NBCi Spins Off AllBusiness.comUnder pressure to turn a profit, NBC Internet Inc. has decided to step back from the business-to-business online market with the announcement this week that its AllBusiness.com subsidiary will be spun off into a stand-alone company.
The 2-year-old AllBusiness, which NBCi bought this spring for $225 million, will combine with Bigvine Inc., a Redwood Shores, CA, online barter exchange for small businesses. It is owned by American Express Co., Kleiner Perkins Caufield & Byers and Kohlberg Kravis Roberts & Co.
NBCi will own 49.9 percent of the new AllBusiness.com LLC and Bigvine's owners 50.1 percent. Headquarters will be in San Francisco, currently AllBusiness' home.
Once merged, the new AllBusiness will reach more than 1 million small businesses and 750,000 e-mail subscribers. It will offer more than $80 million in barter for categories such as office supplies, travel, hospitality and professional services.
"We've got the media component, the upside associated with revenue share, but the big third is being able to participate in the transaction," said Scott Waltz, chief marketing officer at AllBusiness. "Bigvine has a 3 [percent] to 4 percent cut on all of their transactions, including barter, and this helps us to better monetize the market."
Both companies will pool their assets to beef up AllBusiness' service. This meshing includes AllBusiness' content and more than 75 small-business services from application service providers. Add to that the financing options and a trading component from Bigvine's transaction engine.
The new site will offer a prospecting database with access to more than 700,000 business listings.
AllBusiness' new parents will not set the site adrift, however. NBCi will run TV ads for AllBusiness on sister broadcast properties CNBC and NBC. It also will offer distribution and marketing on the new consumer-focused NBCi portal.
Additional support is expected from GE Business Solutions. General Electric Co., also known as GE, owns NBC, CNBC and NBCi.
For its part, American Express, which marketed Bigvine to its more than 2 million small-business customers, will continue that co-marketing support to AllBusiness. So will Bigvine supporters Delta Air Lines and Starwood Hotels and Resorts.
In its current version, allbusiness.com is designed to help its target audience start, grow and manage businesses, develop business plans, screen employees and generate sales leads.
A $30 million ad campaign that launched in May was intended to position AllBusiness as the key component of NBCi's BTB strategy. But intense pressure from unforgiving financial markets, plus obvious economies of scale, tipped NBCi's hand toward a joint venture.
Add to this competition from rivals such as Onvia.com, Work.com, Digital Work, localbusiness.com, Office.com and inc.com -- all competing for the same audience with similar content, commerce and community offerings for small businesses.
"A lot of people have talked about consolidation in the space, and I think that's right," Waltz said. "There are a lot of sites out there. You're dealing with a [small-business] audience out there that doesn't have the time.
"The key challenge in the small-business space is that people are looking for ways to monetize. And there's no question about size. The key is accelerating the market adoption and monetizing it."