Delivering niche-specific leads to advertisers took a step back last night, as Bankrate (Nasdaq: RATE ) and The Knot (Nasdaq: KNOT ) posted quarterly declines.
These are two of my favorite Internet companies, so I was hoping they would defy Wall Street's bearishness. But it wasn't to be.
Bankrate posted a 10% revenue dip to $38.3 million during its first quarter. Earnings fell even harder, down to $0.25 a share after last year's $0.35 showing. The company is the undisputed champ of aggregating current interest rates on everything from home equity loans to interest-bearing checking accounts.
The site also wasn't the hotbed of activity that one might expect. Serving up 199.5 million pages during the quarter is nice, but it's still 7% below last year's action. The more troubling metric in the report is that hyperlink revenue -- income from financial institutions that pay Bankrate to post direct links to their websites on rate-listing pages -- fell by a sharp 19%.
The Knot's report was even worse, because at least Bankrate was profitable. The wedding-planning site's revenue held up by coming in flattish at $23.7 million, but the company posted a loss of $0.04 a share. That reverses a small profit The Knot rang up a year earlier.
Gains in local online advertising and merchandise revenue were essentially offset by weakness everywhere else at the company, but the loss wasn't expected. Analysts figured the company would simply break even.
I'm not losing hope. Bankrate isn't as profitable as it used to be -- and The Knot isn't profitable at all this time -- but they remain attractive ways for advertisers to reach their target audiences. If you have an interest-based financial vehicle to promote, how can you ignore Bankrate? If you're a florist, a banquet hall operator, or even an Adam Sandler-channeling wedding singer, how can you dismiss a site that draws millions of folks planning their nuptials?
Most niches have their lead generators. You have InsWeb for insurers, Market Leader (Nasdaq: LEDR ) for real estate agents, and Tree.com (Nasdaq: TREE ) for lenders. Web-savvy sponsors will also naturally go right to the top -- and bid on keywords through Google's (Nasdaq: GOOG ) search results -- but there's something to be said for the specialists that can serve up ads alongside proprietary content and specific listings.
The Knot and Bankrate are both active Motley Fool Rule Breakers recommendations. They also aren't taking the market's current lull quietly. Bankrate relaunched a redesigned version of its namesake site last month. The Knot is rolling out dozens of smaller sites, in hopes of generating more traffic through destination-specific wedding planning pages.
Evolving in the shadows is commendable. When the ad market bounces back -- and it will, eventually -- the active leaders are the ones that will feast on fatter chunks of market share. Online lead generation is too perfect to let this sloppy quarter get in the way of the future.
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