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 up for Sale, or just in Trouble?

Tongues are wagging across the valley about Steve Case's Revolution Health being up for sale.  Is this true?  Or is Revolution just in a bit more trouble (after all the rumors of folks being unhappy and leaving, no health insurance for quite a while, etc. etc.). 

Either way, their traffic is dropping precipitously - see the graph below, from Quantcast.

This is quite the drop-off.  However, it could also be a function of Revolution slowing down their SEM efforts - they grew their traffic aggressively using SEM (and who doesn't today?), but early estimates held that the Revolution gurus were spending between $400K - $800k/month between October 2007 to May 2008, without getting a proportionate return.  If that was the case, then it makes sense that they ramp down their SEM activities until they can run them profitably, or at break-even.... or even at a loss that is sustainable, given their overall burn-rate.

There is, of course, another option - that Google changed their algos with respect to Revolution Health, temporarily destroying their SEM strategies.  It happens quite often,  much to the detriment of Google advertisers. 

(Its not just SEM players who get taken to task every now and then; SEO companies also get whacked when the big G changes its ranking algos - witness what happened to Answers.com last year).

By the way, on a totally separate note,  the graph above shows why I love Quantcast;  comScore, which is the metrics provider of choice for most advertisers and agencies (specially in the Health industry), shows a company's total network.  A few months earlier,  Revolution signed a deal with Daily Strength, to supply ads to DS.  comScore would probably show Daily Strength Page Views and other metrics under Revolution Health.