Never underestimate the power of a fast-growing website. Few investors considered Intermix little more than a low-priced dot-com wannabe -- until its MySpace social networking website led to a $580 million buyout by News Corp.
That's what I keep reminding myself when I see press releases touting the rising popularity of sites like Spill.com and WikiAnswers.com. They're run by small, publicly traded Internet companies that fell out of favor long before these new workhorses stepped up to the plate.
I've decided to check into some of the low-priced Websmiths out there, to see whether there's another potential Intermix in the making. Here are a few that intrigue me, though it bears mentioning that all of these players sport significant risks.
Forget the vanilla-bean namesake reference site, where year-over-year revenue growth is actually slipping. WikiAnswers.com has been the real stallion at Answers lately. Ranked by comScore as the fastest-growing domain among the country's top 1,500 websites, the social Q&A site may be the ticket to a company revival.
WikiAnswers still has a way to go. Despite its growth spurt, the Web 2.0 site still accounts for just a quarter of the company's revenue mix. However, as long as it keeps growing quickly, it will be a fine feather in an otherwise moribund company's cap.
Movie review site Spill.com was such a small part of the MIVA pie that it didn't even make it onto the company's press releases until recently. Given MIVA's second-tier FindWhat.com search advertising engine, and its Espotting acquisition to gain a foothold in Europe, who would have thought that a downtrodden MIVA could find new life in celluloid?
Spill's ascent is the real deal. The site cracked market-watcher Hitwise's list of the 20 most popular movie and entertainment sites for the month of March. Spill attracted almost 500,000 unique movie buffs last month, serving up 2 million pages and 600,000 views of its amusingly animated movie reviews and celebrity interviews.
The movie site is showing double-digit sequential percentage growth with every passing month this year. Until that slows, the upside continues, even if Spill.com remains a small part of the MIVA model.
The real gem in the United Online family isn't apparent from the company's fading Juno and NetZero Internet access business. It isn't even Classmates.com, the pioneer in keeping college grads connected; its IPO was shelved back in December under atrocious market conditions.
No, my favorite piece of the United Online pie is actually MyPoints.com, the Web loyalty program that would have been the profitable part of the now-defunct Classmates Media IPO. MyPoints had attracted 8.4 million subscribers as of last summer, all shopping through the site and answering surveys. The site shares its affiliate revenue with those users through points that are applied to gift certificates at dozens of popular chains.
I see the botched IPO as a chance for MyPoints to keep growing, earning the right to go public if Classmates still isn't up to snuff in a few quarters.
If you want an entertainment-strike victim, Hollywood Media would show up early for the casting call. As the company behind Hollywood.com and Broadway.com -- and a 26% stake in MovieTickets.com -- it got slammed by both the stagehands strike and the studio writers' strike.
Despite its West Coast name, the East Coast-fueled Broadway.com actually accounts for the lion's share of Hollywood Media's revenue. As one can imagine, November's stagehands' walkout whacked out a good chunk of the pre-holiday ticketing business at the company, prompting wider losses and lower revenue.
However, now that those labor problems are in the past, Broadway.com should continue to grow as the number of stage shows and the prices consumers are willing to pay for premium tickets continue to grow.
When you own roughly 200,000 domains, it's hard to pick a single catalyst. In Marchex's case, the local domains bear watching. Local advertising revenue grew at twice the pace of the company's overall 13% top-line gain this past quarter. With its OpenList.com site able to populate what once was dormant localized domains with area content, Marchex should continue to grow.
Traffic has been kind to Marchex. It attracted 26 million unique visitors in December, generating 50 million advertiser leads. Since local search is growing faster than national search, specialists like Marchex and Local.com
The moral of the story with all of these stocks is that big things can come in small packages, which is often the mantra of the Rule Breakers newsletter service where I am part of a team of specialized sector analysts on the lookout for great companies early in their growth cycles.
Think small. Dream big.