Monday, July 23, 2007

Building a Reference Portfolio: Answers.com Plans to Pump Up Reference.com Properties with Profits

I had a chance to catch up with Answers Corporation Chief Strategy Officer Bruce Smith recently regarding their recently announced acquisition of Lexico Publishing Group, the publishers of the Dictionary.com, Thesaurus.com and Reference.com online portals , for USD 100 million. Lexico's reference portals are fairly simple and undramatic properties, but they have an audience that's about comparable to Answers.com in overall ranking and a footprint in education that offers Answers.com a complementary and loyal footprint. Most importantly Answers.com has been more efficient in being able to extract revenues from its references audiences than Lexico, so it effectively doubles its advertising base for marketing and ecommerce any may come close to doubling its revenues and then some along the way. As with its acquisition of FAQ Farm the Lexico properties are likely to remain autonomous sites, gaining common branding and integration over time but remaining tools that for the time being leverage highly popular bookmarked addresses.

While many magazine publishers are still sniffing around for undervalued print publications to take under their wings this move by Answers.com to scoop up highly ranked but underperforming online sites with complementary advertising bases demonstrates how quickly a highly profitable online site can extend its advertising efficiencies to build profits - even before an ounce of synergy or integration is added. To hearken back to my earlier post on Yahoo's possible sale it's far more likely that media companies that know how to extend advertising synergies online to related online holdings are going to build profitability more quickly than companies looking simply for overall scale of operations.
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