CNET: High-Tech Super Portal

Yet again, the markets have gone into a swoon — troubled by the same fears:
interest rates, inflation, currency fluctuations. It’s as if history
repeats itself every month or so.

Then again, these sell-offs can be great opportunities to find bargains in
the Net sector.

As we enter earnings season, there are sure to be some nice surprises, to
help reverse the downward trend.

One company to keep an eye on is CNET, which reports on Thursday.

The fact is that the Web is a perfect medium for distributing high-tech
content. After all, according to Forrester Research, about $50 billion
will be spent by businesses online for computers and electronics.

As technology becomes more complex, people need ways to sort out the good,
the bad and the ugly. CNET has become a very trusted source for such
determinations.

But in the Net world, such leadership can evaporate quickly.

To prevent this, CNET launched a $100 million marketing campaign in July,
covering print, TV, radio, billboards and so on. It was a gutsy decision,
as the company had to forgo profitability. But for the long-term, the
decision should prove wise.

In fact, the decision may pay-off much quicker than expected.

For example, the company is averaging 130,000 leads per day for its
participating merchants (CNET gets a referral fee for those who purchase
products from the site). What’s more, it looks as if the conversion rate —
turning leads to customers — is fairly high, close to 10 percent.

Many say that the CNET strategy is effectively “turning browsers into
buyers.” According to CNET, the company generated $270 million in revenue
in the last quarter for its 103 merchants. Perhaps this is why CNET has
been able to hike its advertising rates between 15 percent to 20 percent. Yes, companies
will pay a premium for results.

But CNET is not stopping. It has recently added more properties, such as
Help.com and a new consumer electronics channel.

With such positive trends, there should be many surprises for investors for
the next year or so. With markets in a down spin, this is always a winning
strategy.


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