Private Equity Pushes Harder Into Online Media

After Hellman & Friedman’s well-publicized return on DoubleClick when it sold its stake in the company to Google in April, there seems to be an uptick in the interest among private equity firms in online investments.

The latest is NexTag, which just received an $830 million investment from Providence Equity Partners for a roughly 66 percent stake in the company. As we mentioned last week, there is little brand affinity in online shopping comparison engines because they are mostly the same and offer little differentiation in search results. NexTag, however, shows strong metrics and claims 11 million monthly uniques and about $200 million in revenues (driven partly by its mortgage lead generation business).

This deal is the latest (and biggest) acquisition in a long line of shopping engine acquisitions, which Comparisonengines.com lists (see chart below, offered at GigaOm).

Source: GigaOm (2007)

As online investments prove their worth to private equity firms (or not), look for others to follow suit. Also look for more innovation and differentiation in online comparison shopping to crawl more product listings and seek differentiation from the retail feeds that are mostly common to major players, including NextTag, Shopzilla and PriceGrabber.

And as examined in the previous post, given the portion of traffic that reaches shopping sites via search engines, we expect more SEO strategy development from new companies that enter the online shopping space.

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