Eureka! You have found your answer. (Do not be ashamed for typing that phrase into your search browser, we’ve all been there!) There you were, a big media executive, sitting in your office all alone staring at the all-knowing search browser. You type in “Which interactive media company should I buy” and voila! Here you are.
Acquiring a company today is almost like a kid being in Dylan’s candy store for the first time, but with only $5 and the entire store staring directly at you. Not to mention the $5 is a loan from your big brother. There are lots of choices and it can be overwhelming. So, which media company should you buy?
Well, I’m not going to answer that question in this post, because that’s why I get paid the big bucks. I will take you back to the fundamentals of media though. It starts with reminding mid-size and larger media companies to focus on what they are good at – creating content and selling advertising.
As for 2009, the days of large-scale splashy Internet acquisitions are over (at least for now). Tools, technology and applications are sexy acquisition targets that will put your company in the headlines, but can also land you in front of an investor firing squad. Just imagine the A.I.G. grilling you will get from shareholders after you close on a $100 million acquisition that becomes obsolete in twelve months.
Only grandmas and banks hold on to cash. You’re a media company executive, it’s time to start investing in growth! Use it or lose it. ROI waits for no one. With your VP of corporate development reduced to “Yes” man status in order to cover his rear end, you may want to start out with smaller brands that you can help grow and cross-promote within your own portfolio of Websites.
The safest area to begin making online media acquisitions is in the niche consumer or business-to-business categories. Niche categories represent smaller and safer environments for building online media brands. If you are looking for a loyal and entrenched audience with a vested interest in promoting the Website, then niche community based Websites and social media companies are the way to acquire. The people in these communities not only identify with Website brands, but are also content contributors by uploading videos, sharing photos and sharing experiences relevant to the community.
There are significant buying opportunities at great prices. Especially, since many of these companies are not able to raise venture capital because they are not generating obscene amounts of traffic. These Websites can be picked up for small amounts of money and then introduced to the traffic of the parent brand - similar to ESPN’s acquisition strategy.
In the chart above, I outlined what I believe is the safest area to begin acquiring. You are probably going to get the most bang for your buck in the niche B2B or consumer arena. Whether it is video, social media or just plain old information, non-evergreen content that is updated regularly is the way to go. You will be able to grow traffic, cross-promote brands, add what I call smart-scale (already scaled down businesses) and leverage your existing sales infrastructures. Sounds like a party to me.
Here are some examples of small strategic acquisitions that would be considered in the safe ROI zone for 2009 (and it is not a coincidence that the companies listed below were already acquired):
There are tons of small content companies out there that could play a strategic role in helping your company solidify relationships with advertisers. Adding more of your core target demographic group is a safe way to go in this environment. Everyone is skittish, even advertisers. So, more bread & butter and less pizazz will serve to be accretive all the way from the ad pitch to the bottom line.
