ChasNote

In this week’s New Yorker, financial-page writer James Surowieki offers a pessimistic outlook on the CNET-CBS marriage.

First, he argues that a good partnership strategy is often better than an owned and operated (O&O) approach:

“Merger mania also rests on what you might call the fallacy of ownership — the assumption that you have to own a company to make money from its properties. In fact, much of what mergers are supposed to accomplish can be achieved through partnerships and alliances. Google has made deals to handle searches and advertising for companies like A.O.L. and I.A.C., giving it access to their customers without the hassle of an acquisition. And I.B.M. has, in recent years, marketed the products of its competitors Sun Microsystems and Novell, enabling it to expand its offerings and its potential customer base. If CBS and CNET had simply agreed to cross-promote each other’s brands and distribute each other’s content, CBS would have had many of the benefits of merging without the costs.”

Second, he suggests that the merger makes the most sense if the gameplay is layoffs and cost-savings:

“There are, of course, situations in which acquisitions do make sense. According to a recent meta-analysis of a number of merger studies, mergers that rely more on cost-cutting — combining back-office operations, eliminating redundancies, and so on — than on promises of vast growth are more likely to be successful. (The merger of J. P. Morgan and Bank One, for instance, led to more than three billion dollars in annual cost savings.)”

I hope that’s not the plan.

From AllThingsD:

“CNET Networks will also announce a much expanded editorial and advertising relationship with Yahoo that will give the tech news site broad distribution on the highly trafficked Internet portal…..

“Under the new deal, sources at both companies said a large swath of CNET tech news and also reviews will be carried on Yahoo, making it the major supplier of tech news content to the site. Rather than just focusing on its owned-and-operated properties, Yahoo’s more recent strategy has been to partner with media companies.

“In addition, under the terms of the deal, Yahoo will sell some of CNET’s remnant inventory and also allow CNET ad sales staff to sell into some areas of Yahoo.”

Smart.

It suggests each company has begun to recognize its strengths — and begun to get comfortable with its weaknesses. Yahoo has enormous audience reach (it’s a portal) and sells lots of banners at low CPMs (it’s a giant ad network); it isn’t a leader in original content or high-CPM brand advertising. CNET has a great sales team that generates very high CPMs around premium tech content and an award-winning editorial team (it’s DNA is that of a niche publisher); it isn’t big enough to make the high volume, low CPM ad-network model work outside the core tech sites.

It’s a shame — given all the recent news at both companies — they didn’t do this sooner.

From Times Online UK:

“What’s surprising, though, is that the pure-play internet media companies that might have been expected to benefit from the tectonic shifts in the industry have done badly too. Yahoo!, CNET Networks and Interactive Corp all seemed to be in a great position three or four years ago, and yet all three look like they’ll soon cease to exist in their current form as investors express their displeasure with poor stock performance.”

“Part of the explanation for this is simple enough. Yahoo! and CNET could be considered new media versions of old media models; they aim to drive large numbers of people to their pages with expensive investments in content, and monetise that traffic via display advertising. But low-cost blogs — especially in the technology news space that CNET once led — have scooped up a lot of the audience.”

FM, Huffington Post, PaidContent, TechCrunch and others are called out as alternative models.

I spent 6 years selling adverting and other marketing services for CNET — asking, as part of my job, for marketers to join our readers online. I’m sure glad I didn’t have to sell against that headline when I was there!

Elinor Mills at CNET’s News.com asks what she takes to be a rhetorical question, “Want to ‘converse’ with marketers?” and provides her answer in the headline to her piece, “Me neither.”

I wonder how Intel, the advertiser running alongside that story, feels about CNET’s point of view, that Intel doesn’t belong there, that marketers aren’t adding to the CNET experience except insofar as they pay their bills.

Mills also challenges the founding concept of conversational marketing:

And what’s this with the slogan of the conference — “Brands are conversations”? No, they aren’t.

Oh my goodness. Forget about the sometimes-controversial programs called conversational marketing. Great brands have sparked conversations since before there was an internet, conversations that often don’t even require that we open our mouths. We tell our friends, our colleagues and communities something about ourselves (I’m not saying it’s always something good) by the brand choices we make — the cars we drive, the sneakers we wear, the cellphones we use. I don’t know Elinor personally, so perhaps she doesn’t engage with brands or people who use, wear or talk about brands. But if that’s the case, she’s part of a very small segment of population.