Majestic Internet Conference

I am at the Majestic Internet Conference today.

Majestic is a wall street research company that uses proprietary data to project the performance of companies and their stocks.

We got a preview of some data that includes holiday shopping data through yesterday from Gian Fulgoni, Chairman of Comscore, one of my portfolio companies.

We also got a history lesson from our friend Howard Morgan, of Idealab.  Howard showed us the basic economic equation for online commerce, which is:

RPC – CPC = Profit

RPC is revenue per click

CPC is cost per click

The Comscore data seems to indicate that this formula may no longer hold because two big things are happening this holiday season that portend big changes in ecommerce and search.

Trend 1 is the emergence (finally) of the multi-channel retailer (retail, catalog, online, etc) as a major player in online commerce.  Walmart, Target, BestBuy, and others are having huge holiday seasons this year.  They finally got the web right!

Trend 2 is the latency of online searches (the searcher often buys as long as 30-60 days after doing the search) and the fact that over 90% of searchers actually make the purchase offline.

If revenue per click is recognized in the Best Buy store in the mall three weeks later, then cost per click is going to go up and may go way past immediate online revenue per click.

This portends well for Google, Yahoo!, etc and very well for the multi-channel retailers.  It’s going to be a challenge for the single channel online retailers.