LivingSocial Monetizing Splendidly

Earlier this month, Groupon’s IPO news was accompanied by market’s revised valuation assessments pegging the company to be worth $30 billion. I believe that their highly unprofitable performance may bring their valuations down to more realistic levels. But, one cannot deny the strength of their business model that has helped them to achieve such fast-paced revenue growth. And it is not just Groupon. Their model of revenue sharing with merchants has also been successfully adapted by their competitor LivingSocial, which too now boasts significantly higher revenues.

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For-Profit Education Sector Taking Huge Hit

The for-profit educational sector continued to face tighter scrutiny amid high student loan default rates, high interest rates, big debts, and accusations of “deceptive marketing practices.” Recently, the Department of Education (DoE) announced its final interpretation of the rule of gainful employment, which were less severe than anticipated. The new rules are aimed at protecting both students and taxpayers by regulating the federal aid provided to for-profit colleges. The DoE estimates that students at for-profit institutions account for 12% of all higher education students yet contribute to 26% of all student loans and 46% of all student loan dollars in default. According to the new rules, for schools to qualify for federal student aid, they have to ensure a minimum of 35% of their students repay loans and that loan payments constitute up to 30% of the former student’s discretionary income or 12% of their annual income. The DoE expects 18% of for-profit schools’ programs to fail this litmus test at some point, and 5% of programs to lose eligibility under the new law. The stricter rules have already translated to stringent enrolment norms being incorporated by for-profit schools. As enrollment figures tighten, some schools’ financial performance has also wavered.

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Twitter Sharpens Focus On Monetization

A lot has been happening with the best-known microblogging service, Twitter, of late. There was speculation that the company was going to be a $8 billion to $10 billion acquisition target for Google and Facebook early this year. That hasn’t happened, but Twitter has been busy acquiring third party Twitter application TweetDeck and advertising company AdGrok. And that is not all – Apple has decided to integrate Twitter deeply into iOS5 when it releases the operating system later this fall.

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Samsung, Motorola On Android Worried About iCloud

Samsung this week unveiled its Galaxy S II Android phone, while Apple announced its iCloud service that provides free online storage for apps, books, and media files for iOS devices. The iCloud integrates all the storage needs for devices in the iOS ecosystem, while Google has different services to cover them.

While Samsung may benefit in the short term with the delay in the iPhone 5, the new iCloud service is a googly that it needs to deal with. Another problem both Samsung and Motorola need to deal with is the crowded Android market and the need for a differentiating factor. Both Samsung and Motorola had both done well with their Android-based smartphones. While Samsung is almost closing its gap with Nokia, Motorola has managed a turnaround. However, as the market is getting crowded with Android smartphones, what will be their differentiating strategy? Let’s take a closer look. >>>

ERII Holds On; Long-Term Hold

The Organisation for Economic Co-operation and Development (OECD) estimates that nearly 1.1 billion people lack access to safe water, and 2.6 billon people lack access to basic sanitation. Given below is a map of water stress present in the world today as published by the worldwatercouncil.org. >>>

Athenahealth, Healthcare IT Sector Show Strong Growth

According to a report released earlier this year, the U.S. Electronic Health and Medical Records 2009-2015 – Meaningful Use Spending Forecast and Analysis, by IDC Health Insights the electronic health record (EHR) market was estimated to be worth $1.98 billion in 2009. These projections cover software license and maintenance costs for products that meet meaningful use certification criteria. The market is projected to grow to $3.8 billion by the year 2015, translating to a growth rate of 11.5% annually. The report estimates the ambulatory electronic records software spending by providers to grow to $1.41 billion by 2015 from $0.64 billion in 2009. The inpatient EHR software market is projected to grow to $2.4 billion by 2015 from $1.34 billion in 2009. Recently announced results by athenahealth reflected such positive sentiment.

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There Is A Trend To Spot In Groupon’s Growth Rate

What is different between Groupon and all the rest of the massive Internet sites that have been in the news lately? Why have they become one of the fastest-growing companies ever?

For the purpose of this discussion, set aside the fact that they are also massively unprofitable, a reality that they will get beaten up for in the upcoming IPO. It doesn’t change the evidence that the company’s revenue growth is phenomenal.

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Demand Media Also Under Monetized

Of late, I have given quite some thought to an opportunity that multiple Internet-based companies have missed. Most of these companies, with high traffic and equally high valuations, have clearly missed out on one of the most powerful monetization models: affiliates, especially revenue sharing. These companies prefer sponsorship and CPM advertising to percent of revenues. Online media company, Digital Media is another such player.

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Groupon Leads Adoption Of Revenue-Sharing Monetization Model

Where most online companies have been struggling to create a robust monetization model, Groupon has figured a way to leverage the Web to become an effective marketing tool for local businesses. Last week, they filed S-1, ending a much anticipated wait for their IPO. The issue is expected to raise $3 billion, pegging their valuation at $30 billion. Here is a review of the company’s strong performance in the past few months. Notable in their journey is the revenue sharing business model, a trend that I think will be major in the next incarnation of the web.

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Under-Monetized Facebook Dominates Display Ad Market

The comScore Ad Metrix report for the Q1 2011 U.S. online display advertising market reports that nearly 1.11 trillion display ads were served to U.S. Internet users during the quarter. The researcher estimates that the U.S. market currently has nearly 300 individual advertisers spending at least $1 million a quarter on display advertising. Social networking phenomenon Facebook led the market with 346 billion display ad impressions, accounting for 31.2% of the market, compared with a 16.2% share a year ago. Yahoo! sites came in a distant second with 112 billion impressions and 10.1% share followed by Microsoft sites’ 54 billion impressions or 4.8% share. Below is a graphic representation of the monthly movement of the display ad shares, courtesy of  The Wall Street Journal.

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