Good summary over at SeekingAlpha on TheStreet.com’s quarterly earnings. The author’s main takeaway:
monetization of ads getting tougher as ad model struggle: This issue is facing every firm reliant on ads for revenues. TheStreet.com’s CFO Eric Ashman said, “it is safe to say that we have very little visibility into online ad spend for the rest of the year or for 2009.” While online has held up better than offline, I think this is an important issue. I’ve said before that firms like SeekingAlpha have created new content models but not revenue models. Constrained by pageview growth and CPMs, these firms are no different from the predecessors in terms of generating advertising revenues.
TheStreet has pursued a strategy away from paid subscription growth to more ad support and the beginnings of a lead generation strategy. Whether this works or not, I think the main issue is what innovation leading Finance 2.0 firms are going to market with that really pairs revenue recognition with the value of the service that these firms provide. The closer the revenue recognition is to the actual consumption of the service, the more powerful model.
I don’t claim to know what this looks like. Is it more a transactional model like Covestor and other expert community firms are headed towards which essentially turns these sites into trading platforms? Maybe. Is it more targeted IR opportunities for public firms looking to reach an ever-focused group of individuals? Dunno. Is it lead generation for financial advisors? Could be. I think it’s clear though that ad-supported models are going to be tougher and tougher to go to market with in terms of scaling. Ads allow a young company to get a product to market and immediately start monetizing it but ultimately to scale, the model has to change.
