FindWhat.com said yesterday it will stop announcing per-customer revenues and click-through revenues, according to MediaPost. Amazingly, the CEO had the temerity to say We are not discontinuing the reporting of key metrics because we fared poorly in 2003." In fact, the revenue-per-click is falling as click-through inventories increase across the Web (thank you, Google AdWords).
This isn't bad for advertisers or Net users, but it does spell trouble for the companies that, having valued inventories at unrealistic levels are confronted now with the reality of lower-than-projected revenues and the need to radically increase inventories to meet revenue goals -- it's a vicious cycle that will drive inventory values lower. Deciding not to announce one's financial performance based on the value of individual customers and the revenue-per-click is not dealing with the challenges FindWhat.com faces, it is telling investors that management isn't confident about what they measure, nothing more or less.
Sure, revenues are up 62 percent in the most recent quarter, and FindWhat says it will hit 2003 revenues of $70 million. It's easy to say revenues are up and not focus on the increasing costs that you paid to achieve those revenues. If the cost of serving those ads and acquiring inventory are rising faster than revenues (which would produce a lower revenue-per-customer and per-click), the prognosis is not good, as Google and Overture can hammer the cost-per-click down to strangle their competitors.
Posted by Mitch Ratcliffe at October 21, 2003 09:48 AM | TrackBack