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.
1. Gawker Properties. This blog company has a number of successful sites including Gawker, Defamer, Jezebel, Gizmodo, Lifehacker, and Jalopnik. In combination, the sites have about 23 million unique visitors and over 200 million pageviews a month. The company’s owner, Nick Denton, says the firm’s advertising is holding up this quarter. Traffic at most of the sites is still growing, in some cases at a rate of over 50%. The average CPM for each page across all of the properties is estimated at $15. That makes Gawker at $36 million business. Based on staffing levels, the company should have margins well above 50%. With an 8x operating income valuation, the company is worth $170 million.
2. Huffington Post. HuffPo is probably the most well-known “blog” in the world. The company recently raised $25 million. There has been a great deal of concern that once the national election ended in November that the site’s audience would drop because of its focus on politics. All of the available audience measurement services show it holding its number of visitor flat if not slightly up. The range of unique visitors among the services measuring Huffington is fairly broad with an average of about 12 million a month. Pageviews per month should be at least 180 million. HuffPo’s current valuation is being undermined by the quality of its advertising. To fill its inventory, the company is selling a large portion of its ads to marketers like FreeCollegeInfo and Vonage. This brings its CPM per page as low as $5, putting a 2009 annual revenue estimate at about $11 million. Huffington appears to have about 50 full-time employees, operating costs like those of a traditional online news site, and a technology platform that is expensive to maintain and build out. The cost to run the operation is probably over $18 million a year. Owning Huffington would be a prize, especially for a major media company. Normal media multiples don’t apply. The company is worth more than $90 million.
3. The Drudge Report is the father of news and news opinion blogs. Compete and Quantcast have very different unique visitor counts. The number is almost certainly over five million a month. Quantcast puts pageviews at 742 million per month, which is almost certainly too high. The ads on the site appear to be almost all network sold and the CPM per page is not likely to be above $2.50. If the site has 500 million pageviews, revenue would be $15 million a year. Margins should be very high, so operating income should be $8 million. Without Drudge himself, the site has almost no value. At a 6x multiple, Drudge is worth $48 million.
4. Perez Hilton. According to Quancast, the celebrity blog has 5.5 million unique visitors and 236 million pageviews a month. The site runs a lot of low CPM advertising which should only yield about $3 per thousand. This is a business that brings in about $8.8 million a year. The site is relatively inexpensive to run. Margins for the company should be in the 60% range. PerezHilton is in an extremely competitive part of the online entertainment content business. If the founder leaves, the site is worth almost nothing. With the founder staying, the business is worth $32 million, about 6x operating income.
5. Sugar, Inc. This network of blogs for girls and young women has a number of sites including PopSugar, BuzzSugar, and CelebStyle. According to Quantcast, the 27 sites taken together have about 10 million unique visitors a month. Pageviews are probably close to 200 million. The number of ads on the websites and fairly low CPMs that they yield bring Sugar only about $3.50 per thousand pages. Sugar, Inc.’s revenue is about $9 million a year. The company appears to have about 70 employees, so annual costs are about 80% of sales. The sites are in a very competitive part of the online market. Looking at revenue multiple of 3x and supporting that with a high operating income multiple, Sugar is worth about $27 million.
6. TechCrunch. This is the “must read” site for people who want inside industry information on tech, VCs, tech start-ups, and the internet. Compete and Quantcast have different audience numbers for the site, but it probably has a little over 3 million unique visitors a month. Pageviews are in the area of 15 million. TechCrunch has a number of high-yield advertisers and a number of ads on each page. CPM yield should be about $18. Ad revenue is close to $3.5 million. The company has several foreign language sites. TechCrunch also has a substantial conference business which could bring in another $2 million. Running the conferences is likely to be expensive. The site has a fairly small staff. The company’s margins are about 30% on revenue of $5 million. Without founder Michael Arrington, the firm is worth very little. With him, because of its tremendous influence in the markets it covers the company has a value outside most standard measures. TechCrunch is worth about $25 million.
7. MacRumors. This huge site covering almost everything there is to write about or say about Apple has about five million unique visitors a month and 35 million pageviews. Like many other websites hit by the advertising recession, Mac Rumors is taking a lot of network advertising from companies which sell ads with fairly low CPMs. This probably pushes its yield down to $9 per page. MacRumor’s revenue is running about $3.8 million. The company has a tiny staff and should have an operating margin of close to 70%. MacRumors is worth about $21 million at 8x operating income.
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.
9. GigaOm, one of the top sites on technology and the internet, has a network of blogs including Earth2Tech, NewTeeVee, and TheAppleBlog. Total monthly unique visitors across all sites are about 1.5 million and pageviews run above 15 million. The sites carry a large number of ads per page and some clearly have high CPMs, for an average per page of $12. Revenue for GigaOm also includes several industry conferences which should bring in another $1 million. The company is fairly expensive to run, so operating margins are not more than 25%. Without founder Om Malik, the company would be worth very little. With him, it is in a property which could easily find an owner at a large media which has extensive tech coverage. At a 12x multiple of operating income GigaOm is worth $9.5 million.
10. Politico covers Washington and politics. The site has about five million unique visitors and about 30 million pageviews a month. The website does get a lot of advertising from major companies and trade associations. It also carries a fair amount of inexpensive network advertising. Total CPM per page is about $8. That brings annual revenue to $2.9 million. Politico appears to employ more than 70 people, some of them almost certainly well-paid. The site is complex and expensive to run. Annual expenses should be about $7.5 million. At a 3x multiple of revenue, the company is worth $8.7 million.
11. SmashingMagazine is one of the largest websites devoted to internet design and web development. If has about one million unique visitors and 12 million pageviews a month. The site has a large number of ads per page and they are highly targeted and command high CPMs. Total CPM per page is at least $15. Total revenue for the company is $2.1 million. Margins should be 60% for an operating margin of $1.2 million. At a 6x multiple, the company is worth $7.7 million.
12. SearchEngineLand is a blog for people interested in search engine marketing and the industry. The site has about 600,000 unique visitors and 1.3 million pageviews per month. The site runs almost no advertising, but does operate a large conference business. Attendees pay as much as $1,000 a piece to go to the events. And, the conferences have outside sponsors. The company has at least ten of these scheduled for the year. This could certainly be a $3 million business. Expenses to run the company and the conferences are high. Operating income is around $750,000. At a 6x multiple, SearchEngineLand is worth $4.5 million.
13. Boing Boing calls itself a directory of wonderful things. The business gets about 15 million pageviews a month on almost three million unique visitors. The number and quality of advertisers is weak. The CPMs across each page bring no better than $5 to the company after network sales commission costs. Expenses appear to be very low. Revenue for the Boing Boing is around $1 million and operating income is approximately $600,000. At 6x operating income, the firm is worth $3.6 million.
14. ReadWriteWeb carries technology analysis, tech product information and reviews. The site gets one million unique visitors a month and about six million pageviews. ReadWriteWeb has fallen victim to taking network ads, but does carry some marketing messages targeted specifically to its readers. CPMs across each page run about $12. Revenue for the site is $900,000 a month, but the margins should be 65%. At 6x operating income of $600,000, ReadWriteWeb is worth $3.4 million.
15. SB Nation is a network of 185 sports blogs which has two million unique visitors and 20 million pageviews a month. The home site carries a very modest amount of advertising which appears to be getting mid-level CPMs. CPM per page is around $6. Total revenue per year is $1.5 million. The operation has a fair number of people for a company its size so operating margins are not above 30%. With a 6x multiple of operating income SB Nation is worth $2.7 million.
16. Destructoid is the most popular gaming blog and community site with 1.1 million unique visitors and 7.7 million pageviews per month. The site does not carry a huge amount of advertising, but what it does carry is highly targeted and almost certainly has a high CPM. With a $9 per page CPM, annual revenue is about $830,000. Margins are high because most content is user created. Margin is probably 50%. At a 6x multiple on operating margin, the company is worth $2.5 million.
17. Mashable is the largest site covering subjects about social networks. The site has about two million unique visitors a month and five million pageviews. Masbable has a large number of ads on each page. They are targeted and almost certainly have high CPMs. CPM per page should be about $20. Annual revenue is $1.2 million. The operation has a fairly large staff and is unlikely to have an operating margin of more than 25%. At a multiple of 8x, Mashable is worth about $2.5 million.
18. Alley Insider sites. This group of sites now includes Silicon Alley Insider, Clusterstock, Greensheet, and The Biz and the company is known as The Business Sheet. The advertising is a mix of very targeted ads, network ads, Google Adsense, and ads for related companies like Gilt Groupe. Total unique visitors across the sites are about 1.1 million a month. Pageviews per month are about three million. At a $12 CPM per pages, the company does about $450,000 per year. With a relatively large staff The Business Sheet loses money. The company does not much value without editor-in-chief and lead writer Henry Blodget. At five times revenue, the company is worth $2.25 million.
19. /film (slashfilm) covers the worlds of movies and movie making. The site has about 1.5 million unique visitors a month and ten million pageviews. Ads are mostly low CPM and Google Adsense making the CPM per page no better than $5. Revenue runs $600,000 a year. Costs look remarkably low. Operating income should be $300,000. At a 7x multiple, Slash Film is worth $2.1 million.
20. The Superficial Network (AntiClown Media) has three sites with The Superficial being the largest. The Superficial takes an unusually cruel look at celebrities. Combined unique visitors for the three properties of 1.3 million and 15 million pageviews per month. Sites run a lot of inexpensive ads so CPM per page is only $6. Revenue for company is a little over $1 million. Inexpensive company to run. Probably clears $400,000 in operating profit. At 5x, the company is worth $2 million
21. Neatorama is about neat things. That gets a broad definition from giant rats to water found on Mars. The site has about 1.3 million unique visitors and four million pageviews per month. The site has a small number of ads which cannot bring in more than a $4 CPM per pages. That part of the site’s business probably does not generate more than $200,000 a year. The site also has an e-commerce section which looks well-managed. The average item sells for about $20. This operation could net the firm $250,000 a year. That would bring total revenue to just under $500,000. The site looks like it costs very little to run. Neatorama is worth $1.5 million.
22. Daily Kos is a political commentary site. Compete and Quantcast both put unique visitors a month at 600,000. Quantcast reports monthly pageviews of 21 million, which seems extremely high compared to unique visitors. The site runs a modest number of ads which would appear to have low CPMs and Google Adsense text advertising. CPM per page is unlikely to be higher than $4. Daily Kos has revenue of $1 million a year and probably a high operating margin. Operating income is probably slightly less than $500,000. The site has idiosyncratic content and its audience is dropping. Its multiple is not likely to top 4x giving Daily Kos a value of $2 million.
23. Talking Points Memo covers political issues. Audience measurement firms put unique visitors as about 700,000 a month and falling since the election. Pageviews are in the five million range. The site runs a fairly large amount of network advertising which pushes CPMs down. Average CPM per page should be about $5. Annual revenue is below $400,000. The company has a fair number of employees and probably does no better than breakeven. Talking Points is worth 4x revenue or $1.2 million.
24. VentureBeat is the most prominent blog covering the venture capital market. It has about 600,000 unique visitors per month and 1.7 million pageviews. Unfortunately, the site has been overwhelmed by inexpensive network ads. It has a very modest number of premium ads which are targeted directly to its readers. CPMs per page are $8. VentureBeat revenue is probably not more than $200,000 a year. Its costs are high, so it probably does not breakeven. But, it is a special case because it is the leader in a portion of the market that would make the site valuable to a large media company. Five times revenue give the business a value of $1 million
25. Wowowow.com is a site for women over 40. “Women On The Web” has a large number of famous writers including Mary Wells, Liz Smith, Whoopi Goldberg, Leslie Stahl, and Candace Bergen. Quantcast says the site has over 400,000 unique visitors a month and 4.7 pageviews. The site carries a lot of public service advertising which probably brings in no money. Wowowow does run Google AdSense and some ads from branded companies. CPM per page is not more than $3. Revenue per year is about $200,000. The site looks extremely expensive to run both from a design and engineering standpoint. Staff costs are also high for a site this size. The company recently raised $1.5 million. Running the operation cost at least $1 million a year. If the authors go along with the site, it is worth $1 million.
Douglas A. McIntyre
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