Web 3.0 & Personal Finance: Synthesis

Online advertising spend is expected to be $19.2 billion in 2007 and eMarketer expects the financial services sector to increase its online ad spending by 33.3% in 2007 to $2.4 billion and reach $3.52 billion by 2010. This makes the sector one of the largest advertisers online, and thus validates the compelling case for online offerings in the Financial Services space. Over the last few weeks, we have analyzed the Personal Finance segment based on the Web 3.0 framework.

YAHOO recently launched its new personal finance site to provide the best of financial information and tools for managing one’s finances. The addition of personal finance to YAHOO! Finance’s portfolio of services will aid the company to increase audience, improve consumer engagement, expand advertising inventory in one of the largest advertising categories.

We have reviewed Yahoo, MSN, Marketwatch, AOL and CNNMoney’s Personal Finance offerings in detail. CNNMoney’s display ad rates are $92 – $143 per thousand impressions (CPM), which is extremely high by any standard, and is a testimony both to how valuable the offering is to its users, and how precious the audience is to the advertisers. All the other big players in the category sport similarly high CPM. My guess is, given that the inventory is still limited, these rates would go up quite substantially over the next few years, and more players will (and should) enter the segment.

Seeking Alpha, a blog on stock research, providing opinion and analysis on the stock market, individual stocks and portfolio management tips has garnered a tremendous fan following in the past one year. One of the ways for a new player to enter the Personal Financial Services category is by leveraging the Seeking Alpha offering. The company’s business model supports licensing to other players, and can easily get an otherwise large player like NYT into the game.

In terms of their offerings, the content on these sites (YAHOO, MSN, CNN, AOL, Seeking Alpha and Marketwatch) is what sets them apart. Most of these sites have organized the content under different categories and sub-categories like Personal Finance, Investments, Retirement, Tax, Insurance, etc for providing contextual information and easy navigation. These sites also provide useful financial tools and calculators.

Apart from their own sources, most of these sites source content from experts, professionals, other sites, magazines and newspapers to maintain a continuous flow of high quality content and have an in-depth coverage of all the topics. The sites have also done a very good job on presentation of the information.

The sites have made some progress on the commerce front. Yahoo! Finance provides Yahoo! Real-Time Package on a subscription basis and Yahoo! Finance Research Reports on pay per download basis. CNNMoney permits electronic reprints or custom reprints of content from its site for a fee. MSN Money through its software “Microsoft Money” allows users to manage their Personal Finance. Marketwatch provides subscription based products relate to investments.

YAHOO! and MSN also provide bill payment services for nominal charges, while AOL offers the same for free. The sites however can explore additional commerce opportunities like tax filing for a certain fee, paid advice / customized financial planning services, transactional brokerage services, as well as Cost-Per-Action (CPA) lead generation for their advertisers.

YAHOO! and MSN have reasonable community features but most of the sites have plenty of scope for improvement.

Sites like YAHOO!, MSN, Marketwatch, etc provide very good vertical search (stock screener) and elementary personalization (portfolio tracking) facilities. It is important that other sites too incorporate these features, as these are value added service that increase the time spent by consumers on the site.

Conclusion

Advertising, needless to say, is the main source of revenue for these sites. Over time, each site would do well to evaluate itself against the Web 3.0 framework, and improve their grades in each of the 6 aspects : Context, Content, Community, Commerce, Vertical Search, and Personalization. And those large media companies who are not playing in the Personal Finance / Financial Services category would do well to license Seeking Alpha and get into the game.