Hearst Acquires Kaboodle, Old Media New Again

Last week saw the acquisition of social shopping site Kaboodle by Hearst Media, one of the oldest of old media companies. This deal makes a ton of sense on so many levels that it’s hard to know where to start.

First and foremost, Kaboodle is clearly the leader among social shopping sites, with main competitors StyleHive, ThisNext, and Crowdstorm trailing in every meaningful metric by a wide margin. Other competitors include Friend2Friend.com, Wists, and Trendmill, and of these companies I found Trendmill to be the most media savvy but also the most obscure among the sector because it really does cater to fashion insiders.

Kaboodle is an interesting company because the technology is part ETL and part data normalization with a good dose of social features layered on. The content and keyword extraction works according to a simple principle, once the engine has been “trained” for a particular domain even significant changes to the layout can be navigated by the extractor and because correction of the training template is checked at the end user point, the system does not rely solely on someone from the company tweaking and optimizing the extractor.

The network effect applied to content extraction is extremely effective and scales amazingly well, Kaboodle claims their engine has been trained for more than 150,000 websites using over 35,000 templates. This same approach to ETL could be phenomenal inside of the enterprise and at a cost point a fraction of what traditional ETL products have sold for.

The social features include groups, lists, "help me choose" widgets" and a really slick "compatability tester", all of which translate into a great big time suck for people on the site. I have been playing around with it and found myself clicking through dozens of "help me choose" polls. This, of course, is the point and it one reason why this deal makes so much sense for Hearst.

Advertisers don’t care about pageviews, in fact Nielsen isn’t even tracking them anymore. What is driving CPM and RPM is demographics and "time spent", and here Hearst has a winning solution on both counts. Kaboodle’s primary audience, American women, are heavy fashion, lifestyle, and travel spenders, and interestingly, they spend about 1/3 of their time searching and browsing content, 1/3 creating content, and 1/3 engaging in some in-network social activity.

Hearst has a number of media properties that stand to benefit almost immediately, such as MyPromShopper.com, CosmoGIRL!, eCrush, and Country Living, as well as Town & Country Travel (which could replicate the deal Kaboodle currently has with Conde Nast). A strong tie-in with the Oprah magazine could be a blockbuster on it’s own.

The reason why a simple feature driven integration strategy with these media properties is a winner for Hearst is that it drives time spent metrics like crazy while fitting in nicely with existing site architecture and lastly, requires zero editorial shift. It’s a hand in glove fit because it leverages what Hearst is good at, content, with what Kaboodle has developed leadership in, social activity on top of content.

It’s often been said that new media kills old media, but it’s increasingly clear that old media can co-opt these strategies with great effect. Having said that, old media is still straddled with a physical expense driven by the nature of their business, printing, that greatly impacts their cost structure, but in the magazine sector this has not been as threatening as it has been in newspapers.

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