Brand Dilution
There's been a few announcements this week in merger mania that has left me scratching my head. Sure, the Dow is at an all time high making stock transactions relatively cheap. Still, I think that synergies are more important unless these big conglomerates have something farther up their sleeves that they are not letting on. Granted there have been some M&A activity that makes sense:
Coke buying out Glaceau , the Vitamin Water manufacturer. This makes sense as a line extension of "healthy drinking" as soft drinks are slowly falling out of favor from the more health conscious community. Further, Coke already has a wide distribution channel that the smaller Glaceau can take advantage of. Great deal here for both sides.
Then there's the line extensions that just make no sense whatsover. Even if he has something up his sleeve I really don't see how this ties into his brand. The brand I'm talking about is Trump. Donald Trump. After his successful runs in New York City real estate and Atlantic City casinos, the mogul has put his name on a few different items that didn't really reinforce his luxury brand status. Trump Water? Trump Vodka? (from the man who doesn't drink?) and the latest
Trump Steaks. The Apprentice definitely reinforced Trump's image as a wheeling and dealing businessman but steaks?
Perhaps vodka, water, and red meat will be given to the folks at the Trump Modeling Agency? I'm not sure, but I'm sure there's something behind this...or not, just another thing to slap the Trump name on (which at this point, might not be such a great thing - The Apprentice was not picked up by NBC).
Back into technology where I have a feeling that I know where Google is going with
its acquisition of Green Border. Google is becoming Microsoft slowly and surely. It more or less has an entire suite of products and once those products become unreliant on IE and can stand independently on any browser, Google will have a portable desktop. And since you don't want other viruses you may have picked up while using your virtual desktop anywhere else, Green Border protects your home computer (note I didn't say PC). So that's Google's strategy it seems. Buy everything to make it a viable competitor to Microsoft. Google's about halfway there (market cap GOOG: 151B, MSFT: 295B).
The final question in my head (and please help me here!) is CBS. We covered
CBS's purchase of WallStrip last week for $5 million. I speculated that CBS wanted to lock in the rights on Lindsay Campbell as their own Amanda Congdon. Ok, that makes sense, I think. But this morning,
CBS announced their intent to buy Last.fm. We've spoken about Last.fm's loyal user base and I think its a great tool to find new artists and even old ones that you didn't know about.
A
StumbleUpon for music so to say. But I'm not sure how these two purchases really help CBS in the long run. CBS spokespeople have said that Last.fm helps them get that younger demographic that is so elusive to advertisers. Could be true. And perhaps this is where the synergies begin. Since the split of CBS and Viacom, CBS has all of the "old" properties, while Viacom retained the MTV's, Nickelodeons, Vh-1's, Paramounts, etc. Further as its old parent is suing YouTube,
CBS has publicy said that YouTube has boosted its viewership. I think that these last purchases are probably more of a way for Les Moonves to stick it in Sumner's face more than anything else (since
Sumner was so mad about the loss of MySpace that he fired Tom Freston). And for $280 million (half the cost of MySpace) why not?
Labels: last.fm, microsoft, myspace, stumbleupon, youtube
Power of the People
Even
Digg couldn't withstand the power of the people or the so called
Wisdom of Crowds. Digg, traditionally against any type of DRM, monitors its posts and takes down anything that they feel is morally wrong. Yesterday (via
TechCrunch) someone posted the decryption key to HD DVDs. After the Digg team took it down, someone reposted it. Pretty soon, the entire Digg site went down with a deluge of the decryption key posted all over it. Kevin Rose, Digg's co-founder, says on their
blog:
But now, after seeing hundreds of stories and reading thousands of comments, you’ve made it clear. You’d rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won’t delete stories or comments containing the code and will deal with whatever the consequences might be. If we lose, then what the hell, at least we died trying.So that's it, that's what happens when you try to turn against popular opinion. Digg (valued at
$60 million per Businessweek's cover story) could become the next
Friendster, where users left at the blink of an eye. Fickle consumers have the power and especially online where the butterfly effect is magnified ten times over. It's a scary place to be right now for Digg as many of their million plus users have revolted against them.
What does this mean? Well, I've touched on it before, and again, I'm not sure how this phenomenon happens but if you think about companies out there
Apple,
Google, and
Craigslist are the "good guys" while
Microsoft,
Yahoo, and
Dell are the "bady guys." It's a connotation that can most likely be traced to a few choice events (Microsoft knocking down Netscape, Yahoo charging for email, and Dell's customer service debacle.) While Apple has come clean with its iPod batteries, Google discloses all (or wants you to think that), and Craigslist doesn't make that much money only through its job postings. Since then Dell has apologized, Microsoft has been a bit more open, and Yahoo provides free unlimited storage. However, the damage is done, and just like
Gladwell's book Blink, these corporations are the evil empire while our knight in shining armor are the former companies. Stay open, make sure that your PR team has experience in damage control, and address your customers because the power of the crowd is too much to handle (at least for a $60 million company).
Labels: apple, blink, digg, drm, google, microsoft, wisdom of crowds, yahoo
eBay, PayPal, Skype, Stumble Upon?
EBay's latest acquisition, Stumble Upon has been
purchased for $40-$45 million as reported by GigaOm. So
eBay has bought
Paypal, which makes great sense given their close integration with auctions and online payments, then
Skype for a few billion dollars and now
StumbleUpon? I'm not sure how Skype fits into eBay's core business of auctions. Would you ever Skype a person that you were buying the latest Nintendo Wii game from? And where does StumbleUpon come into play? Unless....eBay plans to take on the evil empire that is slowly brewing in Google. With StumbleUpon, which is essentially a repurposed version of Google's "I'm feeling Lucky" button, eBay users have a smart search at their finger tips. Users are taken right to a page instead of banner ads or even contextual ads, bringing some decent brand awareness at the very least. Connected with eBay's auction system, you can browse for similar items using the StumbleUpon mechanism.
As for Skype, how does this VoIP system fit in? I think that eBay wants to claim some desktop real estate similar to that annoying uninstallable Google desktop. With the acquisition of StumbleUpon, eBay's positioning of finding everything new and used, and a communication tool more intimate than IM, eBay is also building a complete desktop to compete against Microsoft and more likely Google (who announced their own "rolling of the dice" product as well). Keep this in mind as eBay who was once the garage sale of the Internet could become a viable player in the online space.
Labels: ebay, google, microsoft, skype, stumbleupon
Google Rules the World
So in addition to their
purchase of Doubleclick and their
announcement of the Clear Channel Radio ads roll out, coupled with Google TV and their purchase of YouTube last year, Google seems to be the major force in the new world of targeted advertising. Google's database is going to stretch across all media which will truly be either a scary thing or an extremely good thing.
With Doubleclick, Google now has a presence in serving up banner ads and other display media. Coupled with their AdWords product, Google hopes to serve up relevant ads not just in text but also via banners. Overall Google is hoping that you have one crossover Google account. You can be hit with advertisements for your favorite foods and mainstream brands on TV, your favorite restaurants while on the road via Radio, and anything else they've missed via the Internet. One area where Google is lacking (although I'm sure they can find a small fledging company in this space that would LOVE to get bought by them) is mobile. Could Google be going the way of
Apple and their iPhone product? Mobile is the hot new area of growth especially in the advertising front. Mobile gaming has
grown in triple digits, nearly everyone has a cell phone (80%), web access is coming up on 50% and so on. While Google has their text messaging feature, it will be a matter of time before Google offers you free service, but only if you listen to an ad or if someone interjects during your conversation about different goods and services from some type of voice recognition pattern. Scary huh?
One last point.
With this inevitable big brotherliness about Google, why does everyone still cower down on
Microsoft? Why is Microsoft evil while Google is always the good guy? It's clearly not David and Goliath anymore but rather a battle of two near equals. I think it comes down to the fact that Google doesn't charge YOU the end consumer and for the people that they do charge, they have guaranteed results. Google is open source everything, opening up their API's, and integrating their revenue source into it. Microsoft meanwhile is more old economy by selling IP and closing off the rest of the world to their monopoly. Lesson here? Be open, be liked, and also take over the world while you're at it.
Labels: apple, doubleclick, google, iphone, microsoft, mobile, SMS
