and could be pondering a significant change in business strategy. We view the potential retirement of Meg Whitman as a slight positive, as the pace of strategic change could accelerate after her departure. What would make us more positive: 1) management change, 2) resetting of financial expectations, 3) strategic refocus to reflect current reality, possibly including a PayPal spin-off, Skype sale, and layoffs, and 4) further correction in analyst sentiment. We have reduced our 2008 estimates to reflect the uncertain near-term outlook.

Meg Whitman announced yesterday that she’s leaving. eBay’s earnings call is on tap for tomorrow after the market close. If you’re in the ecommerce industry, pay attention to the call.


Shopzilla Gets Organized

January 22, 2008

Shopzilla has quietly, but dramatically changed the way it presents search results to users.

Big bold pictures highlight the change in this search for Football (Go Giants!):
Shopzilla Football Search

As opposed to:
Pricegrabber
PriceGrabber Football Search

Yahoo! Shopping
Yahoo! Shopping Football

Shopping.com
Shopping.com Football Search

Furthermore, Shopzilla is delivering detailed categorization to help the user narrow results.

For example, the main page of Home Organization lists Storage Product Type, Closet Organization, Garage Organization, etc.:

Home organization Shopzilla

And drilling one level deeper on Closet Organization reveals options such as Shoe Organizers, Hangers, and Closet Rods:
shopzilla categorization

Shopzilla’s taxonomy only has ‘Home Organization’ (25000800) as an option, so they are doing a solid job of going deeper than just what merchant specifies as the proper category in a feed.

While this taxonomy work isn’t anything new for the shopping engines and Shopzilla still has a long way to go, Shopzilla’s filtering options just seem to be a little sharper/cleaner than what’s found on the other shopping engines.

Examples:
PriceGrabber – Home Organization
Shopping.com – Home Organization
Become – Home Organization
NexTag – Home Organization
Yahoo! Shopping – Home Organization
Smarter.com – Home Organization
Sortprice – Home Organization
Pronto – Home Organization
Google Product Search – Home Organization

Starting with the big, bold pictures representing the categories and then moving down into cleaner/more robust filtering options and a more granular taxonomy, shoppers should be finding products easier (which makes for a better shopping experience) and merchants should be getting more relevant clicks (which improves ROI).


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