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Ok, so by now we?ve all had time to digest the fact that LinkShare is being acquired for a staggering $425 million in cash by Japanese e-commerce player Rakuten.
I?ve spent the better part of today talking with a variety of folks about what the deal means to all parties involved. The only point of agreement so far is that Steve and Heidi Messer are going to be rich or should I say even richer. Many other points about the deal are up for debate.
So, is it a good thing that a huge, international conglomerate with an extremely diversified portfolio/agenda is swallowing the last of the big independent networks?
Some say the financial backing from a $9.7 billion company can?t hurt LinkShare. Others are already requesting tickets for Rakuten Golden Eagles. Still others fear a conflict of interest with Rakuten?s huge online shopping mall of 13,500 retailers and service providers.
Overall, Haiko de Poel, Jr., president of online affiliate community AbestWeb.com says, ?LinkShare has a lot faith and lost trust with affiliates. This whole deal is not a good thing.?
The amount that Rakuten was willing to pay for LinkShare has also raised some eyebrows and has left some scratching their heads. $425 million in cash is a lot of money ? especially when you consider the selling price of LinkShare competitors.
Commission Junction was bought for $58 million in cash and stock by ValueClick in October 2003; ValueClick previously purchased affiliate network BeFree in March 2002 for $128 million in stock; Performics was acquired by DoubleClick in an all cash deal estimated of $58 million (plus an earn-out of up to $7 million) in May 2004; DoubleClick was later (July 2005) acquired by Click Holding Corp. in a deal valued at $1.1 billion.
One poster on ABestWeb.com’s LinkShare forum called the sale price ?An insane amount of money!!? While another wrote, ?I was actually surprised they got it for as little as $425 million. Especially considering MySpace was purchased for around $580 million and Shopzilla.com went for around $560 million. I guess the going price for big sites like these is between $400 million and $600 million I can’t believe ValueClick paid so little for CJ, they certainly got a deal there.?
?The price ? especially compared to their competitors is startling,? Shawn Collins, an online marketing consultant, says. ?But the economy is in better shape than a year ago. Affiliate marketing is more respected and on firmer ground. It?s a real testament that affiliate marketing is going well.?
de Poel admits that affiliate marketing is only slightly hotter than when CJ was purchased two years ago.
?Even though the climate is better and affiliate marketing is a little hotter, it?s not enough to justify $425 million. There is no way you can tell me that LinkShare is worth twice what was paid for CJ and BeFree combined. There?s just something wrong with that. In fact, there are just too many things wrong with this whole deal.?
There were lots of other opinions flying around that used language unsuitable for a professional publication. I’ll spare your delicate sensibilities. Although, those are typically the most fun to read, they are the ones that I dismiss first.
Meanwhile, most affiliates still have a lot of questions. When will they be paid? How will they be paid? Who will pay them? What changes are going to be made? What improvements are going to be made? How will current issues be resolved? Will Chairman and CEO Steve Messer and COO Heidi Messer actually stay on through the transition? And if they do, is that a good or bad thing?
Because upper management is not leaving, de Poel says, that everything will remain the same and his book that?s not a positive thing. ?It?s the same s–t, just a different smell. This company has f—ed the affiliates by pushing back important technology and claiming it was for one reason, when really it was because they were being sold.?
So many questions. Stay tuned over the next several months to see how this all plays out.
While I’m waiting to see what happens with this drama, I’ll be engrossed in lighter fare – watching reruns of Gilligan’s Island. Rest in peace, Bob Denver.
Let me know what you think about the LinkShare deal. lisap@revenuetoday.com
