NONE: Re: A money-making web site (was: Cost/Audience Comparisons)
Re: A money-making web site (was: Cost/Audience Comparisons)
Cliff Kurtzman (cliff.kurtzman_at_tenagra.com)
Mon, 22 Jul 1996 22:16:59 -0600
I wrote:
>>Our client Harley-Davidson of Stamford <http://www.hd-stamford.com/>
>>consistently tells us that they bring in profits from direct sales that
>>exceed the costs of maintaining the web site. See
>><http://owi.com/netvalue/v1i2c1.html> for a case study.
<snip>
and erik kraft <erik_at_ensuing.com> replied:
>Both of these are pre-selling. Their web site is a vehicle to attracting new
>customers, not for direct sales.
I guess I don't understand the definition of direct sales used here.
People are going to this web site and filling out the order form and buying
stuff nearly every day. Why is this not considered to be direct selling?
<snip>
>>Tennis Warehouse <http://www.tennis-warehouse.com/> advertises their web
>>site on one of our web sites, and generates significant revenues from the
>>endeavour. See <http://www.inc.com/incmagazine/archives/01960932.html> for
>>a case study in Inc. Magazine.
>
>Again, Tennis Warehouse may be making money, but is the company that is
>hosting their on-line ad?
Well, in this case that company is us. Whether our company as a whole is
making an overall profit does not seem to be relevant, as we are involved
in so many different online endeavours. However, whether or not the
advertising revenue we receive for this site exceeds our costs for this
site is applicable. In this case, we feel it is appropriate to including
our labor costs priced at the same rate per hour that we charge our clients
for services, because the time we spend on this site could alternatively be
spent supporting and billing clients (or acquiring new clients). By this
standard, the web site is not yet profitable, but at the current rate of
growth in our advertising, we project that it likely will be profitable
within the next six months.
<snip>
>>I'd be surprised if anyone gives you information at this level of detail.
>>As you can imagine, this sort of data is highly proprietary. It is enough
>>of a risk for them to talk about their successes even in general terms. I
>>believe that the PR value of being a success story exceeds the risk of
>>imitators trying to grab a portion of their market share, but there is no
>>certainty of that fact.
>
>I doubt this. Most of the web and internet companies are either public or
>trying to go public. This requires a certain amount of financial disclosure.
>It is also common for companies to investigate the financial solidity of
>other companies they will be doing business with.
I think that most of the web and internet companies are _not_ either public
or trying to go public. Perhaps most of the higher profile ones are, but
on sheer numbers, they are in a vast minority. There are well over a
hundred Internet companies in Houston (where we are based), and the only
one that quickly comes to mind as going/having gone public is The Forefront
Group, although it is certainly something that we have considered, but not
yet too seriously.
I would also argue that most companies are more than just a web site.
Looking at company financials as a whole does not necessarily tell you much
about their web site's profitability. And most private companies that I
have dealt with (including mine) tend not to give out any detailed
financial data unless it is for very exceptional circumstances and under a
strict non-disclosure agreement.
--Cliff
Cliff Kurtzman
The Tenagra Corporation
http://arganet.tenagra.com/
713/480-6300
