Microsoft buys FranchiseGator parent
In recent years, FranchiseGator.com built such a strong business it attracted a buyer willing to pay $21.5 million—pretty good money for a franchise lead-generation Web site.
Now, for reasons that have nothing to do with franchising, FranchiseGator’s parent, aQuantive, has attracted an even richer buyer: Microsoft, which paid $6 billion for the Seattle-based digital marketing company.
Microsoft bought aQuantive as a salvo in the Internet advertising war. In announcing the purchase, a Microsoft spokesperson said it now has the tools to build an Internet advertising platform to compete more directly with the likes of Google.
The big question now is what kind of impact Microsoft’s purchase will have on FranchiseGator—assuming that the Redmond, Wash.-based giant will hold onto the property. “That’s the big unknown,” said Brad Fishman, CEO of Illinois-based Fishman Public Relations, who along with three partners purchased an equity investment in the Web site FranchiseWorks.com.
Officials with aQuantive said it’s too early to say what impact Microsoft’s purchase will have, but they did say both aQuantive and FranchiseGator would operate in much the same way they have over the last year. “We expect to keep pushing the business forward with access to additional resources from Microsoft,” said Brad Aronson, executive vice president for product development at aQuantive.
FranchiseGator was founded in 2001 and has since become one of the top franchise lead-generation sites on the Internet—sites that are designed to connect franchisors with increasingly-hard-to-find franchisees.
AQuantive redesigned the site, built the Franchise Selector and changed its business model. It now charges franchisors based on the number of leads generated—instead of a simple set fee, which is the norm in the online franchise lead-generation business.
Other lead-generation companies, such as the ones focusing on mortgage or insurance, have long used a pay-per-lead model. And many online advertisers charge based on a “pay-per-clicks.” By paying per lead, Aronson said, franchisors will get a better indication of the impact their advertising has.
Competitors and industry observers, however, questioned the change. “It’s probably the easiest way to increase revenue,” Fishman said, noting that such models could result in lower-quality leads that drive up the cost. “I still don’t trust it,” he added.
Kim Ellis, president of rival site Bison Advertising Inc., said her company’s rivalry with FranchiseGator has always been friendly—they share some clients and refer business to one another. Nevertheless, she said a pay-per-lead model could be a “slippery slope” that yields an increasing number of bad leads. She said her company remains committed to a flat-fee model, but if FranchiseGator’s new system works, “we’re all going to have to re-examine our business plans.