Internet Business Share Discussion Threads

[the analyst] 28/6/2007 15:09

Thinking about it, they could be really open about it - preferring to show sites without 'too much advertising' in search results in favour of thse with more content.

Google could improve the experience for many users by cutting out the sites advertising real e-commerce sites. Those looking for them can go towards the paid for listings. I quite often look for sites with interesting, absorbing content without advertising, but am disappointed by what I get in the search results - loads of sites that have been optimised to the hilt, loads of ads in banners and text links and very little content. Most people are equally frustrated by the search results they get. When I search for a particular electronic item, I'm quite often looking for information and reviews, not ebay listings or other companies trying to flog me the product. That can be frustrating.

I think they can make these changes and move organic search away from showing commercial advertising sites and it could make users happier in general.

They may even offer the option for users to filter out sites with loads of affiliate ads from organic search results - now there's an idea that could be very popular...

[bonio10000] 28/6/2007 14:57

The internet is a big place with room for plenty of operators.

The idea that google can do as they want and take 100% of all markets is fanciful.

[lord buffett] 28/6/2007 14:51

You can't conceal any intentional policy/activity within a large corporate organisation; they'd get nailed within very short order if that was their motive, however hidden/subtle they thought they were being.

[the analyst] 28/6/2007 14:44

I agree LB, but they would have to be careful. But I suppose they could be very subtle about it. Just taking a few number 2 or number 3 results down to number 4 and 5 here and there to start with. May not get noticed, but could have big effects on revenue.

They could also, for example, put a couple of 'selected links' above where the organic search results appear. that may also attract quite a bit of attention away from organic search.

[lord buffett] 28/6/2007 14:29

analyst - I think that Google would have to be very careful about that sort of activity or they'd be in danger of getting hauled over the antitrust coals - and I don't think they'd want to attract that sort of attention to themselves!

[the analyst] 28/6/2007 13:47

cheers. I guess that's probably the case for most site owners, although I do know that many sites get nearly all of their traffic from organic search on google.

Now, if google do move into affiliate advertising, they may begin to very subtly penalise sites that do not use their affiliate network for their ads. We could then see site owners' affiliate network adverting revenues drop or they may begin to switch to more google ads.

That, to me, is the danger that could arise from google sometime in the future. It is encouraging that AF work with google, as I think this limits the potential danger.

[hirschnathan] 28/6/2007 13:28

combination & msn

[the analyst] 28/6/2007 13:24

hirsch, if your sites suddenly failed to appear in organic google search results, how much would it affect your business?

Or is your business almost entirely based on paid for ads like the 'sponsored links' that come up after a google search?

[aleman] 28/6/2007 12:46

The directors stated that Alexa ranking didn't mean much even when it might have suited them to suggest it did a couple of years ago. Even if it were to turn out to be some kind of reflection of revenues, then clearly other web ad/marketing companies have a similar trend, and there would be some big profit warnings about. I suspect Alexa give a pretty good picture of trend in traffic for most sites, if not absolute numbers; Alexa tracking cookies are some of the most pervasive on the internet and I suspect they have plenty of info to adjust their distorted toolbar figures with.

[clueless] 28/6/2007 10:54

I agree SteMis and yes I was just as worried by Google and competition 8 days ago but like a greedy idiot I held out til after the strategic review in the hope of a higher "out". I didnt see the share price moving up on its previous level.

I think I take a different view to you in how the share price will move - I dont really care what the price is at any given time, I just consider what will make it move up or down. At 28p I couldnt see whats would change to make it go up (other than a sale). At 17p I still cant see much to make it go up.

Im not sure I understand what you mean about 1% of no sales v 10% of lots. Im talking about the fees that merchants pay to AF being low compared to TD, CJ, AW etc.

I disagree on Alexa - its no use for comparing sites with other sites as the demographic of the users can be different. Webmsaters in particular are far more likley to have the Alexa toolbar installed and hence sites frequented by webmasters always have an inflated Alexa. However as a relative indicator of month to month traffic I think it is a good indicator of unique visitors. For webmaster frequented sites like AF then as the sample size is high then its more accurate in my opinion than maybe it would be for ASOS say.

I agree the business is doing well right now and valued lower than a snapshot valuation would seem fair but I see a future of fair to poor newsflow and sentiment.

Yes diversification is good and is necessary and maybe its because they too know that AFs growth is tailing off, but now we are talking about a different business, a highly competetive business of being an affiliate, which I know from expereince is not easy, especially if you are starting now.

Anyway Ive provided the balance I wanted (and not been slated yet either - thanks :) ) and I dont wish to be a regular poster of doom on here as it is annoying when people do that!

[bonio10000] 28/6/2007 10:44

Well said.

[slapdash] 28/6/2007 10:43

I have to say what I find bizzare about this whole episode is Maz's statement here...

It really answers few questions and is just the typical CEO whine about the share price and how shareholders should perceive that the company can do no wrong...

It isn't our fault Maz can't identify a new chairman or couldn't apparently get on with the old one...

It isn't our fault that IBG has introduced these advertising products later..

or that the company couldn't find a buyer at a high price...

in fact it makes me laugh when management blame shareholders for a weak stock price..

Slapper

[stemis] 28/6/2007 10:36

Clueless,

I have no problem with anyone posting negative comments as long as they are rational. Unfortunately what we are getting from some posters is basically "this company has let me down, I've sold my shares, I hope it goes bust", followed by a stream of unsupported attacks on the company, its management and its business plan.

I don't disagree with your comments on Google (albeit the market is big enough and growing fast enough for cake all round) but it was as true 8 days ago as now. So why is it suddenly taking on such a significance? If anything the steps AF are taking are to make it a more robust and defendabe business. Surely you would applaud this?

AFs core business is about lowish costs for smaller clients

It clearly isn't all about low cost. Paying a commission of 1% on no sales surely isn't better than 10% of lots.

We're already seeing it in the Alexa results - yes not a perfect guide but still a relevant indicator.

I don't think it is a relevant indicator at all.

It might come good again

I don't accept that the company has gone bad. The share price has.

[bonio10000] 28/6/2007 10:20

Even on a P/E of 15 - a fall in yearly profits by £200k should only equate to £3m off the price.

Man alive there is some tosh on this board.

[omlaysause] 28/6/2007 10:19

I think it's fair to say that no share is without risk and especially a share like IBG that is still in it's relative infancy and building for the future. IBG doesn't have to make a huge amount of profit and turnover for the share price to rise back to the 30p level and on to a 40-50p range.
Clueless you're right most people don't want to hear anything negative about the shares they hold and will always try and put on a positive spin. In IBG's case, I was stunned with the latest RNS, as I'm sure were 99% of the shareholders but I think it was an over reaction to what the board were trying to say (all be it pretty badly) and we know this is a well managed, profitable company that are trying to improve the share price for the good of the company and the shareholders.
I for one think it's worth the risk and believe this will be back to the 40p range by the end of 2008.
If not, well you pays your money and takes your choice.

[the analyst] 28/6/2007 09:43

Good post, it is very easy to look at a share with rose-tinted glasses. I think IBG will still do very well, but it is still a risky share.

A perfect example of what you are saying is the profit warning. Nobody expected it.

[clueless] 28/6/2007 09:37

I dont really know why Im posting this as its clear people dont take kindly to negative comments about a share and I have no intention of ever buying in again but I guess I just want to try to give some balance to the idea that IBG is certain to do well in 2-3 years.

I dont think its a certainty at all.

I mentioned in an earlier post that I was concerned about Googles entry into the CPA area, and while someone posted a quote from Valueclick even if I agreed with it I dont think its relevant to AF which operates at a different level.

AFs core business is about lowish costs for smaller clients & they have a great scaleable solution. While Im sure AF offers some service to their advertisers, Im also sure its primarily a self service solution with support when clients have issues. Hence these smaller clients are going to be concerned mainly by cost and the functionality of the interface, both of which AF does well.

Now enter Google - experts in low cost scalable solutions & no doubt able to deliver a very low cost highly useable solution. Im sure it will be a no-frills service in terms of personal contact but for smaller clients who arent getting or wanting a great deal of "personal" service I'm sure this will be a very attractive alternative.

Add to this the numerous other networks springing up every month and what we are seeing is increasing competition and pressure on margins. With its smaller clients AFs service is going to turn into more and more of a commodity if they arent careful.

So in these 2 years that its expected to take to see the share price recover I really believe it is unlikley that these pressures wont start to show in the results. We're already seeing it in the Alexa results - yes not a perfect guide but still a relevant indicator.

So as someone who's been an affiliate for over 10 years I'd caution people against thinking this is a safe long term play. It might come good again, but there are easily foreseable scenarios where it might not.

[azamdotbiz] 28/6/2007 03:12

We deal with IBG on almost a daily basis from both an affiliate and affiliate management perspective and they are a company which has very strong foundations, a skilled and loyal work force, and a knowledgeable team at the helm with their own finances invested in the company. And IBG are in a sector which is growing at an astronomical rate.

As many posters above have indicated, there is no doubt the share price will rise and rise - in the medium to long term.

[stemis] 27/6/2007 22:26

That's right

[68steve] 27/6/2007 19:22

Yes,so don`t be too concerned if the share price falls in the short term...

[stemis] 27/6/2007 18:36

Even if the investment incurred by IBG turns out to be completely worthless, EPS of 2.0p with 5.5p of cash in the bank has got to be worth at least 25p in 18 months time. That's 30% pa.

Hopefully of course by then we'll have a forecast of at least 3.0p for 2009 and a share price of 50p instead.

Patience is required.

[clond] 27/6/2007 16:32

We all know the potential on this one , it's just a patient ride.

Two years is a long time to see 100% gains , especially when you can get 6% a year at the bank !