Monday, 23 February 2009 23:00

Who has the most valuable blogs?

A reader sent me this very interesting article. After reading through it I have decided to post link. I would put BoomBustBlog somewhere around mid-point in the list, but if one were to take into consideration my business model (pure digital commerce, with no advertising or physical inventory) which is much more sturdy than the advertising model (ask all of the bankrupt media companies about the veracity of that assumption) and the fact that I am increasingly influential in my analysis, I believe that we can move BoomBustBlog farther up the ladder.

I also think that Calculated Risk and Mish's site should rank somewhere in the list as well. The only blog that I know of that has a similar model to mine is Nouriel Roubini's RGE Monitor, which is venture capital driven and a much larger operation (not to mention having the first of the rock star economists as an owner). I will probably grow the blog into a larger business, thus buildout considerably more bleeding edge interactive and community features. For those who have not really taken a good stroll through the site. I suggest you browser through the many community features that I have already implemented .

From 24/7 Wall The Twenty Five Most Valuable Blogs

It is extremely difficult to put accurate financial values on blogs. Almost all of them are private companies. Some do raise VC money and those sums can be used as guidelines if and when they are disclosed. Like many content businesses, the only worthwhile value is what an acquirer will pay. At least two blogs from last year’s 24/7 Wall St. list were sold—Ars Technica and PaidContent., both very near the valuations we gave them. This year’s list does not include blogs which are part of larger companies because the traffic of these properties is almost never broken out. Blogs which are used as fronts for other businesses have also been excluded. Blogs that do not have revenue are also excluded. For instance, “The Daily Beast”, a large news commentary site, does not take advertising or sell products. In theory, it has little if any economic value at all.

Because of the depressed economy, 24/7 Wall St. has brought down the multiples that it assigned to blog revenue and operating profits, when there are any, by about 50% from last year. Large public companies have been writing down the value of media and content assets over the last several quarters and private content site values have certainly suffered from the same drop in value. The prices being paid for online media and is almost certainly dropping sharply. Perhaps most importantly, shares of most of the large media companies are off by a half to two-thirds from their 52-week highs.

To determine value, 24/7 Wall St. looked at unique visitor and pageviews information from several public sources including Alexa, Quantcast, Compete, and comScore. These services are often criticized for estimating website traffic too low and we have taken that into account to the extent possible. We also looked at audience measurements provided by the blogs themselves when it seemed credible. Our estimated CPMs for ads are based on the current display and text ad environment, the quality of ads at each blog, and the number of ads that it runs on the average pages. The CPM value assigned to each blog is based on all of the ads it runs on its typical pages. To determine margins, 24/7 looked at headcount when available, and estimated costs of operating and maintaining websites. More complex content platforms where assigned higher monthly costs. Current audience growth rates were taken into account. A site which has traffic doubling year-over-year was given a higher multiple than one which is losing traffic. Because not all blogs make money, multiples of revenue and operating income were used to assess value.

Large blogs with big “moats” got higher multiple that smaller ones. Recreating Huffington Post or TechCrunch would be extremely difficult, especially in a recession. Blogs with one founder who does most of the writing were given lower multiple because the presence of that single person is essential to the company’s value. Finally, blogs which have been operating for a long time or have recently received funding received higher valuations because they are more likely to survive.

Number 8 on their list is surprisingly not very far away from my very small, accidental operation - at least according to the authors.

8. SeekingAlpha. This aggregator of investing blogs and news has almost 900,000 unique visitors according to comScore. Compete puts that number at about 1.5 million. Since Comscore tends to underestimate audience numbers, the higher figures is more likely to be accurate. Because of the content and site navigation, SeekingAlpha should have 15 million pageviews a month. The site runs a reasonable amount of network ads that have low yields, but has some financial services ads from investing companies including discount brokers which would bring CPMs up. The yield on a thousand pages for SeekingAlpha should be about $10. Revenue is probably running about $2.2 million a year. Based on the number of editors and writers that the company has and looking at the cost of it publishing platform, SeekingAlpha probably cost about $3.5 million to run. It is a potentially valuable property for one of the large financial sites. Seeking Alpha is worth about five times revenue or $11 million.

More on this topic:

  1. A change is gonna' come

  2. Continuing the conversation of the future of main stream media..,

  3. The Future of Main Stream Media, pt 3

  4. Sometimes, to grow, you must stick to your core competencies

  5. Time Warner and the MSM pt. 4

  6. Has the Web and the Blogosphere ushered in the Death of Radio?

  7. A Direct Challenge to the Mainstream Media (MSM)

Last modified on Monday, 23 February 2009 23:00

1 comment

  • Comment Link NDbadger Tuesday, 24 February 2009 10:43 posted by NDbadger

    Yves Smith at naked capitalism is excellent too.

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