Scripps Networks Interactive Reports Q3 2008 Results

October 29, 2008

From the press release:

Revenue for the Interactive Services segment grew 14.7 percent to $62.6 million. Segment profit was $12.8 million compared with $8.7 million during the same period a year earlier.
The growth at Interactive Services is attributable to increased user traffic and higher referral fee revenue at Shopzilla, and an increase in energy switching activity during the period in the United Kingdom for uSwitch.

This compares with Q2 revenue of $66.9 million and segment profit of $15.1 million (PDF link).

These results are a positive sign for the industry in the face of Shopping.com’s troubles as reported by eBay in its Q3 2008 call.

The results are also a bit of a surprise to me…if Shopping.com was really affected by “changes made by search engines that disrupted shopping’s traffic.” (from the eBay Q3 Earnings Call), why wasn’t Shopzilla?  Were these “changes” to PPC listings or organic listings?  I believe that eBay was probably talking about PPC (AdWords) listings.  I have to believe that most of the shopping engines were penalized by Google AdWords for littering product pages with AdSense listings.  Why not just build out your catalog, push merchant listings, and beef up other forms of advertising???

I’ve definitely noticed a lot less AdWords ads from the shopping engines on Google’s SERPs for products related searches.  No hard evidence, but  6 months ago, I remember seeing AdWords ads for NexTag/Calibex, Dealtime/Shopping.com, BizRate/Shopzilla.  Not so much anymore.

Organic listings are still dominated by the shopping engines.  I don’t think these listings are at risk in the short term as the product pages of the shopping engines clearly offer a lot of value to consumers, but if Google wants to push consumers to Google Shopping/Google Product Search/Google Base/Froogle/Google Checkout, as I suspect they do, the shopping engines better watch out.

Do I sound like a broken record?  Good!


Stocks – GSI Commerce hits 4 year low

October 23, 2008

GSI Commerce (NASDAQ:GSIC) hit a 4 year low yesterday, closing below $10 for the first time since October 18, 2004.  My go to analysts at Deutsche Bank are still cautiously optimistic on GSI saying in yesterday’s brief:

Net/Net, while we don’t think GSI is sheltered from a slowdown in consumer spending, the company is well positioned to succeed even in this environment, for two reasons.

First, there is a shift towards results-oriented business, in our view, especially when times are tough. In this case, GSI’s services-based model, where it partakes on a commission basis, certainly will ease a multi-channel retailer’s concerns of high fixed costs. In fact, the company’s two extended long term contracts, including a 15-year extension with Dick’s Sporting Goods and a 10 year extension with Aeropostale, validate the value GSI’s service oriented model.

Secondly, the company’s interactive marketing services are helping multi-channel retailers enhance their brand online and grow its fastest-growing sales channel, even as its offline business falters. In addition, the recently acquired e-mail business (e-Dialog) provides a natural extension for retailers to leverage in-house customer e-mails, effectively monetize existing assets without significant cost.


Mercent’s Smart Layoffs

October 23, 2008

via The Seattle Times, Mercent is laying off 6 of its 50 employees.  As the article states, this is a ‘prudent’ cut in staff.

If you’re not a start up person in Silicon Valley, you might have missed the hooplah over Sequoia’s recent meeting with its portfolio companies.  You can ge the recap (including the deck) here.

If you’re like me and are more than slightly pessimistic and believe that we’re in for a long financial winter (extending throughout all of 2009), then this slide is very important to pay attention to:

The lesson – cut costs now and horde cash so you don’t hit the death spiral.  This would explain many of the layoffs in the Valley.

In other words, the difficult move by Eric Best can be viewed as a positive action.  It’s a smart move to ensure it’s business as usual and that Mercent will ‘stay warm’ in this harsh economic climate.

There are other reasons for layoffs, but let’s just leave it at that for now…


Retail/Ecommerce Index

October 23, 2008

Can someone point me to a Retail Index besides the Retail HOLDRS (AMEX:RTH)?  Maybe one that focuses a bit more on ecommerce…

Thanks.

-b


Spending More or Less on Halloween Costumes?

October 23, 2008

Pricegrabber says that consumers are spending less this year on Halloween Costumes than they did last year.  Based on the number of click-throughs on particular Halloween items on the site, “the average costume spend for men and women has declined from $57 in 2007 to $39 in 2008, a 30% dip.  We also found that adult costume sales are down 31.6 percent from 2007 and children’s  costume sales are down 45.4 percent”

However, the National Retail Federation put out a report on September 30th that said “the average person plans to spend $66.54 on the holiday, up from $64.82 one year ago.” The study claims that “after months of bleak economic news, consumers are looking for a reason to let loose,” said Phil Rist, Vice President of Strategy for BIGresearch. “And with Halloween falling on a Friday this year, consumers may plan to celebrate all weekend long.”

Makes some sense, but the report was released before the financial winter really started to set in…

So what about you?

As for the top costumes, according to PriceGrabber, women are going for:

1) Goddess Adult Sexy of Love Costume

2) GHOSTBUSTERS SEXY – ADULT MEDIUM COSTUME

3) (CL) Adult Sexy Sailor Girl Costume

Men are going for:

1) Adult Halo 3 Deluxe Master Chief Costume

2) Batman Dark KnightBatman Grand Heritage Collection

3) Adult Batman Dark Knight The Joker Costume


Like.com Raises $32m

October 22, 2008

via TechCrunch: Like.com raised $32m in its Series C round of financing.  Congrats to Munjal and his team.  That’s a lot of money to weather this harsh economic winter.

This is especially good news in light of eBay’s recent comments about Shopping.com during the Q3 2008 earnings call: “Our online comparison site, Shopping.com, was significantly impacted by changes made by search engines that disrupted shopping’s traffic this quarter. This business decelerated sharply in Q3, impacting marketplace’s revenue growth by about a point. We expect that Shopping.com will continue to negatively impact our growth rate for the next three quarters.”

While Like.com originally focussed on accessories like shoes and handbags, the company has dramatically increased category coverage and is now pushing all clothing (including Halloween Costumes) Rugs, and Posters.  The company seems to have even taken a step into non-visual search, with its Health and Beauty category.

Like has a number of direct merchant partners, but the company also relies on back-fill from the usual suspects: PriceGrabber, Shopping.com (Dealtime), Shopzilla (BizRate).


The Ecommerce Landscape

October 6, 2008

ComparisonEngines.com started out by covering vertical search – shopping search, job search, and travel search – but eventually found a voice focusing solely on shopping search. While the focus will continue to be shopping search, this is just one marketing channel which is closely related to many other online marketing channels as well as the overall ecommerce ecosystem. I hope to start hitting on the larger ecommerce landscape and this post is my quick survey course of the industry.

This slide (having trouble embedding at the moment, will try again later) is meant to be the start of a discussion about ecommerce players.

Let’s start from the bottom up.

Ecommerce platform/Shopping cart – This is the core of ecommerce. Ecommerce platforms used to be the complete package – shopping cart (manages catalog/inventory + checkout process) plus WYSIWYG front end) while shopping carts (Mercantec) were stand alone items that just plugged in to a home grown solution. While can still be the case, for the most part, any provider that you approach will enable the core functionality to get a store up and running. The major ecommerce platforms include Yahoo! Merchant Solutions, OS Commerce, eBay ProStores, MIVA, etc. Yahoo! Merchant Solutions (formerly Y! Store), the 800lb gorilla in the space, made getting a store up and running quick and easy and has built an impressive business, with major ecommerce players as well as some 30k+ SMBs utilizing the platform. However, just building a store doesn’t equal success. As businesses expands, so do needs. Proper integration with Analytics, Marketing Channels, and Content Management Systems, becomes critical. Newer ecommerce platforms like Infopia have started to build models around this type of open integration.

Analytics – Once an ecommerce platform is set up, the next step is adding an analytics platform (Omniture, Coremetrics, Google Analytics). I’m a metrics oriented marketer, that’s why I love ecommerce. With the proper analytics package properly enabled, you can track clicks, click paths, conversions, conversion rate, marketing campaign effectiveness, up-sell/cross-sell rate, cart abandonment, and much more. It still amazes me to find merchants who have an analytics solution like Google Analytics activated, but only use the system to track referrals. Especially in these harsh economic times, merchants need to make sure they are analytics gurus. No marketing program should start without proper tracking.

Marketing Channels – Merchants should start with Search Engine Optimization (SEO) and the Pay Per Click (PPC) engines, collectively known as SEM (Search Engine Marketing). From there, email, affiliates, marketplaces (eBay, Amazon, Overstock) and shopping engines can be extremely effective. [Note that marketplaces and shopping engines are looking more alike every day.] If SEM is the platinum standard for online marketing channels (people start their shopping on the search engines), email marketing to an in-house list is the gold standard.

The reason the shopping engines have become such a valuable marketing channel for retailers is that they are some of the best online marketers. Conduct a search for a product on Google, Yahoo!, MSN, or Ask, and the shopping engines will dominate the listings. While the numerous marketing channels might seem overwhelming, merchants need to make sure to track and test to figure out which channel or channels are best for their particular situation.

Within online marketing channels, there are many ‘helper’ companies. ChannelAdvisor started out as an eBay helper company and has since moved to become a one-stop shop for online retailers, helping merchants succeed on multiple online marketing channels. ChannelAdvisor has also moved to other parts of the ecommerce ecosystem: on site enhancements, analytics, ecommerce platform, etc. SingleFeed is also a helper company. While the one-stop shop (ChannelAdvisor’s model) has its advantages and our merchants have asked us to help with other marketing channels, we’re focused on doing data feeds better than anyone else.

On site enhancements – This is a really big area with many players. This is also a significant growth area for ecommerce. While online marketing channels are continually advancing, on-site enhancements are the next step for sophisticated marketers. The goals of on-site enhancements are to increase conversion rate and/or to increase average order value (AOV). Here are some highlights:

-Billing flexibility – Visa, Master Card, and Discover won’t cut it anymore. Merchants have to take advantage of not-so-alternative payment methods like PayPal, Google Checkout, and Bill Me Later.

-Product Reviews/Ratings – Power Reviews and Bazaar Voice are the main players in the space with surprisingly different business models. Either way you go, the gist is that products with ratings/reviews sell better, create impressive merchandising opportunities (emails with top rated products, for example), and help merchants improve organic search exposure.

-Personalization/loyalty – My first experience at an ecommerce company was in 1995 at the interactive division of CUC International. CUC (later to become mired in an accounting scandal after merging with HFS to become Cendant Corp) was a direct marketing company for membership programs, which means that execs talked about personalization (targeting) and loyalty from my first day on the job. Over the last 13 years of ecommerce, we’ve made some amazing strides in personalizing the shopping experience through creating accounts and tracking past purchases.

Loyalty is obviously different than personalization and is probably better described as a marketing channel, but I feel it’s more appropriate to put it in this section for now. Loyalty is a slew of measures to get that customer coming back. Couponing and rewards are two of the best known loyalty programs. I could highlight a ton of loyalty businesses that merchants can work with, but I’m going to mention just two for now: Microsoft Live Search cashback and Webloyalty. When Microsoft said in May 2008 that it was serious about ecommerce, it’s first initiative in the area was Cashback shopping (through its acquisition of Jellyfish). Microsoft is putting significant marketing muscle behind Cashback shopping.

Webloyalty is run by a bunch of ex-CUC employees. While you might not know the name Webloyalty, the company powers loyalty programs on a ton of sites and is one of the most successful players in ecommerce that you’ve never heard of.

-Engagement – This can be anything that encourages consumers to interact with your site. A rich browsing experience like Borders’ magic book shelf (forgot who powers it) or RichFx’s capabilities are good examples.

-Cross-sell & Up-sell – When I think of cross-selling, I think of accessories. If I’m buying a computer, keyboard or mouse. If I’m buying a digital camera, I might need extra memory or a carrying case. This cross-sell ability is baked into many ecommerce platforms. Up-selling has become way more complicated. With a name like UpSellit.com, you’d expect a straight up-sell, but instead, UpSellit.com is a chat based program that allows an ecommerce site to pitch instant savings to stem off cart abandonment, what they term Save a Sale. I once thought of Aggregate Knowledge as up-sell technology, but now they are pitching themselves as a discovery network. Let me over-simplifiy things and just say that there are many companies that are trying to help the user find the ‘right’ product/make a buying decision.

Page optimization – If I wasn’t in the data feed game, I’d be A/B testing my landing pages (product pages) as well as my checkout process day and all night through companies like Optimost (Interwoven) and Offermatica (Omniture). These incredible systems are like crack for a metrics oriented marketer like myself. Once you have a website, are tracking effectively, and engaged with multiple online marketing channels, multivariate testing can provide the boost that gets a merchant to the next level.

Ok, I’m starting to fade here (I’m about 4hs into my red-eye flight to NYC on my way to SMX East) and I still haven’t talked about a number of other important parts of the ecommerce ecosystem, but hopefully, this will serve as a solid starting point for a new discussion.

Looking forward to getting back in the game!


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