• Quinstreet Purchases CarInsurance.com for $49mm

    November 9th, 2010
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    The big news in the lead generation world was of Quinstreet purchasing CarInsurance.com for an unexpected $49+ million. Thank you to those who sent us the following links to the PaidContent story and Quinstreet’s Investor Call.

    Our two line summary is as follows:

    • QNST is all about organic media and CarInsurance.com traffic is similar in volume but better in quality than Insurance.com
    • QNST thinks it will be accretive from an EBITDA perspective very quickly

    For more, we reached out to someone with a long history in evaluating lead gen transactions, Sandy Kory, Managing Director of Horizon Partners, a boutique investment bank based in San Francisco.

    LC: What can you tell us of the deal?

    SK: The deal is consistent with previous Quinstreet acquisitions in many ways.  First, they are showing a strong interest in buying organic traffic. Lead gen businesses inevitably face margin pressures.  Organic traffic is the best way to relieve that pressure.  Second, they are continuing to diversify out of edu.  In contrast to edu’s continuing regulatory clouds, auto insurance has little regulatory risk.
    LC: What do you think about the purchase? And, did QNST need another premium domain?
    SK: Quinstreet, like any media business, can never get enough organic traffic since it is so high margin.  With a great domain like CarInsurance.com, they have a property with strong type-in traffic and brand potential.  That means it has much less reliance on Google than with other organic properties of theirs that do depend on SEO for organic traffic.Quinstreet generates lots of free cash flow and has access to relatively cheap money from the capital markets.  They have a strong track of successful M&A.  So it makes sense for them to continue to use M&A to drive growth.  In that context, the deal makes a lot of sense.
    LC: Do you have any feelings about how big insurance can get? It has surpassed Education as their largest vertical if I remember correctly.
    SK: Insurance has plenty more room for growth, particularly in auto.
    LC: Any advice for competitors or entrepreneurs?
    SK: Organic traffic is the most valued commodity in lead gen.  The holy grail is non-SEO organic traffic.  It’s hard to get, but buyers will pay a premium for it.

    Official press release:

    QuinStreet Announces Acquisition of CarInsurance.com, Inc.

    Extends Leadership Position in Insurance Media and Marketing Online

    FOSTER CITY, Calif., Nov. 8, 2010 (GLOBE NEWSWIRE) — QuinStreet, Inc. (Nasdaq:QNST), a leader in vertical marketing and media online, today announced the acquisition of CarInsurance.com, a prominent independent consumer website supporting auto insurance shoppers. The acquisition of CarInsurance.com extends QuinStreet’s position as the leading online vertical media company in Insurance. It provides additional, complementary capacity for QuinStreet to continue to improve insurance research and shopping for consumers, and digital marketing effectiveness for insurance carriers and agencies, on the Internet.

    CarInsurance.com is one of the most visited online destinations for consumers to research auto insurance information, receive and compare quotes from leading auto insurance carriers, and connect directly with insurance carriers and agencies. CarInsurance.com has an extensive library of articles, questions and answers, insurance requirements and tips, rate and premium trends, and tools and calculators, providing consumers with the information necessary for them to make the best auto insurance decisions based on their personal circumstances.

    Auto Insurance represents a large, early and growing market opportunity for QuinStreet. An estimated $4.1 billion was spent on property and casualty insurance advertising in 2009, of which only $591 million or 14% was spent online. Consumers are increasingly turning to the Internet to research and compare insurance offerings. According to the comScore 2010 Online Auto Insurance Report, 52% of consumers shopped for auto insurance online in 2009 and 38.8 million quotes were generated, a 21% increase over 2008. Advertising budgets will follow consumers online as they increasingly use the Internet to research and shop for insurance information and offerings.

    “Insurance is a strong and growing vertical for QuinStreet, and we are excited to add such a premier online media property to our business,” commented Doug Valenti, QuinStreet CEO. “CarInsurance.com expands our proprietary media and traffic sources in Insurance, consistent with our strategy. It builds on our recent acquisitions of Insurance.com and Insure.com, both of which are performing well, and provides us with additional, complementary capacity to better serve consumers and clients at ever-increasing scale. This acquisition completes our near-term program to identify and acquire the best of the largest independent online organic media properties in the Insurance vertical. Our efforts now turn primarily to building these properties to provide exceptional consumer information and experiences, and to delivering great measured marketing results for our clients.”

    QuinStreet purchased all outstanding shares of CarInsurance.com, Inc. and related entities for $49.7 million in cash.

    Conference Call — Today at 7:00am PT

    QuinStreet will host a conference call and corresponding live webcast at 7:00 a.m. PT today, Monday, November 8th, 2010. To access the conference call, dial 1-866-240-0819 for the U.S. and Canada and 1-973-200-3360 for international callers. The webcast will be available live on the investor relations section of the Company’s website at http://investor.quinstreet.com and via replay beginning approximately two hours after the completion of the call until the Company’s announcement of its financial results for the second quarter. An audio replay of the call will also be available to investors beginning at approximately 10:00 a.m. PT on November 8, 2010 until 11:59 p.m. PT on November 15, 2010 by dialing 1-800-642-1687 in the U.S. and Canada, or 1-706-645-9291 for international callers, using passcode 23829565#. This press release is also available on the investor relations section of the Company’s website at http://investor.quinstreet.com.

    About QuinStreet

    QuinStreet, Inc. (Nasdaq:QNST) is a leader in vertical marketing and media online.  QuinStreet is headquartered in Foster City, CA.  For more information, please visit www.quinstreet.com.

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  • BrokersWeb.com Expanding into the Auto Insurance per-Click Marketplace

    June 24th, 2010
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    Looking at Quinstreet’s market cap recently, you might presume something is wrong with the business. They are trading almost one-third off of their peak and almost twenty percent below their IPO. Yet, stock analysts who cover the sector estimate nothing but continued growth. Some of this selling of the stock is a result of perceived exposure to the Department of Education’s ongoing process to overhaul portions of the Higher Education Act. It’s a complex topic that is even more complex the further one is from an educational institution. The uncertainty and complexity hasn’t helped education institutions, most notably the for-profit education companies and those who service them like Quinstreet.

    The online education business might comprise the largest segment of Quinstreet’s business, as it was their primary line of business. But, education does not represent their fastest growing segment, financial services does. For those with some familiarity with Quinstreet’s business, financial services means SureHits, the auto insurance click marketplace the company acquired several years back. The SureHits business differs fundamentally with the cost-per-lead approach of Quinstreet’s online education business and with the cost per lead approach favored by a large number of other marketing services firms in insurance such as Netquote, InsWeb, and AllWebLeads.

    Outside of the obvious, namely that vertical click marketplaces charge on a click basis, vertical marketplaces have other differences that many advertisers favor. An advertiser in a vertical click marketplace owns the conversion experience. A common complaint of lead aggregators is that buyers do not know from where the leads come – what was said in the steps of the funnel up to their acquiring the name. In the click marketplace, they own the ad, the landing page, and are responsible for the conversion. The ultimate cost per lead could end up much higher than through a lead aggregator, but it is the only option for many brands who have policies against leads. The marketplace is all about control, and judging from SureHits success, there is something to be said for vertical marketplaces as an alternate vehicle in the quest leads. But, they are not for everyone. If you do not have expertise in online advertising, you will find yourself spending a lot for little in return.

    This week brings news of a new entrant into the vertical click marketplace for auto insurance – BrokersWeb. Those in the health care space most likely know BrokersWeb by their HealthCare.com brand and their additional owned properties HealthInsuranceFinders.com, HealthCare.org, MedicareSupplemental.com, MedicareSupplement.com, and LifeInsurance.org. In addition to owned properties, they also have robust network of highly-targeted website distribution partners. (HealthCare.com purchased the BrokersWeb assets in Q3 2008 and has grown them 5x since – primarily through partner distribution). As you can see from the domains, the company goes deep into the health care vertical, and it is my understanding too that they are the only solution for those niche health insurance sub-categories, i.e. Medicare Supplements, Group Health Insurance and Dental Insurance. Prior to this week’s auto insurance launch, life insurance was the most recent, launching in 2009 and buoyed significantly by the organic traffic coming through the highly ranked LifeInsurance.org.

    Auto insurance may not seem like a logical next step for a company with deep health expertise, but from a market perspective, it is the exact right choice. Everyone who drives needs it, i.e. a large overall market, relatively high natural churn so advertisers must spend to grow, and those insured with one company can switch to a new carrier with less friction than cell phone. Plus, there are a lot of major brands spending for direct access to customers – perfect for a vertical click marketplace. As such, it’s a logical next step for a company with an operating history in vertical click marketplaces. Like any entering, there is still the classic chicken and egg scenario of having enough buyers and sellers. Distribution partners will want high CPC’s, and advertisers will want to see quality before coughing up the high CPCs. It’s a slow process, and simply saying, we’re doing it doesn’t mean both sides will come. Luckily, there is enough latent demand from both that BrokersWeb stands a good chance of speeding up this process in order to become a viable player, and they are kicking off the launch with several high profile players on each side at launch. This includes top-tier bidders such as GEICO, Esurance and The Hartford on the advertiser side and AutoInsurance.com and OnlineAutoInsurance.com on the distribution side. We wish them luck as it’s always good to see growth in the space.

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  • News Brief: Quinstreet Files for IPO

    November 20th, 2009
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    quinstreet logo

    A name known to many but a company still unknown below the surface, Quinstreet announced plans to raise $250mm in an IPO and trade under the symbol QNST.  Having had their founder and CEO, Doug Valenti, on a panel at LeadsCon, it was a first opportunity for many of us to get a feel for their operation. There are volumes to be said on this, and a more detailed post is coming. If only we were part of the ex-Quinstreet list serv. Overall, a tremendous day for online lead generation, and we should all congratulate and thank Quinstreet, as a successful IPO will help list the entire industry and practice. Not everyone likes them, but for now, we should all root for them.

    Here is what I wrote on my personal blog:

    The day many of us have been waiting for (including Quinstreet) has arrived – the Quinstreet IPO. After years of speculation and some unanticipated market twists, Quinstreet announced its intention to go public, filing their S-1. For a company that has been incredibly secretive closed lipped, the S-1 is an amazing look under the hood of one of the most intriguing companies in the online lead generation space. It details their acquisition history, and while many of us knew about their acquisitive nature, none would have expected it to include more than 100 purchases with at least four eight figure deals. The Quinstreet today is no longer an education lead generation business. They are a roll-up and have been a source of liquidity for countless smaller publishers who sites earn revenue through lead generation. And, today they are a diversified play with some large client concentration but only 50% of the business being edu.

    Much more to be said on the topic.

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