PlayerSearch Blog

by Ted Kasten, Founder of PlayerSearch

Fantasy Sports Ventures buys BaseballHQ

According to the Wall Street Journal, FSV has acquired BaseballHQ, one of the most well respected fantasy baseball sites, for low seven figures. BaseballHQ is run by Ron Shandler who is nothing short of a legend in fantasy baseball. He sells subscriptions at $99 per year which is higher than any competitor…by far. I don’t talk to too many baseball die-hards that haven’t heard of Ron and most of them have subscribed to his service for many years.

BaseballHQ doesn’t have the traffic of some of its peers (RotoWire’s strength is in baseball but they cover multiple sports; BaseballProspectus is another great baseball focused site but they have some free content and only charge $39.95 for an annual subscription), but it certainly has significant subscription revenue at $99/year. However, FSV is not buying companies for their subscription revenue (KFFL now provides their content for free after being acquired by FSV over a year ago; I don’t see baseballHQ going the free route though…maybe a combo of free and subscription). What BaseballHQ provides FSV that is more important than the subscription revenue is a top quality name and high quality content that they can use to lead discussions with brand advertisers. The value of this is huge to FSV and to every FSV affiliate (Me!) running their ads. All vertical ad networks have their lead anchor sites when pitching advertisers. Owning these sites enables FSV to take the conversation from banner ads (most vertical ad networks that I have heard of generate anywhere from $2-$5 CPMs for banner ads) to more endemic advertising/sponsorship opportunities ($15-$20 CPMs or higher).

The recent partnership between FSV and USA Today/Gannett also has to play a key role here…what better content to include on USA Todays baseball section than content from the legend himself Ron Shandler? Top quality content and huge distribution is certainly a winning combination.

The guys at FSV are incredibly smart and clearly know what they are doing. They have taken 100+, mostly small, sports websites that on their own were probably earning around $0.50 CPMs from Google Adsense and aggregated them together to create a top 20 sports audience and immediately increase ad revenue potential by a factor of 10 (these are my guesstimates, but I think I am close). They are not stopping here though…they partnered with USA Today to get added distribution and they have made smart strategic acquisitions of leading brand name sites in the top sports to lock up top quality content. To get the attention of the top sports marketers that the founders of FSV have worked with in the past with the NFL, you need huge reach, high quality content and engaging user experiences…FSV’s ad sales pitch has gotten a lot easier over the past few weeks with the addition of USAToday/Gannett and now BaseballHQ. This is great for everyone running their ads and sharing their ad revenue as we will see more and more inventory sold at higher CPMs.

Congrats to both FSV and Ron Shandler!

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May 15, 2008 Posted by | Vertical Ad Networks | , | Leave a comment

Real Estate Search Engine creates Ad Network

Trulia just launched its own ad network. Makes perfect sense for Trulia, advertisers and other publishers focused on the real estate market.

“The Trulia Ad Network is a real estate ad network comprised of online advertisers and publishers with a target audience of home buyers, sellers and homeowners and local content focused on real estate and related life events.”

Trulia has an audience of about 10million unique visitors per month and is one of the most well known vertically focused search engines. They aggregate data from numerous sources and use complex data mining to provide a simple experience for the user. Trulia also provides its data to other sites through an API and provides white label real estate search to other sites called the Trulia Publishing platform.

Mashable has more coverage here.

May 12, 2008 Posted by | Vertical Ad Networks | | Leave a comment

Sports Illustrated getting into Ad Network Space???

SI.com is now selling the advertising for Citizen Sports Network (ProTrade). I am not sure if this is the beginning of a new sports focused ad network as Derrick at RotoNation states, but I would be very impressed with SI.com if it was. It would make perfect sense for SI. They have one of the most well respected brands in sports, a huge ad sales team and existing relationships with the right brand advertisers. Until their purchase of FanNation, Sports Illustrated never made a major push into the on-line world other than simply putting some of their off-line content on the web. They missed out on the huge growth in fantasy games by focusing solely on content that has quickly become a commodity. Despite having one of the most recognized names in sports, SI.com trails the leading independent fantasy games companies like Fanball, Myfantasyleague.com and rtsports.com.

The only missing piece for SI.com to build a leading ad network for sports is the technology to deliver, track and optimize ads…thanks to companies like Adify, that problem is solved! Adify provides the ad network technology for vertical ad networks. Adify has identical set-ups for Forbes for their finance focused network of blogs and for Martha Stewart for her lifestyle network. Adify was recently sold to Cox for $300 million cash.

Oh…the other missing piece is the publishers that have all the visitors/eyeballs. Fantasy Sports Ventures has locked up over 100 sports content sites after they launched their ad network in early 2007 and they are now a top ten sports site based on aggregated traffic. There are a couple of major publishers left, but not many. Although if the facebook apps that Citizen Sports Network develops for SI.com are as successful as their March Madness application that drew 135,000 participants (this is a larger audience than many independent fantasy sports content sites), they may not need any other sports content sites.

I think this is a great combination for SI.com and Citizen Sports Network.  One amazing stat from the facebook application that ProTrade built for SI.com…the ProTrade version registered just over 1,000 members while the SI.com branded version registered over 135,000 members for the exact same product.  I am not sure if there were other driving factors involved here, but if not, this says a lot about the power of a trusted and recognized brand on facebook.

May 7, 2008 Posted by | Vertical Ad Networks | , , , , , , | Leave a comment

USA Today takes equity stake in Fantasy Sports Ventures

I have written about the value Fantasy Sports Ventures provides with its ad network. They have just increased the value they can bring to their affiliates with a partnership with USA Today. In addition to a significant cash infusion, FSV added a great brand and distribution channel to its key assets. USA Today has an audience of about 3 million monthly visitors to their website which makes it one of the top sports websites. According to the press release, the partnership includes content/promotion opportunities with the print edition of USA Today that reaches over 3.9 million readers on a DAILY basis. That is a huge number (not sure how many people read the sports section, but I would guess it is a significant percentage). USA Today was actually one of the first media companies to benefit from Fantasy sports as people depended on them for the box scores each weekend. Once internet sites like Yahoo, ESPN and SportsLine began providing these scores and integrating them into commissioner services like commissioner.com, then fantasy fans no longer needed to manually tabulate scores using USA Today.

This is a great strategic partnership for both sides with content and branded sponsorship opportunities (which are the real gold mines for vertical ad networks).

April 22, 2008 Posted by | Vertical Ad Networks | , | 1 Comment

Microsoft makes acquistions to grow presence in key verticals

Mashable has reported that Microsoft has acquired Farecast.com (travel website that predicts the price of airline tickets so users know when to buy at the cheapest price…what a great idea!). Microsoft has made public its intention of acquiring websites in key verticals to expand its advertising networks potential. Certainly a good sign for vertically focused websites with a unique offering to users that is able to build a large enough audience to get the attention of the big media players like Microsoft/MSN.

The rumored purchase price was $115 million. With about 1 million unique visitors according to Compete.com, that places a hefty valuation of 115x monthly visitors. A similar merger in the on-line travel vertical was completed at a valuation of 100x monthly visitors. To put that in perspective, Google paid 23x monthly visitors for YouTube and News Corp paid 7.3x monthly visitors for MySpace. The key difference is that the on-line travel sites are able to monetize that traffic a lot more (CPMs for travel sites are among the industries higest). Also, keep in mind that YouTube had enormous traffic but didn’t have a proven business model…and the CPMs on MySpace are apparently in the nickel and dime range (among the lowest of any site).

April 18, 2008 Posted by | Acquisitions, Vertical Ad Networks | , | Leave a comment

A Jason Calacanis view on Ad Networks

Jason Calacanis of Mahalo provides the Silicon Alley Insider his strong opinion on the value of ad networks. His viewpoint is from someone trying to grow a huge business with ad revenue in the 8 figure plus range. If that is the case, it certainly makes sense to have your own ad sales team as he states…I don’t think anyone will argue that. He also dings ad networks for running poor quality ads. I agree that if my ad network (Fantasy Sports Ventures) started running ads for AdultFriendFinder on my site, I would remove their ads immediately. Another challenge for vertical ad networks is running competitive ads (by design, these networks serve ads on sites that are highly likely to be direct competitors to other sites in the network…so the ability to remove those ads is also key).

I have stated in the past that ad networks, in their current form, are ideal for running ads on small sites that can’t afford their own ad sales person/team. The ad networks will become really valuable if they can deliver higher value sponsorship or integrated marketing opportunities instead of just banner ads. Their ability to execute on these higher CPM opportunities will determine the ultimate winners and losers in the highly competitive ad network space.

April 16, 2008 Posted by | Vertical Ad Networks | | 1 Comment

Fantasy Sports Ventures is the Federated Media for the Sports world

TechCrunch is reporting that Federated Media has raised $50mm in its C-round. “Federated Media acts as the advertising salesforce for about 150 blogs and dozens of online media properties with a collective audience of 50 million people a month. Its blog partners include Boing Boing, GigaOm, Ars Technica, Silicon Alley Insider, and TechCrunch.”

As I have talked about before, Fantasy Sports Ventures (my ad network partner) is taking a similar approach for the on-line sports world. FSV has a network of about 100 sports focused websites and has bought 5 internet properties in less than twelve months. In 2007, FSV reached an audience of 5 million people a month across its network, which placed it in the top 5 among sports sites. I expect that number to grow dramatically this year.

Some amazing figures…Federated commands between $10 to $25 CPMs (Google AdSense pays less than $1 CPM) which it splits with publishers (60% go to the publishers). A $25 CPM is among the highest CPM I have heard of for an ad network. Those high CPMs helped it generate $22mm in revenue in 2007, up from $4mm in 2006. This may help explain part of that value:

Compete Affluent Visitors

It will be interesting to see if John Battelle and Federated Media end up investing in or even purchasing some of their blog partners to lock in valuable advertising inventory. They state that they have no plans to at this point…but it does make sense if they are able to command a higher CPM for owned and operated sites than they can for affiliate sites. Also, if competition picks up for ad networks, it may become a necessity to ensure their long term competitiveness. According to the article, Federated has been cash flow positive for the past year.

These numbers are pretty amazing.

April 15, 2008 Posted by | Vertical Ad Networks | , | Leave a comment

ESPN Removes Ad Network from its site

Speaking of the value of Ad Networks…MediaWeek has reported that ESPN is removing its ad networks (Specific Media and unnamed others) from its website. They state that this proves the limitations of Ad Networks, but I disagree.  It is simply a matter of ROI…ESPN is selling an enormous amount of ads with its own in-house sales team and for the little remnant inventory that they have, if any, they are probably getting a higher ROI on promoting their own offerings than what they get from ad networks. ESPN has been promoting their fantasy games heavily (see their series of webisodes titled Endless Drama). ESPN is unique as it has a huge ad sales team, great content AND fantasy sports games to promote alongside that content. When ESPN was focused primarily on content and didn’t truly promote its fantasy sports games (which one could argue only changed as recently as late 2006 when ESPN purchased Talented Mr. Roto and Matthew Berry and hired Nate Ravitz from CDM/TQStats; Matthew and Nate have been business partners of mine and friends since I founded this company and they have both started and successfully sold their own fantasy sports businesses prior to joining ESPN), it made sense to generate incremental revenue for its remnant ad inventory by using an ad network…now they most likely earn a higher ROI promoting their own fantasy sports games.

I work closely with ESPN as well as CBS Sports with the promotion of our Draft Analyzer software. They are constantly optimizing the value of their promotional space for good reason…to maximize ROI.  My guess is that ESPN is now getting a higher ROI on its remnant ad inventory by promoting its own offerings than it received from the ad networks that promoted other companies offerings.  Most other large publishers do not have this breadth of offerings, so ad networks are a great way to earn incremental revenue from their remnant inventory.

April 2, 2008 Posted by | Uncategorized, Vertical Ad Networks | , | Leave a comment

Vertical Ad Networks – Huge potential for a good reason

PlayerSearch partners with Fantasy Sports Ventures to serve our sports focused ads, many tech sites partner with John Battelle’s Federated Media and many women’s focused sites partner with Glam Media. It appears that FSV is going to be the dominant ad network for sports sites. They have 90+ sites signed up, have raised a good amount of capital and, most importantly, they have the right rolodex full of contacts at the large brand advertisers from their 10+ years of experience working with the NFL. Oh, and they have no real competition at this point…that helps! In an interview with CNET, John Battelle makes an interesting comment about the range of CPMs that vertical ad networks can provide. This seems to apply very well with my positive experience so far with FSV.

John Battelle: “The industry is really good at direct response advertising on-line. The problem with vertical ad networks is that until you have engagement, integration, and proof of that consumer awareness, you are just going to keep devolving down to direct response pricing, which is sub $5 cost per thousand (CPM) for an ad.

We want it at the kinds of CPMs that supported the magazine and the cable industry, which is above $20, $30, $40, $50 cost per thousand. Advertisers will pay that once they feel like they’re getting that value for it, and once the media is created that proves that value, and it’s not just the publisher’s job to create that media, it’s the publishers working in partnership with the marketers and that what we try to do it with them.”

Techcrunch covers this interview here.

With Google AdSense a small site can hope to get about $1 CPMs…FSV has done an excellent job in less than a year of executing on direct response banner ads, as John describes them, that garner about $5 CPMs. So FSV immediately adds value to their affiliates by doubling the CPM that we could get otherwise. One of the challenges I see with any vertical ad network is that the quality of each site varies dramatically…so 2+2 is still 2 in many cases – marketers don’t want their brand/ads on poor quality sites and if that happens they certainly aren’t willing to pay a premium CPM for it. So adding up 10 million page views across 100 sites is not as valuable to marketers as going to Yahoo or MSN and getting the same reach on a single site. And as John points out, the engagement brand advertisers are looking for is currently very fragmented on most networks.

PlayerSearch brings a very unique value proposition to the FSV network. PlayerSearch can direct traffic to each affiliate by including their content in the search results and can improve their site to keep their users coming back more often by providing a much better search experience for their users…both actions increase page views for the affiliates which increases ad revenue for both the affiliate and FSV (FSV wins twice…once by serving ads on the search results pages and a second time by serving ads on the affiliate sites that receive the traffic from the search results; this is not unlike Google that wins twice as it serves Google AdSense on many sites that it sends traffic to). In addition, the high quality content (human editor approved) and user interface provides a high quality advertising environment for brand marketers. Once we are able to build the reach (assuming it is a matter of when, not if!!) we can work with the brand marketers to create high value promotions beyond banner ads that are worth the $20+ CPMs that John is talking about. That is the potential and the goal…now we just need to get there!

March 21, 2008 Posted by | Vertical Ad Networks | , , | 3 Comments