There’s a new acquisiton in the Turkish internet industry – IMSG has acquired Zap Medya for approximately $13m (probably after an earnout).  The announcement also discloses that Zap had 2006 revenues of $12m and pre-tax earnings of $2m.

Zap is an interesting company that it has somewhat cornered the dysfunctional online advertising industry.  I presume that the bulk of the $12m revenues is actually media billings of its customers and, if true, it points to the enormous cuts the middlemen have in the Turkish online advertising market, given the very high net margin indicated by the earnings figure.  One has to wonder how sustainable the current model is, given that the media buying agencies, which previously have outsourced their online work to Zap, have started launching their own online companies and departments.

The acquisition is good news for Turkish internet sector, as more and more international players are taking notice of the opportunities here.  Congratulations to the Zap team.

PS. I am going through a much slower blogging period, largely due to a new baby. 🙂

UPDATE: Bulent Boytorun, Zap’s CEO sent me a message with some corrections, as well as some clarifications on the transaction and Zap’s business.  Here are the hightlights:

…the figures that were disclosed were not properly announced. The 2 m is
a figure forecast for 2007 at an expected turnover of around 20 m USD,
and Zap’s sole income is not the media billings [but also from our creative and content management services].
…
Not a majority of our profits are generated from our creative & content management services, but it is still quite sizable.
…
It is the usual practice to have about 10 % media commission on online
media billings throughout the world, since the budgets are much smaller
than those on TV or newspapers and the work involved is quite
extensive. However, especially big networks add to this commission
their adserving costs -which may be between 5 to 50 cents per CPM- as
well as additional creative and analysis charges or even extra charges
for strategic planning.

Here at Zap, we provide all these services free of charge
(including at many cases the whole creative work if it is in connection
with a sizable campaign) and all is included in the commission we
charge.