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The 2.0 Imbalance
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So, Desimartini got sold for less than $10 million. Success? Definitely. That was the business model. No, you are getting it wrong, online advertising was never the main business model .That is the apparent business model. The indirect, but main business model is to get bought by some big player. And so, I say, Desimartini achieved what it set out for.
There is clearly an imbalance. A lot of people scouting for a limited number of advertisers.
So, another bubble? Right? Umm. . ., I don’t know. The world has seen bubble 1.0, and in the world where everywhere is going 2.0, they’ve got be 2.0 times cautious. I hope they get the complete picture. Advertising revenues are good. Advertising revenues added all the 0s to Google. Advertisng revenues are the ones that the big three (Google-Yahoo-Microsoft) are chasing after, but at the same time, lets keep this in mind advertising success depends on user exposure. Desimartini claims it has 2.5 lakh users. A descent figure and therefore, makes sense to get acquired. This, however might not be true for everyone else. OK, start counting. The social networking sites in India. BigAdda.com, MingleBox, Desimartini, Yaari, Bharatstudent.com, goyaar, yo4ya.com. Everyday, literally, someone from my “friends” list joins one of these and then let them access their Gmail and Yahoo account and send invitation to all the people in their address book, automatically, resulting in me getting a number of invitations every day. What they have in unique, I do not know. And I doubt if there is any uniqueness at all.
The unique thing with Desimartini was that it spent quite a fortune on TV Commercials and thus managed to get noticed. That, indeed was an intelligent step. One TV commercial can get you anything from 30000 to 1 lakh eyeballs. The advertisements by Desimartini were good and they were broadcasted on primetime slots. Thus resulting in a huge number of users visiting and registering on their website. They , therefore gained some traction. This gave them an edge over others. Now for a media conglomerate, whose revenues thrive on advertisement, something like a social networking site makes sense. And hence, the deal. Rather than spending time and money on developing a new site, HT simply acquired a site that had recently got some traction and was in news, thanks to its TV ads. Nice move. By HT and by Desimartini.
I bet all the big media companies will be having a social networking site in their stable. And most of them will be acquisitions. The makers of such sites know this and that’s what they are waiting for. An advertisng deal that gives you access to newspapers, television, radio and now even the internet. (HT and Times of India, both are already into Radio. ToI is even into TV channels). The media companies will have better terms to advertise with the advertisers. Consolidation is on the cards. A few will survive. I see Reliance pushing its “BigAdda” brand to give stiff competition to HT’s Desimartini and any other site that might come up. Next on the block may be the Times group announcing its acquisition of some social networking site.
So, another Bubble-Bust 2.0 is not on the cards, but consolidation definitely is.
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This acquisition is just like the acquisition of Jaiku and not Twitter by GOOGLE.