The Worst Business Story in the World
Yesterday, we argued that the worst business stories were of the “X nearly reaches Y” genre. We could have cited the example of the “Index reaches round number” stories, but we chose the ever popular “Apple’s earnings/market cap/etc. approach Microsoft’s.”
What Monday was to the S&P, yesterday was to business journalism. For today was the day that Apple’s market cap (not enterprise value) fluctuated around being larger than Exxon’s.
- The Atlantic‘s Alexis Madrigal compares and contrasts Apple and Exxon, which at least talks about fundamentals, though it does compare Apple and Exxon on gross margins (they are not exactly in the same industry).
- Reuters Breakingviews asks if Apple could be the first trillion-dollar company by comparing its multiple on much lower earnings to its current earnings. That’s old news.
- TechCrunch outdid itself with minute-by-minute screenshots of Apple and Exxon’s market values.
No good decision will ever be made based on this kind of analysis. It’s several degrees removed from real news: commentary on how something meaningless might have been about to happen, then briefly happened before not happening after all. It’s roughly equivalent to Soap Opera Digest.
Which is another way of saying that, whatever its faults, it does bring in the pageviews.
Quarterly Earnings Update: AOL, DMD
Not enough pageviews, unfortunately. AOL reported their first quarter-over-quarter increase in display revenue yesterday, but the stock closed down 25.8% after reporting earnings. Citi’s Mark Mahaney attributes that to growth in low-margin sectors, zero organic growth, and a decline within the quarter that doesn’t look likely to end.
(Meanwhile, AOL’s iPad magazine offers access to plenty of non-AOL content, perhaps in an effort to grab users before promoting in-house articles. And Daniel Frommer argues that there are two AOLs—the boring cash-cow and the creator of cool products. And the cool product side will have trouble attracting talent because of this dynamic.)
Demand Media also reported earnings. Despite Panda, their pageviews on owned and operated sites were down by less than .1%, while their customer sites took a ~1% hit. The registrar business is doing unremarkably well. Confirming our thesis that Demand Media is a social media stock, the company purchased youth-targeting ad network IndieClick and social media tool producer RSS Graffiti. On their conference call, CEO Richard Rosenblatt bragged about removing 300K pieces of low-quality content—a good way to clean up, post-Panda (plus, Demand can very cheaply replace it with better content as necessary). Tragically, one of the removed articles was the hilarious “How to pour water into a glass cup,” which now redirects to eHow’s food and drink section.
Scoring one point for the argument that eHow’s long-tail content does serve a purpose, and is, in fact, as good as the subject matter deserves: the term “How to pour water into a glass” gets 700 searches per month, and the search results are now either a) scraped copies of the old eHow article, b) People referencing the article, or c) irrelevant.
In after hours trading, Demand was up to $10.75, but ended up at $8.65. Odd.
And IPO hopeful CafePress grew revenues, but lost money on higher customer acquisition spending. That seems to be a common symptom of companies that lose organic traffic (whether that’s SEO, brand searches, or social): they can always crank up their paid marketing in order to keep things on trend. No details yet on whether or not that’s what happened to CafePress, though.
Why Restaurant Sites are Terrible
Slate has a nice piece examining the uniform badness of restaurant sites, and chalking it up to restaurant culture—something between the need to be hospitable and the compulsion to cause a scene.
Bad restaurant sites have been a boon to startups like Yelp, Menupages, OpenTable, and Foursquare. More than a few web designers have tried to fix restaurant site usability by building them better sites one at a time (LetsEat.At has potential, though). As it turns out, the most cost-effective way to improve restaurants’ web presences isn’t to fix their sites one at a time—it’s to build a single site that’s better than all of them.
Introducing the Data Scientist in Residence
Greylock Partners has hired former LinkedIn Chief Data Scientist and Color product guy DJ Patil. It’s interesting to look at which job functions tend to be undertaken by VCs (some corporate development, lots of capital raising, some general CFO functions) and which ones don’t. Until recently, data was firmly an entrepreneurs-only field. Perhaps as it gets easier for designers to start a consumer web company, it won’t be as common for founders to have the data-processing chops they need.
Top Internet Activities Largely Unchanged
Social media bulls take note: search, news, and email are still more common activities online. The demographic data are a little more interesting: use of search engines correlates very well with socioeconomic status. That introduces two competing narratives about search versus display: either search used to do better because it’s a great way to sell to rich, educated early adopters—or search is destined to do better because even rich people click on AdWords ads.
Google Addresses AdWords “Cannibalization”
One concern advertisers often have is that their ads are charging them for clicks they could get anyway. Google begs to differ, at least 89% of the time. They claim that AdWords ads tend to produce additional traffic for the advertiser, and take away few non-paid clicks. This is borne out by the huge number of big brands that still advertise on their own name.
Microsoft Aims For Vendor Lock-In Early
The bull case for Microsoft has long relied on vendor lock-in. Microsoft is good at selling to corporate clients, but other companies have to be really good to overcome the hurdle of porting everything to a new system. Their recent deal with CapLinked helps startups that use Microsoft’s apps raise funds more easily. This is a very smart long-term move; if it plays out well, it’ll lead to another generation of lock-in for Microsoft.
Facebook Launches Independent Messenger App
So Beluga wasn’t just a talent acquisition, after all! Facebook has launched a new messenger app, run by Beluga’s founder and using a similar technology base. It has a few elements that compete with Google+ (group chat) and one that competes with Loopt (showing friends’ locations on a map). Facebook usually tries to create a unified experience through a single app or URL; this is a departure.
Paxfire Banned by Affiliate Marketers
Commission Junction (a subsidiary of publicly traded ValueClick) has banned Paxfire for redirecting searches. This is an unusually public-spirited move from an affiliate marketer—because of how competitive the industry is, these companies tend to support some pretty edgy practices.
Compete on Web Habits Among Liberals and Conservatives
Compete analyzes the differences in browsing habits between liberals and conservatives. One minor flaw in this study is that it’s based on identifying sites as liberal or conservative, but not identifying them based on how doctrinaire they are. Plenty of conservatives read the NYT because it’s a good news source, and a fair number of conservatives read the Huffington Post because it’s so comprehensive. Fox News doesn’t have that dynamic.
Ripoff Report Disappears from Google
Ripoff Report, the legally fraught SEO / blackmail company, has been removed from Google, apparently voluntarily. As of 1AM Wednesday, it’s back. Best guess: a disgruntled employee with access to the company’s Webmaster Tools account decided to play a temporary prank.
A Complete Google Algorithm Update History
SEOmoz has a well-informed and well-presented history of Google algorithm updates. Highly recommended.
Digital Due Diligence Weekly