Is GSIC immune to rising PPC ad prices?

| About: GSI Commerce, (GSIC)
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A key challange for most Internet retailers is the rise in
pay-per-click (NYSE:PPC) ad prices. The rise in PPC ad prices is having a
negative effect e-tailers, even on companies like EBAY and AMZN that
you would have thought had strong brands and didn't need to attract
traffic through PPC ads.

But GSIC's Q4 earnings announcement and conference call suggested that GSIC is unaffected (at least directly) by the rise in PPC ad prices, because its clients bear the cost of marketing their web sites, while GSIC provides (and profits from) the underlying e-commerce infrastructure. That's a crucial facet of GSIC's business model that doesn't seem to have been picked up by the sell-side. So when commenting on GSIC's earnings results, I wrote:

GSI Commerce has been viewed by some on the buy-side as playing in the least profitable area of e-commerce: back-end infrastructure and fulfilment. But note that its online advertising costs were basically flat year on year, because its partners do their own marketing. GSIC thus escaped the upward cost pressures faced by many other e-tailers due to rising PPC ad prices.

Is GSIC immune to rising PPC ad prices in the long run? No, because the growth of its e-commerce outsourcing business will depend on the profitability of the services in provides. But in the short term, GSIC may find that it's part of the e-commerce value chain is more attractive than its given credit for.

GSIC chart below.