Private Equity and Telecom Yellow Pages

Check out a thoughtful post by Mark Clare on the Valuecruncher blog. He points out that Private Equity firms are able to raise debt (borrow money) at much lower interest rates than other potential Yellow Pages purchasers (such as Telstra, whose shareholders demand more return than low interest rates).

By plonking a huge amount of debt on the company the PE guys can make the equity portion have a much higher return. The ‘cost of capital’ in theory remains constant, but given that the debt is so low, and that these guys can raise such a huge percentage of the purchase price, it actually makes Yellow Pages more valuable to a financier than to Telecom itself.

Nice analysis, but I’m sorry Telecom – you are selling the family jewelery, though you are doing so for more than the share market is valuing it in your hands.

Living Large

Olivia from Trade Me has started blogging – at Liv Large.

Expect some interesting stuff as Liv has not only been at Trade Me for a long time, but she is also the person at Trade Me responsible for buying and selling advertising. There is lots of growth coming down the pipeline for online advertising in general as spend follows media usage, and Liv will be in the center of it.

Welcome to the Kiwi Blogoshere!

Ferrit – 2 unsubstantiated rumours….

Last night in the pub I heard from someone, who overheard someone else saying:

1: Ferrit offered discounts to Telecom staff in the pre-Christmas period

2: Ferrit is now asking retailers to discount certain products and are picking up the tab

In the style of Wonkette I’m just passing on these scurrilous rumours… but would love it if someone could prove or disprove these.

The first is important because that first rumour would put a big dent in Ferrit’s perceived performance over the Christmas period (performance which has suffered since). I’d love to know what percentage of Ferrits’ business in that period was ex-Telecom.

The second is interesting. It sounds crazy, but it is actually not so stupid if Ferrit is actually redirecting money away from costly and ineffective offline advertising campaigns.

If Ferrit believes people that try the site will come back, then making people try the site by offering compelling bargains is a good way to go. They are following in the footsteps of Amazon (discounts, free shipping), Paypal (free cash) and others that did this in the heady years

It’s the ‘cost per customer acquisition’ approach – which was the idea that whoever got the customers kept them for a long time – but was pretty much proven flawed by 2001. Sure PayPal (in particular) and Amazon made it work, but it was very expensive.

It could work, and is certainly worth a shot.

It is obviously better to slowly build based on word of mouth and minimal advertising – like Trade Me, or Plan HQ (congrats on the launch chaps). Of course word of mouth only works if your site and business model is actually half decent.

Scoopit!

Read this if you are in advertising or media…

The Digital outlook report is a bit over-produced, but there is some very good stuff in there. (It isn’t exactly easy to view on the internet – unless, ahem, you have a 30 inch monitor)

Some of it is obvious, some irrelevant to NZ, but there is much there to read and discuss.

Guy Kawasaki’s blog has the contents (and hosts the download).

4 points from the flashy 6.2mb pdf that demands printing on a decent colour laser printer.

1: CPM prices rose 18% last year (Page 9 – 6 on the pdf) – advertisers are seeing value in getting their brand in front of customers. There is also some discussion on brands

2: Page 65 (page 34 of the pdf) is interesting: the cool is fading from iTunes (I agree – and there is no next big thing), blogs are getting ready for big time media (not what they think) and Americans will finally start txting. Start from page 59.

3: There was some discussion of how online spend is synergistic with TV spend. The chart shows the huge lift online gave versus TV, and how the tow media help each other – it is from some research they commissioned – page 71. (37 in the pdf)

Conversion Rates - Digital Outlook report

4: On Page 95 (49) there is one of two discussion articles on how AJAX is screwing up Page Impressions as the primary measurement

If you are in the advertising game then you should read this.

Scoopit!

Scoopit – fair and balanced?

Why does this promotional post get rated in the Scoopit rankings when this promotional post already exists? (I previously did this related post)

Moreover – count the votes on the Scoopits – this has 9 votes, but 6 voters. This has 6 votes, and 3 voters.

Clearly Scoop members (e.g. althecat, graeme, scooper) get two votes a piece – are you upfront with this guys?

I’m not objecting (after all you seem to vote for my stuff :) as this addresses the dumb-masses-rule flaw in Digg, and elevates average article quality. and i beleive Scoopit is filling a gap in the market.

However – the system fails if the editors vote for the same story twice. Very Slashdot-esque.

While we are thinking of Slashdot though, how about a Slashdot-like system of giving non-scoopies the ability to have more (karma) votes? You can imagine a system where power editors who are demonstratively good (look at their results) at voting early for popular quality scoopits have the ability to cast up to say 5 votes on a story. Do this right and the scoop editors can sit back and watch the site run itself….

I’m going to press the Scoopit button now… <ducks>

Scoopit!

telecom strategy

Some interesting things to glean from Telecom’s consumer strategy document, and the wholesale technology document – presented at an analyst day today. Read it – there is a lot there. (Juha found these)
Firstly – it is actually not that bad – the strategy seems coherent.

Secondly – The biggest source of retail income (page 4) is that bloody access charge, which thankfully is falling. Calling revenue fell by a staggering 10% (is that year on year Telecom, or 2003/4 to 2006/7?), while mobile revenue was up 14% in the same period (whatever that was)

Thirdly – there is a lot hidden in the facile nature of a powerpoint presentation – I think listening to the call may be worth it.

There is a lot here – I’ll dish up more later – this deserves more than a cursory commentary.

Scoopit!

Your house is already on the market

via economist blog via trendwatching:

“Finnish real estate site Igglo lets potential buyers ‘pre-order’ houses that aren’t on the market. Igglo has photographed every building in Helsinki and several other Finnish cities, and combines these photographs with satellite images and maps. Every property is listed, not just those that are currently on the market. (Their tagline is: “Your house is already on Igglo.”)

“On the side of intentions and consumer sellers, there’s US based Zillow, which lets home owners take the initiative, by allowing them to set a “Make Me Move” price without actually putting their house on the market. Once owners set a price (“that magical number you just can’t refuse”), potential buyers can contact them anonymously via email. It’s then up to the owner to decide whether they really want to sell.

Combine the two, the economist blog says, and you’ll have a great business model.

It certainly is a great end game for property sites. Consider that property sites have a huge volume of turnover, and so will collect photos and descriptions of an increasing percentage of houses. Combine this with drive-by photos and fly-by photos and the endgame is in sight.

People wanting to sell their house could just (pay to) flick a switch and turn on the ‘for sale’ sign on the property site.

People that have a “make me move” price could pay a lot less, or pay only when they receive a serious offer. Opting out would need to be either a free option or, given privacy concerns, the default.

Scoopit!

eBay aussie give Tax Office seller records

Via Tamebay – the ATO is getting data on sellers with over OZ$50,000 in sales, affecting an estimated 1000 sellers who should be GST registered. eBay handed over records from 2003 to 2006.

Here in NZ the threshold for GST is lower at $40,000 worth of purchases, and I expect there will be plenty of candidates.

Interesting eBay Australia are not collecting GST on their fees as they are registered as a foreign company. Good luck with that strategy guys.

Paymex paygo paypal paywhatever

The battle for payments in NZ is on. Or is it? We have a plethora of wannabe players, but nobody seems to get it.

Paypal doesn’t care – after all eBay isn’t around and why support Trade Me?
Pago is just woefully bureaucratically crippled, and they can’t spell
Paymex looks ok, but who the heck are they anyway?
Paymate is a bunch of aussies who need to learn about web usability.

And there are probably others out there – the fact I cannot find them (or even these guys) with a cursory Google is not a good sign…

Wannabee payments monopolists – here is some free advice. If you want to crack the New Zealand market then it is very very simple – copy what PayPal did when they launched.

Give us money. $5 or $10 when we join.

And how much are you spending on advertising? oh right – nothing. Don’t think for a moment that PayPal succeeded without advertising (and giving away money). An occasional self laudatory press release isn’t going to get you anywhere (aside from inclusion in a blog rant).

Also spend effort (and pay money to usability professionals) to make your website easy to use, be local and never forget that our bank to bank personal transfers are dead simple, so you’d better be pretty good.

That said – those bank transfers cost far too much, and have considerable room for improvement in usability (are you listening BNZ?). Why are they not instant instead of overnight? The banks have a window of opportunity to shape up, or one of these guys or someone that gets it will take their business away.

Scoopit!

Love Calculator – Vodafone and Google shame

I really hadn’t looked at the scam that is love calculator. Google ads are still displaying for these fraudsters. Juha has the full run down.

Step one: click on a google ad (still displaying!)

Step 2: enter your name, mobile number and star sign

lovecalulator scam

Step 3: enter a code that was txt’d to you. “Your pin code is xxxx. Enter it into the website to receive the name of your Love Soul Mate”

Step 4: get reamed charged shafted according to that fine print on the 2nd page:

“Summary terms: By calculating your perfect match and by entering your personal PIN Code which will be sent to the mobile phone number supplied by you on this website, you acknowledge that you are subscribing to a bi-weekly horoscope. All plans are subject to the Terms and Conditions. You may stop this subscription service at any time by sending a text message with STOP, to short code 2228. Your phone must have text messaging capability. The love calculation is priced at $5. The weekly horoscope is sent twice weekly and is priced at $5 per horoscope with a $5 club joining fee. Standard text messaging rates may apply. Information? 0800440619. Please click here to see full Terms and Conditions. “

That’s $5 for the love calc, $5 to join, $5 for the first horoscope – so the first time you see a charge there will be $15 worth. What calculating con artists. There was no mention on any other page, nor on the txt. So why does Vodafone still let these guys operate? (I’m not sure if Telecom does because I cannot test it). Why does Google still let these guys advertise? Scammers have no place in NZ. Shut them down please.

Scoopit!

iBankers have to be real estate agents

Apparently, I read in the Independent Financial Review last week, people that receive a success fee for helping a company sell are required under NZ law to be licenced real estate agents. The “investment bank” that helped Trade Me sell was specifically mentioned as a candidate for this law.

1: Trade Me had no formal investment bank advising it on the sale (just me), and nor did Fairfax – something both parties are justifiably proud of.

2: What a stupid law. Apparently the REINZ can go after anybody that receives success fees and claim them. Great way to throttle the incoming private equity money and to slow the sale of companies.

3: There are no links so far on this blog entry as AFR’ website is a front page only, and you are referred to a strange site called knowledge-basket (the name of which is derived from a legend involving Täne.) Pricing to search IFR archives is $1 per search so you had better get those keywords correct (imagine paying $1 per google search). This may work for organisations that have an umbrella agreement, but not for individuals blogging from home…

4: While there are courses to become MRIENZ, extremely little of the content is relevant to a investment banker. I wonder whether I can apply cross credits from any of these (relevant) courses from Yale University?

5: Even worse REINZ says that once you have passed the real estate sales person exams then you have 3 years to work in the real estate industry, or else you must resit the course. Someone involved in helping businesses to sell but not active in the real estate game would therefore have to keep re-sitting.

Scoopit!

What is happening to Xtra?

On March 1 xtraMSN split to form Yahoo!xtra and msn.co.nz. Let’s track the results using Netratings data. (Alexa does not have anything interesting, and I do not have Hitwise data)

The old Xtramsn site is now 1 page, which lets you choose between yahoo!xtra and msn. Neither of those new sites are yet tracked by NetRatings, and apparently yahoo!xtra will ‘never’ be as Yahoo! corporate does not deign to use foreign tracking services. msn.co.nz seems to have the NetRatings code, but no results are to be seen so far.

The chart below shows what data we have: Xtramsn.co.nz traffic disappeared, and was semi-replaced by xtra.co.nz traffic. The new xtra.co.nz traffic appears to be just the traffic to the xtramsn.co.nz selector screen, The big jump was on Friday the 2nd, whch is a day late, and may be due to some code changes. Since then about 150,000 UB’s per day go to the selector screen, versus 335,000 to the xtramsn site the previous week. Most people have made their mind up about replacements for xtramsn it seems.

NetRatings data

Let’s look at PI’s – we can add these together, so the dotted line is the xtra total. Missing PI’s are playing in Yahooxtra or msn.co.nz, or have just gone straight to google, trademe or other sites.

NetRatings data

Seek gets free links from both new websites, and has huge ads all over msn (the only ads there), but their traffic looks static.

Now what is really interesting is that TV3 traffic in red above. The news content for msn.co.nz is supplied by TV3, and if you click on pretty much any of the links on msn.co.nz then off you go to TV3. We’d expect to see a huge jump in TV3 traffic, but while we see that in % terms (below) – in absolute terms (above) TV3 is still tiny, which means that msn.co.nz is performing very poorly. No surprise given the shoddy website.
NetRatings data
However in online TV land TV3 is moving in on TVNZ – the UB’s are around 70% (it varies a lot by day), while the Page Ompressions are around 50%. TVNZ is getting more Page Impression per visitor, suggesting people stick around for longer. However given that these are video sites PI’s are not great yardsticks.

NetRatings data

So – we will continue to watch TV3, and hope to see msn.co.nz appear on the rankings soon. Sadly Yahoo!xtra traffic will remain a bit of a mystery, but we will glean what we can from Alexa.

Scoopit!