Watch out for unsavory players in the online advertising business

If you’re going to go with an online advertising partner, you probably want to make double-sure you’re going a best-of-breed ethical player before handing over your hard-earned dollars. Apparently Progressive (the insurance company which keeps bombarding us with those annoying Flo commercials) failed to do so – they feature prominently as a sucker in this fascinating new report out from Kerrisdale Capital today:

[PDF link]:

The report makes for great reading so we’ll pretty much leave it at that, except to add that QuinStreet is a name we hadn’t come across for a long time – all the bells it rings, as the report points out, are very much Web 1.0. We had no idea they were still around, let alone a public company, and judging from the report, we haven’t missed much. The raison d’etre for this kind of company really isn’t around anymore in this day and age, if there ever was to begin with. With all the changes to Google’s SEO algorithm over the years, it’s extremely unlikely that the kind of lead generation websites companies like this operate get any significant valid traffic, so it’s not surprising that they have to resort to more and more questionable tactics to make up for that deficit.

As to whether their stock would be a good short, we’re not financial players, so we’ll pass on commenting on that. Kerrisdale is a noted stock research firm though, with particular expertise in digging up fraudulent and scammy companies, and making money by… shorting their stocks. That one is a business model that looks like it will stand the test of time pretty well.

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