Fly like you mean it, Microsoft (Nasdaq: MSFT).
Farecast.com, a website that helps potential airline passengers by predicting airfares on certain routes, is coming under Microsoft's wing in what the Seattle Post-Intelligencer is reporting as a $115 million acquisition.
It's not the first time that Mr. Softy has hit the tarmac. The company had a majority stake in Expedia (Nasdaq: EXPE) several years ago.
Farecast may be a fledgling site, but it's still a great catch for Microsoft. My biggest gripe with the Microhoo hubbub -- beyond the outlandish price -- is that it doesn't change the fact that Google (Nasdaq: GOOG) is superior to Microsoft and/or Yahoo! (Nasdaq: YHOO).
Microsoft and Yahoo! are traffic magnets, but usually to pages -- like free email and IM platforms -- that are historically tough to monetize. Google may serve up fewer pages than Yahoo!, but it delivers three times the revenue, because most of that traffic is coming to its search engine.
There is no easier layup in the online advertising industry than serving sponsored leads to folks ready to spend money. On that front, it's hard to beat seekers on a travel site looking to book a flight.
This doesn't mean that Microsoft-sold "Sponsored Links" that run throughout Farecast will be enough to make Microsoft a contender in the high-margin contextual marketing space, but I'm guessing that those ads will work better than their appearance on many of Microsoft's own sites or existing partners like Facebook.
Microsoft needs more deals like this one, especially if the Microhoo deal comes undone, and the software giant has the means to go shopping. I've suggested that Microsoft pursue potential buyout candidates like The Knot (Nasdaq: KNOT) and Bankrate (Nasdaq: RATE) for the same reason that Farecast works. Whether it's wedding planning, home refinancing, or booking that flight to visit your parents in Chicago, this is the quality traffic that Microsoft and Yahoo! lack right now.
You can't fight Google with vanilla pages with low-paying ads for ringtones and survey sites. And you certainly can't fight Google by trying to make that up in volume. Microsoft needs quality -- not quantity -- and it's why it would be better off buying nearly 400 Farecasts than a single Yahoo!.
More Foolishness is in the forecast:
Closed for 15 months – opening 10 days only! Get notified ahead of time as our expert portfolio manager invests $1 MILLION in the best opportunities from across The Motley Fool’s premium investment services. This is the first open since August 2008, by invitation only. Enter email below.
Terms & Conditions
RSS Headlines
Fool UK