Online banking marketplace Bankrate
First was the $10 million purchase of FastFind, a lead aggregator. That means the company generates consumer leads, which are then passed along to lenders such as mortgage, auto financing, and home equity providers. By filling out forms at the aggregator, visitors leave valuable information that in itself can be a source of future revenue. For instance, a person seeking a mortgage may also be interested in products from Home Depot
Bankrate also purchased MMIS/Interest.com for $30 million. This company publishes mortgage guides, which get distributed through newspapers. No doubt, this is a natural fit for Bankrate, which has a long history in the rate table business. The company has existing relationships with 150 newspapers (including The Wall Street Journal, The New York Times, and USA Today) that license content, and it publishes "Consumer Mortgage Guides" in local newspapers such as the New York Post, Newsday, The Atlanta Journal-Constitution, and The Boston Globe.
It stands to reason that despite Bankrate's already strong presence in newspapers, MMIS/Interest.com can help Bankrate learn more about the newspaper business. On the other hand, Bankrate is likely to improve the online business of Interest.com, which connects consumers with lenders.
There are also, naturally, financial benefits. "FastFind will take the applications for leads that Bankrate.com and Interest.com generate from our in-market consumers who come to the site and receive bids from up to four lenders," Evans says. "The lenders pay $20 each for the lead. This is a new revenue stream for us." The combined company is expected to post revenues of $78 million to $79 million in 2006, with pre-tax income of $22 million to $23 million. Pre-tax earnings per share are forecasted at $1.22 to $1.27 per share.
The big positive for Bankrate will be continued growth in online advertising. Through FastFind and Interest.com, Bankrate can go to existing advertisers and sell them more places to put their ads, while Bankrate will have more places to park things like banner ads.
These acquisitions follow a major website design; a new cost-per-click model for monetizing traffic; other co-brands, such as with Autobytel
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Fool contributor Tom Taulli does not own shares of companies mentioned in this article.