WebMD Not Buying Quality Health After All

With WebMD's share price free-fall ($32 to below $20), the erstwhile online Health leader is trimming some of its upcoming investments.  Its latest is to stop its proposed acquisition of Quality Health, which I covered earlier. 

This explains why, even after 3 months of announcing the deal, WebMD had not yet integrated Quality Health's traffic into its own in comScore.  As such, Waterfront Media's Everyday Health, which now reports Kosmix's RightHealth metrics under its own (see my earlier post), has a better chance of holding on to its new #1 ranking in comScore.

WebMD and Quality Health have signed an ad deal, with WebMD's sales team representing Quality Health as well.  As part of this deal, there is still a possibility that WebMD negotiates to report QH's metrics under itself in comScore.  Thats when the race begins again.

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!