Online Advertising: The Bread and Butter of Personal Finance

Online advertising spending is expected to be $19.2 billion in 2007, and eMarketer expects the financial services sector to increase its online ad spending by 33.3% in 2007 to $2.4 billion and reach $3.52 billion by 2010. This makes the sector one of the largest advertisers online, and thus validates the compelling case for online offerings in the Financial Services space. Over the last few weeks, we have analyzed the Personal Finance segment based on the Web 3.0 framework.

Yahoo (YHOO) recently launched its new personal finance site to provide the best of financial information and tools for managing one’s finances. The addition of personal finance to Yahoo Finance’s portfolio of services will aid the company to increase audience, improve consumer engagement, expand advertising inventory in one of the largest advertising categories.

We have reviewed Yahoo, MSN (MSFT), Marketwatch, AOL (TWX) and CNNMoney’s Personal Finance offerings in detail. CNNMoney’s display ad rates are $92 - $143 per thousand impressions [CPM], which is extremely high by any standard and is a testimony both to how valuable the offering is to its users, and how precious the audience is to the advertisers. All the other big players in the category sport similarly high CPM. My guess is, given that the inventory is still limited, these rates would go up quite substantially over the next few years, and more players will (and should) enter the segment.

Seeking Alpha, a blog on stock research providing opinion and analysis on the stock market, individual stocks and portfolio management tips, has garnered a tremendous fan following in the past one year. One of the ways for a new player to enter the Personal Financial Services category is by leveraging the Seeking Alpha offering. The company’s business model supports licensing to other players, and can easily get an otherwise large player like The New York Times (NYT) into the game.

In terms of their offerings, the content on these sites (Yahoo, MSN, CNN, AOL, Seeking Alpha and Marketwatch) is what sets them apart. Most of these sites have organized the content under different categories and sub-categories like Personal Finance, Investments, Retirement, Tax, Insurance, etc for providing contextual information and easy navigation. These sites also provide useful financial tools and calculators.

Apart from their own sources, most of these sites source content from experts, professionals, other sites, magazines and newspapers to maintain a continuous flow of high quality content and have an in-depth coverage of all the topics. The sites have also done a very good job on presentation of the information.

The sites have made some progress on the commerce front. Yahoo! Finance provides Yahoo! Real-Time Package on a subscription basis and Yahoo! Finance Research Reports on pay per download basis. CNNMoney permits electronic reprints or custom reprints of content from its site for a fee. MSN Money, through its software “Microsoft Money”, allows users to manage their Personal Finance. Marketwatch provides subscription based products relate to investments.

Yahoo and MSN also provide bill payment services for nominal charges, while AOL offers the same for free. The sites however can explore additional commerce opportunities like tax filing for a certain fee, paid advice / customized financial planning services, transactional brokerage services, as well as Cost-Per-Action [CPA] lead generation for their advertisers.

Yahoo and MSN have reasonable community features but most of the sites have plenty of scope for improvement.

Sites like Yahoo, MSN, Marketwatch, etc provide very good vertical search (stock screener) and elementary personalization (portfolio tracking) facilities. It is important that other sites also incorporate these features, as these are value added service that increase the time spent by consumers on the site.

Conclusion

Advertising, needless to say, is the main source of revenue for these sites. Over time, each site would do well to evaluate itself against the Web 3.0 framework, and improve their grades in each of the 6 aspects : Context, Content, Community, Commerce, Vertical Search, and Personalization. And those large media companies who are not playing in the Personal Finance / Financial Services category would do well to license Seeking Alpha and get into the game.

Comments

[edgetraderplus:]

Saturday 19 September 2009

Friday's activity confirms our last article, "The Beginning Of The
End?" A few factual observations will make that assessment
clearer based on the additional market activity. Friday's range is
relatively small, and this indicates sellers are present, keeping the
range from making further upside progress, and it also shows how
buyers are not/unable to participate in extending the trend upwards. The fact that volume declined supports that conclusion.
The close on Friday was under the opening range, and it was
lower than Thursday's close

Sentiment aside, bullish or bearish, the observable facts show a
weakening in demand at new highs when demand should be in
total control. What was put forth just suggests the opposite is
true. Add to that another fact: Friday's close has created a
clustering of closes. What we know of clustered closes is that
they can stop a move, at least temporarily. We highlighted the
previous cluster of closes from the end of August. The market did
stop rallying, and it led to the highest sell-off volume of a few
months on 1 September. The stop did turn out to be temporary,
but the message of the market was clear based on an observable
set of facts.

Markets do have corrections, although this move has had very
few "normal" corrections, and in a strong directional move,
corrections are temporary, as was the late August one.
Remember, a sideways move is also a change in trend. A change
does not have to be from up to down. We have no way of knowing
how the market will correct from current levels, but some kind of
correction is being signaled. As was previously noted in "The
Beginning Of The End" article from yesterday, the increased level
of volume may be evidence of distribution, a changing from strong
hands to weak-handed buyers who always buy tops. Look again at
how strongly volume increased over the last several trading days. |That, too, is a message from the market.

We are reminded of a Jesse Livermore quip, "Trading is as old as
the hills. What has happened in the past will happen again." End
that with a little Sonny and Cher: "And the beat goes on!"



The next is a 10 minute chart to get a closer perspective from the
inner workings of market activity. That line, just to the right of the
price data in the upper left corner, is a portion of the upper trend
line channel from the daily chart. Price will often react away from
an upper channel line as a measure of being in an oversold
condition...not in every instance, but it is a guage to watch and see
HOW price reacts to it.

To the chart details. At new highs, who is in control? Bulls, or
demand, obviously. Look at the character of the bar when price
made new highs for the entire move. It was a wide-range bar,
showing that there was a lot of activity, but the close was under the
open and below mid-range. This bar, regardless of its location
being new highs, goes to the sellers as to who won that battle on
that bar.

Two bars later, another wide range bar to the downside on the
highest volume for any bar that day, and a low end close, again.
Looks like sellers are exerting some effort up here. Six bars after
that, a rally attempt, a retest of the high, fails on lower volume. The
drop in volume indicates a lack of demand. Remember, we are
just making factual observations from which a determination as to
the character of the market can be drawn.

The activity from this 10 minute chart is a breakdown of the daily
high bar in the chart above. We mentioned how the smaller range
at new highs was a red flag, and the internal make-up of this day
proves why. Firday's trading day amplifies the story even more.
The initial rally attempt after the opening bell shows a smaller
range, [demand absent at a critical area] and a close at the
bottom. A little trading range has developed as price moves
sideways. There was an inability for buyers to step in and regain
control as can be seen in the final rally attempt, marked "retest
fails," on the right of the chart, shortly before the close. Not only
did the rally fail, it went on the break the support trendline, and the
level of volume increased as price declined. Who would you say is
in charge here?

Each time a rally high was registered on the 10 minute chart, the
next movement was to the downside with greater ease than the
rallies. The gathered facts are telling a story, and even though the
outcome has negative connotations, they need to be clarified and
put in a meaningful perspective. The smaller 10 minute time frame
is not controlling. It can change in a heartbeat, and it must be
measured within the context of larger time frames, like a 60 minute
chart, not shown, but the daily chart is, and the higher the time
frame, the more important is the information's reliability.

The day trend is clearly up. A weekly chart would show an upper
range close, the highest close since the 6 March lows. Both say
the trend is up, and price is likely to go higher. There can be no
argument against these stronger, observable facts. All we have
done is disect the most recent market activity, and the most
recent activity is the most important for it represents the latest
message from the market. What it suggests is that all may not be
what it seems on the larger time frames, but the strength required
to alter the larger time frames is greater than what has been
presented, to date.

What can be said of the current information is that unlike previous
rallies, the high volume attending the last portion of this recent rally
has been absent when compared to other rallies, and volume can
be an incredibly strong indication of change, at times, the
singlemost important information.

We catagorize this analysis as a shot across the bow. It is NOT a
recommendation to beome a short seller...maybe a seller of long
postions, but no more. It is a red flag, and a notice for Buyer
Beware. We will continue to put the developing market activity into
a context for the coming week. It could very well be there is a new
opportunity developing, and we have plans for that, both for the
shorter and the longer term.

Stay tuned.

Sep 19 03:06 PM