Tuesday, May 5, 2009

TheStreet.com Results: Cramer Needs To Learn Internet Advertising

TheStreet.com (TSCM) are out and they are not pretty. You'd think that when advertising is moving from deadwood press to internet, and with great popularity of Jim Cramer, TheStreet.com would reap huge benefits. As Jim would say 10 years ago, wrong! Company lost big, even without accounting for charges.

How advertising is done on the 'net by successful companies? I know exactly two companies which make money in this area: Yahoo! (YHOO) and Google (GOOG). The bulk of this money is earned by search word advertising, meaning that companies add ads to the search results, clearly marking the ads. Google is much more successful in that, but Yahoo!, with all its problems, makes profit, even in current depression turning into recession. Yahoo! also serves a lot of display ads. All these ads are absolutely not intrusive, they usually do not interfere with browsing.

Now lets see how advertising is done by TheStreet.com. When you open the site, you are greeted with full page ad. That's the very definition of intrusive ad. Then you go into the site, which is littered with any kind of intrusive advertisements. You see rich (and CPU consuming) flash ads and inline ads, which are no less intrusive. You'd think that Cramer, who recommended Google from the very beginning (and such a great pick it was!), would learn something from Google geeks. No such luck. What we see on TheStreet.com is business journal advertising transferred to the 'net. Jim, it doesn't work this way!

Of course, the fact that site was redesigned last year, and not in the best way, doesn't help at all. I mentioned it here as a reason to probably dump the stock. My idea was right, my action was not. I'm still holding TSCM.

I think it's time to dump it at last. Maybe it would pay to wait a little bit when current bull run is finished and dust settles.

Full disclosure: at the time of publication author had long positions in GOOG and TCSM and no positions in YHOO. Positions can change any time.

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