AOL, once a leader on the World Wide Web, is lately playing catch-up -- most recently in the acquisition arena. On July 24, the company announced plans to acquire Tacoda, an advertising company that tracks what people do on the Web and uses that information to determine where to place online ads.
The terms of the deal were not disclosed, but a source familiar with the acquisition put the price at around $275 million in cash. Time Warner (TWX)-owned AOL also will gain Tacoda's roughly 100 employees and its chairman and co-founder, Dave Morgan, an online advertising veteran.
Ramping Up the Battle
The announcement follows close on the heels of similar acquisitions by AOL's bigger rivals. In April, Google (GOOG) said it will spend $3.1 billion for DoubleClick, which places and then tracks the performance of targeted advertisements for many of the Web's largest sites, including AOL [see BusinessWeek.com, 4/14/07, "Google's DoubleClick Strategic Move"]. Then, Yahoo! (YHOO) said it will buy the 80% of online-ad exchange Right Media it doesn't already own for $680 million, and later, Microsoft (MSFT) put up $6.1 billion for ad network aQuantive (AQNT) [see BusinessWeek.com, 5/18/07, "Microsoft's Big Online Ad Buy"].
AOL hopes Tacoda and an earlier acquisition of Advertising.com will give it the added heft it needs to compete with the big boys for online ad dollars. According to eMarketer, the online advertising market in the U.S. will swell to about $20 billion this year.
Tacoda tracks visits to key pages on some of the Web's most popular properties, including The New York Times (NYT) and Kelley Blue Book. It then uses the information gleaned from those visits to send related, targeted ads to specific computers whose users are clicking on high-traffic sites throughout the Web. So, for example, Tacoda can deliver a car ad to a computer that has recently looked up the average price of a new four-door sedan on an autos site, even when the computer user has moved on to a different site. "This is really about expanded reach, great publisher tools, and our belief that it will help us grow," says Mike Kelly, president of AOL Media Networks, the division responsible for AOL's advertising business. "AOL is giving us a chance to get big fast," says Tacoda's Morgan.
Maintaining Control of Ad Dollars
Ad networks such as Tacoda have grown in importance for Web titans seeking to remain key destinations for advertisers in an increasingly competitive Web landscape. AOL and Time Warner's other online properties attract more than 123 million unique users per month, ranking just behind Yahoo and Google in terms of individual visitors, according to June statistics compiled by comScore (SCOR). However, in recent years, AOL, Yahoo, and other so-called portals, which aggregate information and features from around the Web, have struggled to command as much of their audiences' time.
These days, many Web surfers, particularly young ones, would rather spend time on social networks such as Facebook and News Corp's (NWS) MySpace, as well as blogs, video- and picture-sharing portals, search engines, and a host of other user sites that depend on content generated by users. Advertising dollars are following the audiences. AOL, Google, Yahoo, and others see ad networks, and their ability to place ads on a variety of Web sites through revenue-sharing partnerships and other deals, as a way to keep control of ad dollars by becoming one-stop shops for advertisers looking to get in front of mass audiences wherever they are on the Web.
Tacoda also promises to give AOL another way to use information on users to sell highly targeted, higher-priced ads on both its own network and across the Web. Though AOL and Tacoda have not fully worked out the details of their information-sharing relationship, Tacoda could potentially use what it knows of AOL users' Web-surfing behavior to place ads on other sites with which it has relationships. Tacoda could also serve highly targeted ads in fixed places on AOL properties to computers it recognizes from visits to other sites in its network.
The promise of additional information and tracking capability has helped fuel earlier ad-network acquisitions from competing Internet giants [see BusinessWeek.com, 5/21/07, "Behind Those Web Mergers"].
Direct to TV
To be sure, the ability for AOL to increase the amount of information it has on users may alarm some Web surfers and privacy advocates. Similar -- albeit larger -- proposed acquisitions have aroused opposition from privacy advocates and government agencies such as the European Union. The Federal Trade Commission is now reviewing the proposed Google, Microsoft, and Yahoo acquisitions [see BusinessWeek.com, 5/30/07, "Much Ado About DoubleClick"]. Tacoda and AOL will also face regulatory review before the merger can go through. The companies expect to complete the acquisition by the end of the year.
Morgan stressed that Tacoda will continue to keep information anonymous, monitoring computers only by the number on a tracking tag, or cookie, picked up by their computer when they visit a Web page in Tacoda's network. The company spent much of the day after announcing the acquisition assuring clients that their data is still their own and that AOL, a potential competitor to some of Tacoda's customers, does not have a new window into their inner workings. "We have been spending a lot of time today talking to our publishers and the ad agencies that are our clients," says Morgan. "They recognize the more scale that Tacoda has, the more value that we can deliver for them."
Perhaps the biggest long-term potential of the Tacoda/AOL partnership isn't online at all, but on television Morgan has long looked toward a future where TVs all have Internet Service Provider addresses. In such a world, information on Web surfing behavior could be synched with the TV and used to shoot targeted ads straight to the TV. The television ad market is expected to top $46.3 billion in 2011, roughly when Morgan and others expect the merger between TV and the Internet to start occurring. "We are going to take things one step at a time," says Morgan. "But we hope that what we are doing here on the PC will translate to the TV."
Thursday, July 26, 2007
Saturday, July 14, 2007
24 hour trading
One of the major advantages of trading forex is the opportunity to trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT). This gives you a unique opportunity to react instantly to breaking news that is affecting the markets.
Superior liquidity
The forex market is so liquid that there are always buyers and sellers to trade with. The liquidity of this market, especially that of the major currencies, helps ensure price stability and narrow spreads. The liquidity comes mainly from banks that provide liquidity to investors, companies, institutions and other currency market players.
No commissions
The fact that forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis.Trading the “majors” is also cheaper than trading other cross because of the high level of liquidity. For more information on the trading conditions of Saxo Bank, go to the Account Summary on your SaxoTrader and open the section entitled "Trading Conditions" found in the top right-hand corner of the Account Summary.
100:1 Leverage
Leverage (gearing) enables you to hold a position worth up to 100 times more than your margin deposit. For example, a USD 10,000 deposit can command positions of up to USD 1,000,000 through leverage. You can leverage the first USD 25,000 of your investment up to 100 times and additional collateral up to 50 times.
Profit potential in falling markets
Since the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. When you trade currencies, they literally work against each other. If the EURUSD declines, for example, it is because the U.S. dollar gets stronger against the Euro and vice versa. So, if you think the EURUSD will decline (that is, that the Euro will weaken versus the dollar), you would sell EUR now and then later you buy Euro back at a lower price and take your profits. The opposite trading scenario would occur if the EURUSD appreciates.
Brief history of Forex trading
Initially, the value of goods was expressed in terms of other goods, i.e. an economy based on barter between individual market participants. The obvious limitations of such a system encouraged establishing more generally accepted means of exchange at a fairly early stage in history, to set a common benchmark of value. In different economies, everything from teeth to feathers to pretty stones has served this purpose, but soon metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value.
Originally, coins were simply minted from the preferred metal, but in stable political regimes the introduction of a paper form of governmental IOUs (I owe you) gained acceptance during the Middle Ages. Such IOUs, often introduced more successfully through force than persuasion were the basis of modern currencies.
Before the First World War, most central banks supported their currencies with convertibility to gold. Although paper money could always be exchanged for gold, in reality this did not occur often, fostering the sometimes disastrous notion that there was not necessarily a need for full cover in the central reserves of the government.
At times, the ballooning supply of paper money without gold cover led to devastating inflation and resulting political instability. To protect local national interests, foreign exchange controls were increasingly introduced to prevent market forces from punishing monetary irresponsibility.
In the latter stages of the Second World War, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilising monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.
The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties. A number of realignments kept the system alive for a long time, but eventually Bretton Woods collapsed in the early seventies following president Nixon's suspension of the gold convertibility in August 1971. The dollar was no longer suitable as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.
The following decades have seen foreign exchange trading develop into the largest global market by far. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.
But the idea of fixed exchange rates has by no means died. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, the European Monetary System. This attempt to fix exchange rates met with near extinction in 1992-93, when pent-up economic pressures forced devaluations of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Europe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro in 2001.
The lack of sustainability in fixed foreign exchange rates gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates, in particular in South America, looking very vulnerable.
But while commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have found a new playground. The size of foreign exchange markets now dwarfs any other investment market by a large factor. It is estimated that more than USD1,200 billion is traded every day, far more than the world's stock and bond markets combined.
Originally, coins were simply minted from the preferred metal, but in stable political regimes the introduction of a paper form of governmental IOUs (I owe you) gained acceptance during the Middle Ages. Such IOUs, often introduced more successfully through force than persuasion were the basis of modern currencies.
Before the First World War, most central banks supported their currencies with convertibility to gold. Although paper money could always be exchanged for gold, in reality this did not occur often, fostering the sometimes disastrous notion that there was not necessarily a need for full cover in the central reserves of the government.
At times, the ballooning supply of paper money without gold cover led to devastating inflation and resulting political instability. To protect local national interests, foreign exchange controls were increasingly introduced to prevent market forces from punishing monetary irresponsibility.
In the latter stages of the Second World War, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilising monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.
The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties. A number of realignments kept the system alive for a long time, but eventually Bretton Woods collapsed in the early seventies following president Nixon's suspension of the gold convertibility in August 1971. The dollar was no longer suitable as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.
The following decades have seen foreign exchange trading develop into the largest global market by far. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.
But the idea of fixed exchange rates has by no means died. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, the European Monetary System. This attempt to fix exchange rates met with near extinction in 1992-93, when pent-up economic pressures forced devaluations of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Europe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro in 2001.
The lack of sustainability in fixed foreign exchange rates gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates, in particular in South America, looking very vulnerable.
But while commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have found a new playground. The size of foreign exchange markets now dwarfs any other investment market by a large factor. It is estimated that more than USD1,200 billion is traded every day, far more than the world's stock and bond markets combined.
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