Internet Stock Blog talks about rising marketing costs at a number of companies, including Spark Networks and Planet Out.
LGBT – PlanetOut.comSales and marketing was $2.6 million versus $1.5 million. Revenue of $7.1 million was up 34%, in line with consensus. Noted: Yet another Internet company with rocketing marketing costs. From the press release: “The company increased marketing activity in 2004 as part of its strategy to provide long-term benefits to its brands, particularly Gay.com. As a result, sales and marketing costs for full year 2004 were $8.8 million, compared to $6.6 million for full year 2003. Sales and marketing costs were $2.6 million in the fourth quarter of 2004, compared to $1.5 million in the fourth quarter of 2003.” And later: “Guidance for first quarter revenue, Adjusted EBIDTA, and net income (loss) reflects several factors, including seasonality in advertising revenues.
SPRK – Spark Networks
JDate accounted for less 2004 revenue than AmericanSingles.com ($24 million versus $35 million) but much more gross profit ($22 million versus $10 million). The reason? Direct marketing costs for JDate were only 7% of revenues, versus 71% for AmericanSingles.com. Subscriber acquisition costs were dramatically lower ($8.09 versus $43.29) and monthly revenue per subscriber higher ($28.42 versus $22.16).
From the S-1: “In general, the costs of online advertising have recently increased substantially and we expect those costs to continue to increase as long as the demand for online advertising remains robust. If we are not able to reduce our other operating costs, increase our paying subscriber base or increase revenue per paying subscriber to offset these anticipated increases, our profitability will be adversely affected.”
