Banks.com Is Proving That Relying On Google Is a Recipe for Disaster

Nov 15 2011

Banks.com is struggling.  The didn’t sell Look.com because they wanted to.  They sold it because they had to. They needed the $400K to make it though tax season and it was one of the few “non core” assets they owned.  Banks.com just reported their third quarter earning and it wasn’t pretty. In the third quarter of last year (2010),  Banks.com reported income of $1.4 million dollars.  This quarter, $613,000.  They blamed it on one thing. Google.  Here’s how they explained the huge drop in income

“Our third quarter results were once again marred by revenue charge backs leveled upon us by Google. As we’ve talked about before, these charge backs generally come with little to no substantiation, making them extremely difficult to adjust to. As such, we have essentially exited the search business to focus our attention on our finance related sites,” said Dan O’Donnell, Chief Executive Officer of Banks.com.

They explained it in a little more detail in their 10-Q filing.

Our recent financial performance has been negatively impacted by a series of revenue charge backs from our advertising network partners in our non tax related, search business, due to traffic quality. The revenue associated with these charge backs also has significant corresponding traffic acquisition costs that are often not recoverable from our traffic partners. Revenue credits recorded for the three and nine months ended September 30, 2011 were $217,000 and $596,000, respectively, and $364,000 and $601,000 for the three and nine months ended September 30, 2010. As a result, we substantially reduced our marketing efforts in our search business in the fourth quarter of 2010 and reduced our cost structure accordingly in an effort to become less reliant on this business line during the off U.S. tax season. Our decision to reduce our reliance and exposure in our search business resulted in decreased search engine marketing efforts and a reduction in our revenues for the period ended September 30, 2011. We expect that our reduced emphasis on our search business will continue to adversely impact our revenues for the foreseeable future. As a result, we are focused on increasing our revenues from sources such as tax preparation, tax extension and stock brokerage services and reducing our traffic acquisition costs through search engine optimization efforts and other internally developed analytics. Our ability to grow also depends on our ability to continue to increase the number of advertisers who use our services and the amount these advertisers spend on our services.

In short.  Banks.com feels they need to stop relying on Google for revenues and move to a self generation model.  Instead of paying for traffic they want to improve SEO (don’t we all) and generate more tax prep revenue.  It seems they want utilize Google to generate revenues, they just don’t want to pay to do it.  Either way they are relying on Google. One last interesting piece of data includes the value they put on their domains (and other intangibles).  They are valued at $9.8 million.  I think it’s a pretty fair assessment considering their two best domains,  banks.com and irs.com.  They also own a few others like easytaxreturns.com and بنوك.com which is banks.com in Arabic.  Take those assets away and the balance sheet gets pretty ugly.

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Outsmarting the Dumb, Outworking the Smart

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7 comments

  1. Brett

    Relying on Google in some fashion is almost unavoidable. Fortunes have been built upon Google, but Google is also fickle, and one of the most anti-customer organizations I’ve ever encountered. Google has an explanation for everything — unfortunately, it’s proprietary.

  2. David Cox

    I am very interested to take a look at the site and it looked to me like there is very little text on the site. So with a lot of rates but little “unique relevant content” so does the domain name alone generate that much traffic? Pretty interesting

  3. Ellis Cheeseburger

    retarded “logic” you have. Virtually every website relies on Google since they control 70% of the search market and people use search engines to find stuff.


    1. Post author
      ShaneCultra

      Ellis,
      Relying and utilizing are two different things. Relying on any one source of income in any business puts that business in a precarious position. And by the way, you’re a mental midget.

  4. Ellis Cheeseburger

    Nope, once again, when people want taxes done they search Google (and maybe Bing) for something like “taxes” or “Taxes 2011.” Where Google puts you matters a lot and can increase /decrease your income by even 1000 times. So they were doing better until Google ruined it for them and now have to do the best under circumstances.

    It’s not surprising since Google is going after that big money niche to increase their ad clicks. Have you checked Google’s earnings lately?

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