That the performance marketing space has two public companies makes watching the stock market a fairly easy but equally frustrating proposition. We have so few companies of scale, and watching their stocks go up and down but more often down than up only makes us feel as though our sector is the Chicago Cubs of the public markets. Perhaps, though, our luck is beginning to change.
Vantage Media and BrokersWeb Combine to Create Multi-Vertical Leader in Online Customer Acquisition.
That's the title of the release that hit the wires this morning. For hard core lead gen folks, it's an announcement that, in some ways, is long overdue. BrokersWeb had begun a process (the term used for a company hiring a bank for fundraising or m&a) earlier this year to seek a strategic acquirer, but it was pulled from the market relatively quickly. The company, though, did not take in any money or change their strategy, i.e., desire to be acquired. At the same time, months and months went by without any word about the not-abandoned process. Until now that is.
Had we been asked to guess which company would most likely acquire BrokersWeb, we're not sure we would have guessed Vantage Media. In fact, I'm pretty sure I would not have guessed them at all. we would have looked to one of the aforementioned two public companies in the space - QuinStreet or BankRate - as the most likely acquirers. Both QNST and RATE have core products offering vertical click marketplaces, and while each already has their own auto insurance click marketplace, buying BrokersWeb could have helped them essentially lock up the market. For QNST, buying BrokersWeb would have helped them consolidate a competitor that in the last 16 months has gone from non-existent entrant to serious pain in their side. Were I asked to guess what company Vantage Media might buy, with the hint being it could be a big acquisition, I probably would have put BrokersWeb up high on the hit list.
Vantage Media may not be a household name, but the company is anything but an upstart in the online customer acquisition space. The DiPaola brothers started the business more than a decade ago, discovering paid search when doing some almost accidental affiliate marketing for Crutchfield, and then becoming one of the earliest players to focus on education. Vantage Media focused exclusively on for-profit education via search, and in the span of a few short years became a $30mm+ player at a time when very few companies had achieved such scale. The brothers sold a majority of the business to venture / private equity firms four years back, and the new management team looked to take the business beyond education. Vantage never left education, but they started to position themselves as a search marketing agency that took principal risk. Earlier this year, the company underwent a transition again with a new CEO taking over, Patrick Quigley, one of, if not the first employees of QuinStreet.
We have covered BrokersWeb a number of times on this site. The company began as a health insurance play, leveraging its suite of organic domains and a select group of partners. As QuinStreet's auto insurance click marketplace started to take off (thanks to its acquisition of SureHits), BrokersWeb decided that they would focus their efforts less on health insurance and build an auto click marketplace. The move made sense, especially in light of the changes taking place on a policy level with health insurance and the new laws lowering how much agents made on new policies. The move paid off big with BrokersWeb posting ridiculous growth, numbers like $2mm to $16mm to $40mm+. The only downside to this growth was that their overall headcount didn't increase during their exponential growth, meaning the company didn't have an infrastructure that would allow them to confidently continue that growth. They knew they had the proverbial bull by the horns, but they also knew it could buck them off if they didn't take action.
Combining BrokersWeb with Vantage brings together an interesting set of disciplines across multiple verticals not to mention a company that should do well north of $150mm in 2011 with $200mm+ a realistic target for 2012. Also of note, this was less about an asset, e.g., acquiring an agent base, and all about acquiring a team. Vantage saw what the BrokersWeb team could do, and obviously views this as a chance to aid them as they look to repeat the success of auto insurance into other verticals (education anyone?). That BrokersWeb didn't look to find just the largest buyer (Vantage is big but not that big) tells me the team at BrokersWeb cared less about the money and more about building a big business, which is great news for the industry. Congratulations to both companies.
Digg 
