TheStreet.com Earnings: Intrusive Ads Are Sinking Site

TheStreet.com earnings (TSCM) are out and they are not pretty. You'd think that with advertising moving from deadwood press to the internet, and with the great popularity of Jim Cramer, TheStreet.com would reap huge benefits. As Jim would say 10 years ago, wrong! Company lost big, even without accounting for charges.

How is advertising done on the 'net by successful companies? I know exactly two companies which make money in this area: Yahoo! (YHOO) and Google (GOOG). The bulk of this money is earned by search word advertising, meaning that companies add ads to the search results, clearly marking the ads. Google is much more successful in that, but Yahoo!, with all its problems, makes a profit, even in the current depression turning into recession. Yahoo! also serves a lot of display ads. All these ads are absolutely not intrusive, they usually do not interfere with browsing.

Now lets see how advertising is done by TheStreet.com. When you open the site, you are greeted with full page ad. That's the very definition of an intrusive ad. Then you go into the site, which is littered with all kinds of intrusive advertisements. You see rich (and CPU consuming) flash ads and inline ads, which are no less intrusive. You'd think that Cramer, who recommended Google from the very beginning (and such a great pick it was!), would learn something from Google geeks. No such luck. What we see on TheStreet.com is business journal advertising transferred to the internet. Jim, it doesn't work this way!

Of course, the fact that the site was redesigned last year, and not in the best way, doesn't help at all. I mentioned it here as a reason to probably dump the stock. My idea was right, my action was not. I'm still holding TSCM.

I think it's time to dump it at last. Maybe it would pay to wait a little bit, until the current bull run is finished and the dust settles.

Full disclosure: At the time of publication author had long positions in GOOG and TCSM and no positions in YHOO. Positions can change any time.

Comments

[Davis Freeberg:]

The street drives me nuts because they have a lot of short articles that they insist on breaking up into five pages. It probably helps them serve more ads, but like you mention in your article, it also creates an environment where readers don't come back. It's also really annoying when they write some kind of fluff piece on a company that you are interested in and then make the second half of the article members only. If they really had any profound to say, it might be worth paying for a subscription, but when it's clear that they are trolling for search hits, bombarding you with ads and then asking you for money, it seems a bit heavy handed.

May 06 08:56 AM

[OHYank:]

I classify myself as a moderate Cramerican but I gave up on TSDC right after their alleged upgrade. They had lost a lot of credibility with me when they pushed Nailz even though he was (to me anyway) an obvious self-promoter AND he was wrong more than he was right. Too many intrusive adverts, a clumsy access process, slow response time to the one area that I used to touch base on before trading: Stockpickr, and a loss of credibility keeps me from using their site period. Sorry. Jim I love you but I hate your site.

May 06 09:35 AM

[pegasus33:]

On my laptop, when I go to thestreet.com, there's a big ad. When I press, "continue to site," I just get the ad again. I can't get to the site. It's been this way for months. I e-mailed customer service and got a canned, vague, general cheery thank you not addressing my specific comment in any way. I hope they get their act together - I have stock in tscm

May 06 11:23 AM

[Hedged In:]

Good article -- thank you.

Note that there are two variables here: traffic (page views, unique monthly users etc.) and ad pricing. On what's happened to TSCM's ad pricing, see:
Hard Data on the Collapse of Internet Display Advertising
seekingalpha.com/insta...

May 07 03:10 AM

[Hedged In:]

I've written two pieces carefully analyzing TSCM's results, the second of which quotes from Alex' article and also Davis Freeberg's comment above:

1. Analysis of TSCM's internet ad revenue:
Hard data on the collapse of Internet display ad prices
seekingalpha.com/insta...

2. Analysis of TSCM's traffic decline:
How to kill a web business, courtesy of TheStreet.com
seekingalpha.com/insta...

May 07 06:52 AM

[kernels:]

Great articles I wonder how much longer this company has till BK?

May 12 05:12 PM