Valueclick short opportunity? (GOOG, VCLK)
For anyone who doesn't watch Seeking Alpha or any of the better Search Engine blogs regularly, David Jackson at SA today posted a very interesting note about Google's new affiliate network that's entering testing. Some of the search engine blogs that noted this as well are here and here.
In short, Google is testing a new AdSense program that would publish what they're calling "Cost Per Action (CPA)" Ads -- ads where the publisher receives payment only if the clicker does something active that makes the advertiser happy. That could be filling out an email form, subscribing to a newsletter, entering a contest, or buying a product or service. I use Commission Junction now, for example, as part of my affiliation with ADVFN, and am paid a small amount when folks sign up for a free ADVFN account from my site, but the program and network are so miniscule in comparison to Google's advertiser network that you can't really compare them.
David believes this is the death knell for Valueclick, which owns Commission Junction (the largest affiliate marketing company/network, or at least the best known). He noted in his post that he immediately shorted VCLK upon seeing this news from Google, though that doesn't appear to have happened across the board today -- ValueClick is actually up today, partly because they announced a fairly big stock buyback yesterday.
VCLK is a profitable, smallish ($1.5 billion market cap) company that's growing pretty quick and has a fairly high forward PE of 20+ that's reasonable if you think their growth will continue. I'm not much of an expert on this business and don't know anything about ValueClick's other revenue streams, but I would tend to agree with Seeking Alpha's founder that if Google moves aggressively to take ValueClick's business, we'd at least have to assume a significantly lower growth rate for VCLK.
David is shorting VCLK, which is something I don't do (I'm not willing to take on the infinite risk of shorting in case I make a wildly bad bet), but I also do notice that VCLK put options are trading without huge premiums -- may be worth picking up some short or long term puts here if you believe Google will move forward with this and eat into VCLK's business, and doing it today might be wise, before this news gets out of the blogosphere and the search engine watcher world and into the mainstream press where it might get VCLK investors nervous. But you're not allowed to blame me if this blows over, or if Google drops this program after testing and it has no material impact on VCLK.
Thanks to David Jackson and Seeking Alpha for this news -- I read it there before I saw it anywhere else.
In short, Google is testing a new AdSense program that would publish what they're calling "Cost Per Action (CPA)" Ads -- ads where the publisher receives payment only if the clicker does something active that makes the advertiser happy. That could be filling out an email form, subscribing to a newsletter, entering a contest, or buying a product or service. I use Commission Junction now, for example, as part of my affiliation with ADVFN, and am paid a small amount when folks sign up for a free ADVFN account from my site, but the program and network are so miniscule in comparison to Google's advertiser network that you can't really compare them.
David believes this is the death knell for Valueclick, which owns Commission Junction (the largest affiliate marketing company/network, or at least the best known). He noted in his post that he immediately shorted VCLK upon seeing this news from Google, though that doesn't appear to have happened across the board today -- ValueClick is actually up today, partly because they announced a fairly big stock buyback yesterday.
VCLK is a profitable, smallish ($1.5 billion market cap) company that's growing pretty quick and has a fairly high forward PE of 20+ that's reasonable if you think their growth will continue. I'm not much of an expert on this business and don't know anything about ValueClick's other revenue streams, but I would tend to agree with Seeking Alpha's founder that if Google moves aggressively to take ValueClick's business, we'd at least have to assume a significantly lower growth rate for VCLK.
David is shorting VCLK, which is something I don't do (I'm not willing to take on the infinite risk of shorting in case I make a wildly bad bet), but I also do notice that VCLK put options are trading without huge premiums -- may be worth picking up some short or long term puts here if you believe Google will move forward with this and eat into VCLK's business, and doing it today might be wise, before this news gets out of the blogosphere and the search engine watcher world and into the mainstream press where it might get VCLK investors nervous. But you're not allowed to blame me if this blows over, or if Google drops this program after testing and it has no material impact on VCLK.
Thanks to David Jackson and Seeking Alpha for this news -- I read it there before I saw it anywhere else.
Labels: GOOG
This article posted by One Guy @ 6/21/2006 02:48:00 PM 0 comments
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