That’s what the CEO of Bankrate said on their most recent earnings call. Now naturally what did he do? Why buy a lead generation company, of course. A few months ago the firm acquired fastfind, which from the looks of it is a completely undifferentiated mortgage lead generator (aren’t they all?).
But seriously, Bankrate are a fascinating story , as I have said before. They are one of those companies that you should know about but don’t really see that often in the media. Their stock price has been on an absolute tear of late. But I digress.
True to my word, I’ll continue to post earnings call summaries for the next little while.
For the quarter all of the leading indicators, revenue (49%) and profit (30%) were up.
Interestingly, there traffic was essentially flat year over year (changing mortgage market) but their eCPM (effective CPM, essentially how many dollars they get from showing 1,000 ads irregardless of the pricing model used) was up 50%.
While that may suggest to some a sign of maturity, it illustrates the power of performance-based pricing once scale is reached. Bankrate doesn’t use dynamic pricing, but the rate increases it has applied have received no push back from advertisers, indicating just how undervalued online advertising really is.
Another reason is that the opportunity for lead generators like lowermybills and Nextag on sites with quality inventory is drying up. Not so long ago Bankrate used to allocate 60% of its inventory to brand-directed financial services firms and 40% to aggregators. This year it will be 85% to brand and 15% to aggregators (primarily its own fastfind, once it sells enough advertisers).
Looking at it from lowermybills’ and Nextag’s point of view, they are forced into ever dirtier inventory sources. Not that there is anything wrong with that: run of network/remnant inventory represents one of the most exciting media buying opportunities for online advertisers. The last frontier, if you will. Search prices have gone up and display advertising in verticals like finance and auto are back. But the majority of the web’s inventory is not in search nor premium display. It is when you check your Yahoo mail, or comment on your friend’s Myspace profile.
Yahoo forces advertisers who buy premium sections to buy remnant. Lowermybills has been buying up swaths of untargeted inventory, knowing that the user searched for mortgage related terms in the morning and is now checking their email. Less effective, sure. But on a relative cost basis for buying the inventory, the economics are so much more attractive.
But where was I? Oh, Bankrate. They are doing fanastically well and performance based pricing has given them a greater yield on the inventory they have but the central problem the company has is getting more of it. They also bought interest.com, which essentially is a smaller version of Bankrate itself. What is clear is the thirst for financial services inventory that can be plugged into the Bankrate sales platform.
