Bear Stearns wrap-up…

June 13, 2007

Digital Marketing ChannelAdvisor By ChannelAdvisor


Earlier this week I had the honour to be on a CSE panel moderated by Bob Peck with some great panelists:

  • Talmadge O’neill (disclaimer, Talm and I go way back to OVER days)  from Mezimedia/
  • Michael Yang (founder of mysimon!) from
  • Glenn Meyers from

We covered lots of topics and Bob Peck did a great job catching the gist of the conversation in his summary (follows).  One behind the scenes topic was lots of speculation around the NexTag exit.

There are enough ex-NexTag people around that some data is starting to come out:

  • NexTag revs: $150m
  • 30% EBIT margins
  • $45m/y profits

So they were taken out for 8x revs, 26x EBIT.  Looking back, I’m pretty sure this is a record for the CSE space, not only on the total value of the deal but on the valuation metrics!

You’ll see in Bob’s notes, Mezi is closing in on $70m in revenues with a similar margin picture as NexTag.  I’ve got to give a big tip of the hat to those guys – it’s always cool to see folks you worked with previously that took the entrepreneurial path do well – KUDOS!

Peck notes follow->

  • Operating from U.S. and Japan; raised 11.7M in capital, two patents pending
  • The site currently features 5000+ retailers and attracts 3M UV.
  • The speaker strongly believes in social shopping.
  • Currently, most of’s merchants are CPC based expect for one, which is CPA based. Retailers get 60-70% of traffic from search engine or CSEs.

  • 3 year plan: targeting $150 million in revenues (150% YoY growth) and 30% net operating margins
  • Low capital requirements for the business model: <15 million raised
  • Differentiation from other CSEs:
  • myTriggers is a CPA based model (WalMart just removed CPC feeds from many CPC based CSEs);
  • Eliminates risks for merchants;
  • Deliver deterministic ROI;
  • Limited maintenance and management resources from retailer point of view.

MeziMedia /

  • Global shopping sites started as online coupon site. Properties include
  • Market leadership in both U.S and Asia (properties in aggregate are the #4 largest site in the U.S; #4 in Japan; #3 in
  • China) and is now moving to Europe.
  • Currently has 160+ employees with offices in Los Angeles, Shanghai and Tokyo
  • Not capital intensive: <$2.5 million raised
  • Project $65.6 million in revenues in 2007 and operating cost is about 10% of revenues aided by China infrastructure.


  • Scot Wingo believes that the comparison shopping industry is going through transition from Comparison Shopping 1.0 to Comparison Shopping 2.0 as the industry addresses challenges such as acquisition of traffic and start to embrace niche products.
  • He observes that dollars accelerate to comparison shopping and the vertical-specific comparison shopping strategy is very successful.
  • CSE can ultimately become part of search – just like Google is incorporating Froogle into universal search.
  • ChannelAdvisor clients marketing spend on CSE was about 5% two years ago and is now 15% and could likely to increase to 20-25% in steady state.