Digg Competition
Now Viewing Digg's competition in: Internet Publishing and Services
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How does the company advertise its products? - Companies use a wide variety of marketing tools, from word-of-mouth to print and television advertising.
How does the company attract new advertisers? - Some companies have relationship managers to work with large clients and generate new business.
How is the company working to expand its customer base? - As companies grow they typically add services or additional websites to increase traffic and attract new advertisers.
Who does the company see as its competition? - Internet publishing companies often compete with IT services companies as well as with traditional media and broadcasting companies.
Does the company contract with third parties for its advertising links? - Larger companies increasingly connect advertisers with smaller companies.
Does the company benchmark its advertising price schedules based on competing networks? - Smaller companies increasingly have a choice of large advertising networks.
How does the company plan to address increasingly sophisticated ad-blocking software? - Ad-blocking software can reduce revenue opportunities for companies.
Competitive Landscape
Demand is driven by consumer and business needs for information and entertainment. The profitability of individual companies depends on their ability to deliver relevant information to consumers and to offer advertisers desirable target markets. Large companies enjoy economies of scale in marketing and in their ability to develop and maintain multiple websites. Smaller companies can compete by focusing on niche markets. The industry is capital-intensive: average annual revenue per employee is about $450,000.
Business Challenges
CRITICAL ISSUES
Reliance on Advertising - Internet publishing companies are largely dependent on advertising for most of their revenue. Advertising is cyclical and dependent on economic cycles, meaning that during an economic downturn revenues can be strained. During the recession of the late 2000s, advertising spending declined 10 percent overall in one year; though Internet ad spending increased, its rate of increase slowed significantly.
Technology Development - Companies dedicate significant resources to the development and expansion of new technologies. Often 10 percent or more of revenues are reinvested into R&D to ensure that companies keep pace with the market; engineers at some companies spend up to 20 percent of their time working on new concepts and ideas. Due to the low barriers to entry into the industry, new companies who are able to provide more relevant information to consumers quicker than larger companies may gain market share from the larger firms.
Industries Where Digg Competes
- Media
- Information Collection & Delivery
- Internet Content Providers
