WebMD Acquiring Quality Health

Consolidation in the Health space continues, and now at bargain prices.  WebMD, the gorilla in the space, is acquiring MTS (Marketing Technology Solutions) and its subsidiary Quality Health for about $50 MM.  

Given that MTS had revenues of ~$21 MM in 2007, this is indeed a poor price for their shareholders. 

Why does this make sense?  Well, WebMD is far and away the leader in CPM advertising, and sponsored sites/ areas.  And Quality Health is the best at CPA for health advertisers,  or what they like to call 'performance-based marketing'.  So the theory would be that health advertisers and agencies now need only make one stop to find their advertising dollars.

Cons - by the same token, though, now advertisers and agencies suddenly find a large part of their budgets in one publisher's hands.  That will probably not be viewed in a positive light; after all, marketing 101 includes lessons on diversification for risk mitigation as well as spreading your message across more eyeballs.  You wouldn't just advertise on NBC on TV now, would you?  You would also keep some budget for comedy central, for the young crowd, for the Oxygen channel, for women, and finally for Monday Night Football... because we're in America, and not advertising on football programs gets your TV advertising license revoked.  So this should make things easier too for the other publishers, such as RightHealth, which is owned and operated by Kosmix, my employer.

The announcement took away the thunder from Steve Case's Revolution Health and Everyday Health.  Let the shake-ups continue!

Revolution Health Sale to Waterfront Media - update

Following my older blog post on Revolution Health possibly looking for exit strategies  (http://techperspectives-vikram-singh.blogspot.com/2008/09/revolution-health-up-for-sale-or-just.html),  now there is talk of them merging with Everyday Health, which belongs to Waterfront Media.  

I'm not sure how much conjecture there is in this news - the Washington Post was the only major news outlet that seemed to carry this article.   Plus, we've heard stuff like this before - layoff news from Revolution seems to come every couple of months.  And around August, there was talk of them merging with Glam,  which would have been funny.

So why might this merger make sense?  Well, to begin with, WebMD is the big bully in the online Health space.  Most Health sites need to sell display and other advertising to make money, and everyone plays second fiddle to WebMD.  With the market softening, this starts hurting even more.

Everyday Health and Revolution Health could merge, and start showing their combined traffic to potential advertisers and media agencies - this at least shows them  having traffic levels comparable to WebMD. 

At the same time, though, there is one issue - this would be the same as the old Daily Strength-Revolution deal, where Revolution signed up to have their ad sales team represent Daily Strength.   And they would get to show DS metrics under the Revolution name in comScore, if they needed to.  But if agencies thought about it, they would really be paying not for this combined set of eyeballs, but a lower number, since the sites would have a large overlap of users.  i.e. the true unique visitor traffic would need to be figured out, to ensure that advertisers and their agencies were getting the best deal.

Both sites were already doing this anyway - Waterfront Media operates a plethora of websites, including the one-dimensional-but-very-popular SouthBeachDiet.com site.

In terms of other strengths, Everyday Health is much better than Revolution at SEM, getting more traffic at lower cost.  And I like Revolution's branding and web 2.0-is look better.  So maybe there are synergies.... I just don't feel the combination will be greater than its parts.

Where does RightHealth,  my employer Kosmix's big Health property (#2 Health Information site per HitWise) end up with all these changes?  Well, for one thing, competition suddenly goes down in all aspects, if EveryRevolution is formed.  In my job, I'll fight against one less sales team and one less Business Development team  (I'm ignoring the benefits of more competitors right now, they are outweighed by the cons),  we'll get more traffic, the online Health space loses one major contributor to fragmentation....

To end this post, I'll throw out some potential names for the combined entity; pick your poison:

• EvolutionHealth  (my current favorite
• EveryHealthRevolution  (a close second)
• RevolutionDay
• EveryRevolution

If one of these is picked, I expect a royalty check.