Huffington Post agrees to $315 million buyout from AOL

[Denny Crane]

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/07/AR2011020700247.html

Huffington Post, the liberal-leaning online news site that has been one of the Internet's start-up success stories, said it agreed to a $315 million buyout late Sunday night from AOL Inc., the elder statesman of online access and digital content.

Huffington Post founder Arianna Huffington, who made the announcement on her site Sunday night, will become president and editor in chief the Huffington Post Media Group, which will put the news outlet she co-founded under the same ownership as AOL's collection of sites.

 

[Denny Crane]

Even traditional web based news sites seem to be in trouble, otherwise I have no idea what the strategic value for HuffPost is in merging with the albatross known as AOL.

The really big news, IMO, in the game is this:
http://www.thedaily.com/

 

[BoBoBREWSKI]

That's a lot of $$$$.

 

[Colonel Ronan]

Where the hell are AOL getting that money from?

 

[BLAZER PROPHET]

This begs an ignorant question from me.

I really don't know how effective advertising is with traditional newspapers. Most of the ads I automatically skip over as I read unless I'm looking for something specific like tire ads in the sports section. And even then I go to the internet more and more. Now, with internet newspapers there are less ads and I really tune them out. How then do internet based news companies make all their money and become worth so much?

 

[chris_in_pdx]

AOL still exists?

 

[MrJayremmie]

AOL? I had no idea they were doing that well.

 

[Natebishop3]

They're still merged with Time Warner, no? AOL secured their future a long time ago. Plus, a lot of older people still use AOL (my mom being one of them). They cling to it. I keep trying to explain that you don't need AOL but she doesn't listen.

 

[maxiep]

Another Liberal sellout to "The Man".

 

[BlayZa]

they have worth because of content. unique content is the real champion though.

as far as skipping over ads that aren't relevant to you, that's the whole beauty of it really. people take everything in and filter it. it's one of the less invasive forms of advertising for sure.

This begs an ignorant question from me.

I really don't know how effective advertising is with traditional newspapers. Most of the ads I automatically skip over as I read unless I'm looking for something specific like tire ads in the sports section. And even then I go to the internet more and more. Now, with internet newspapers there are less ads and I really tune them out. How then do internet based news companies make all their money and become worth so much?

 

[Denny Crane]

They're still merged with Time Warner, no? AOL secured their future a long time ago. Plus, a lot of older people still use AOL (my mom being one of them). They cling to it. I keep trying to explain that you don't need AOL but she doesn't listen.

AOL was spun off from Time Warner and is a separate entity these days.

 

[mook]

This begs an ignorant question from me.

I really don't know how effective advertising is with traditional newspapers. Most of the ads I automatically skip over as I read unless I'm looking for something specific like tire ads in the sports section. And even then I go to the internet more and more. Now, with internet newspapers there are less ads and I really tune them out. How then do internet based news companies make all their money and become worth so much?

I don't know anybody who thinks advertising (online or otherwise) really works on them. And yet I look at my own small business and the tens of thousands of bucks we spend annually on online advertising...we have the metrics to prove that for every dollar we spend on ads makes two dollars.

 

[EL PRESIDENTE]

AOL has always overpaid for shit companies and done fuck all with them. Good for Huffington, don't expect it to do much or expand.

http://en.wikipedia.org/wiki/List_of_acquisitions_by_AOL

 

[barfo]

I don't know anybody who thinks advertising (online or otherwise) really works on them. And yet I look at my own small business and the tens of thousands of bucks we spend annually on online advertising...we have the metrics to prove that for every dollar we spend on ads makes two dollars.

What's the demographic of your customer base, and what's the demographic of the people you know? Maybe they are disjoint sets?

barfo

 

[jlprk]

The CIA owns companies or parts of them. This would explain why Comcast bought MSNBC and why AOL bought Huffington. Denny, what is this site worth? If you made this a liberal board, they would overpay you so they could make it conservative. You need to pay me to post 24 hours a day under many names for a couple of years and then pitch the CIA an offer.

 

[Klinky]

Ever since broadband Internet access became mainstream, AOL has ceased being an ISP and has switched almost entirely over to being a content mogul. Note most of their recent acquisitions have been online media sites. They are actually making pretty good $$$. The AOL "purchase" of Time Warner with "Internet Bubble Dollars"(IBDs) back in 2000 was a pretty swank move though.

 

[Denny Crane]

Even when dial up was king, AOL was a content player.

 

[BoBoBREWSKI]

The technology side of AOL's Huffington Post buy



Read more: http://news.cnet.com/8301-13577_3-20030861-36.html#ixzz1DNoDg6yC​

 

[mook]

What's the demographic of your customer base, and what's the demographic of the people you know? Maybe they are disjoint sets?

barfo

Well, my wife is in our target market. But I think specific demographics are kind of irrelevant to my main point. Google is probably the biggest business success story in America over the past decade, and 99% of its income comes from advertising.

Yet if you ask people, "Do you ever click on those paid ads?" people always say no. Somebody must.

In fact, almost everybody does at some point. It's just that 95+% of the time people use Google they aren't making purchasing decisions, and even when they do the majority of the time they click on non-paid search results.

But believe me, for nearly any demographic outside of the Amish and babies there's a way for somebody to make a buck off you in advertising on the internet.

 

[barfo]

Well, my wife is in our target market. But I think specific demographics are kind of irrelevant to my main point. Google is probably the biggest business success story in America over the past decade, and 99% of its income comes from advertising.

Yet if you ask people, "Do you ever click on those paid ads?" people always say no. Somebody must.

In fact, almost everybody does at some point. It's just that 95+% of the time people use Google they aren't making purchasing decisions, and even when they do the majority of the time they click on non-paid search results.

But believe me, for nearly any demographic outside of the Amish and babies there's a way for somebody to make a buck off you in advertising on the internet.

I guess that's the case - there's presumably a reason why I still get Nigerian emails, too - I assume some people still fall for it. Probably the same people who click on on-line ads?

barfo

 

[mook]

I guess that's the case - there's presumably a reason why I still get Nigerian emails, too - I assume some people still fall for it. Probably the same people who click on on-line ads?

barfo

Nah. There's virtually no cost in doing those Nigerian emails. If they send out a million of them and they can make a thousand bucks off one person, it's a roaring success. So a .000001% success rate more than pays the bills.

With our online ads, we aim for around a 2-3% click rate, and a 2-3% conversion rate. So 2% of the people who see the search engine ad actually click on it. Then 2% of the people who clicked actually buy. So that's around a .04% success rate.

Now, on average it might cost us $.15 every time somebody clicks an ad, so you have to figure 98% of the time we are wasting $.15. It might cost $15 to get one sale in this instance.

Anyway, my point is nearly everybody at some point "falls" for online advertising. In my example it's .04% of the time, which seems ridiculously rare. But over the course of billions of searches, the numbers add up. And it's far, far less rare than the people who get suckered in by Nigerians.

 

[mook]

It gets really crazy with more high-end words. The keywords "Mesolothimia lawyers San Diego" costs the top advertiser $51 EACH TIME somebody clicked on that ad. That's just for clicking on the ad, not making a sale. If typical, it fails to make a sale 98% of the time. So they may pay $5000 to Google just to get two customers.

But you can see how those two customers could easily be worth it.

 

[barfo]

Nah. There's virtually no cost in doing those Nigerian emails. If they send out a million of them and they can make a thousand bucks off one person, it's a roaring success. So a .000001% success rate more than pays the bills.

I recently got a Nigerian email via snail mail. It was actually mailed from Africa. Gotta think that spammer was unclear on the concept.

With our online ads, we aim for around a 2-3% click rate, and a 2-3% conversion rate. So 2% of the people who see the search engine ad actually click on it. Then 2% of the people who clicked actually buy. So that's around a .04% success rate.

That's impressive. I'd never guess that you could get 2-3% to click on something other than porn.

barfo

 

[barfo]

It gets really crazy with more high-end words. The keywords "Mesolothimia lawyers San Diego" costs the top advertiser $51 EACH TIME somebody clicked on that ad. That's just for clicking on the ad, not making a sale. If typical, it fails to make a sale 98% of the time. So they may pay $5000 to Google just to get two customers.

But you can see how those two customers could easily be worth it.

Tempting to find the ad and click it a few hundred times just for fun.

barfo

 

[maxiep]

http://www.guardian.co.uk/media/2011/feb/07/huffington-post-who-gets-money

Good for Ariana. I'll be interested to see how much of her $18MM she gives to the Federal Government, since she is such a supporter of more government control, higher spending and sharing the wealth.

 

[mook]

I recently got a Nigerian email via snail mail. It was actually mailed from Africa. Gotta think that spammer was unclear on the concept.

lmao! Well, they say marketing is mostly trial and error. I'm counting this one as "error."

That's impressive. I'd never guess that you could get 2-3% to click on something other than porn.

barfo

It's all about meeting demand. If you absolutely need a burgundy-colored recipe binder to make your mom happy, and you see one of our ads for "burgundy-colored recipe binder" next to a bunch of normal search listings and ads for just "recipe binder", you might be pretty tempted to go for the one that cuts through the clutter.

But 10 seconds later you'd probably forget that you clicked on our ad and not the organic listing. You'd just remember "clicking on the one that seemed closest."

You were a sucker for advertising, but your mind quickly discounts that it ever happened. Because we like to think we can't be suckered. It's the other guy who gets suckered, not me. I'm too smart.

That's how advertising works. Over and over and over.

 

[EL PRESIDENTE]

Who do you use for click ads? I'm considering doing some, although I think facebook ads might be more beneficial for my market.

 

[mook]

We find Facebook advertising to be a monumental waste of money. I don't know why that is, but it is.

Google advertising has always presented excellent value if you do your research. Bing/Yahoo won't get you nearly as many sales, but it's actually often a better bargain because fewer advertisers use it, so it's bid up less.

Any of these can be ridiculously bad decisions if you just throw money at it. You really need to be smart about it.

 

[EL PRESIDENTE]

My target market is exclusively healthcare providers. I've got to look into it, a direct mail campaign will probably be more cost effective.

 

[mook]

My target market is exclusively healthcare providers. I've got to look into it, a direct mail campaign will probably be more cost effective.

In general, it's a lot easier to refine your message with internet advertising. You can see what converts and what doesn't in realtime. Knowing that 80% of your customers left a particular page they came to without seeing another page on the site, while only 40% did so on another page, is valuable data.

With direct mail, you don't get refined data. People may never open the letter. Or they are turned off by the opening sentence. Or they liked everything about it, but just forgot to call. It's much harder to know what causes success or failure.

If it were me, I'd experiment with online ads, see what works, and then use the lessons you learn to build a direct mail campaign.