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All the hype about the sale of Weblogs Inc. to America Online (AOL) has given rise to the now famous question – How much is your blog worth? In acquiring Weblogs Inc., AOL has provided some concrete metrics to future valuation of blogs. How much will traditional media be willing to pay for a blog? Conversely, how much would you sell your blog for?
AOL-Weblogs Inc. Deal – Benchmark for Future Blog Valuation
Weblogs Inc was established by Jason Calacanis and Brian Alvey i…
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Internet, Blogs, Internet Business, Small Business
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All the hype about the sale of Weblogs Inc. to America Online (AOL) has given rise to the now famous question – How much is your blog worth? In acquiring Weblogs Inc., AOL has provided some concrete metrics to future valuation of blogs. How much will traditional media be willing to pay for a blog? Conversely, how much would you sell your blog for?
AOL-Weblogs Inc. Deal – Benchmark for Future Blog Valuation
Weblogs Inc was established by Jason Calacanis and Brian Alvey in 2003. It is a network of blogs which includes under its wings successful blogs such as Engadget and Autoblog. Jason Calacanis pointed out that Weblogs Inc. earns in excess of $1 million yearly in Google Adsense revenues alone.
AOL purchased Weblogs Inc. for a confidential sum assessed at somewhere between $25 – $40 million. After said purchase, Tristan Louis came up with a blog valuation scheme based on the deal. He created a chart of blog value using the value of each inbound link to Weblogs Inc. as the basis. It is common knowledge that blog readers follow links. Search engines also act as users and primarily determine blog quality rankings based on linkage data thus direct and indirect value links are a great proxy for value measurement. In the blogosphere, conversations that nurture connectivity represented by links and indexes like Technorati give a vantage view of the value of a blog.
Tristan Louis itemized the publicly available data (list of blogs indexed) at Weblogs Inc. network including the number of inbound links (Technorati blog numbers) per blog divided by the purchase price to determine the value of an inbound link to a blog. At the rumored price of $25 million, the estimated value is $ 564 per link. At $30 million, it is $677.57 per link and $903.42 at an acquisition price of $40 million. Interestingly, the consumer segment chalks up the biggest percentage of linkage. Engadget represents over a third of the overall network traffic.
Applying Tristan Louis’s Weblogs Inc, sale, Dave Winer has also sold http://Weblogs.com to Verisign for a rumored price of around $2 million. Blog entrepreneur Nick Denton, founder of Gawker Media has signed a deal with VNU Media to publish Gizmodo (gadget blog) across Europe in six languages. VNU Media is a leading worldwide information and media company which owns ACNielsen, Billboard, The Hollywood Reporter, among others. With this deal, blog publishing has hit big time.
However, the value of a blog is not calculated based solely on links using AOL’s purchase of Weblogs Inc. Jason Calacanis, the man behind Weblogs Inc., disputed using links alone as proxy for the value of the blog network. He reiterated that the acquisition price was based also on the ever reliable revenue, earnings, management and other metrics.
Tristan Louis based his valuation scheme on links to a blog but he also acknowledged the significance of technology, talented management team, financial performance and growth. There is direct correlation between links, traffic, revenue and earnings capacity of a blog or blog network but it takes sound management to maximize all these potentials.
Value of a Blog – Some Metrics to Consider
How much is your blog worth? There is no one standard gauge yet. But one way to measure the value is to look at certain factors to gain a better perspective on how to measure the future value of a blog.
Aside from number of links as mentioned earlier, traffic level is a key factor in determining blog value. Highly trafficked blogs definitely have a bigger potential for earning compared with those blogs with few readership. A blog’s success is highly dependent on visitors/readers. However, ascertaining the value of traffic is a thorny issue. Some bloggers value traffic anywhere from $3 to $10 per hit a day. From this data, a blog with 2000 unique visitors (page views) would be worth between $6000 to $20,000. The downside to this valuation approach is that some traffic is more valuable than others. A personal blog might have 1000 unique visitors but more difficult to convert to revenue than a blog with 1000 readers that blogs on the topic of digital cameras.
Aside from diverse traffic streams that come from bookmarks, direct links or RSS subscribers will make risk of losing traffic low. Social bookmarking sites are inching their way to becoming prime sources of traffic, with peer referral at times carrying more weight than search results. There are a number of well known bookmarking sites you should link to. Top bookmarking sites include Furl, http://del.icio.us, Diggs, to name a few. By leaving an RSS (Really Simple Syndication) feed, you can feed you readers’ desire for information. Visitors can get automatic updates whenever you provide new content. Having a fairly good base of bookmarkers and subscribers ensure a steady flow of fans and repeat readers – the all-important traffic.
In the blogosphere as in any other field, revenue or earnings is a major focus. a logical approach to blog valuation would be to base its worth upon current and projected earnings, assuming that your blog is earning something to start with. Again, there are varying views on how to use current earnings to measure a blog’s value.
Some bloggers opine you should expect six to eight months earnings as your blog value. A blog with a daily income of $150 would be worth between $27,000 – $36,000. Still, others determine a blog’s value as being two years of current earnings. A blog earning $150 a day would be worth $108,000. Again, there is a huge disparity between these methods of assessing value. Having diverse streams in the form of multiple affiliate programs also increases blog revenue. An affiliate program is an advertising model in which a blog owner markets via his blog a given product, on behalf of another company. The blog owner is reimbursed a percentage of all sales sold thru his affiliate link. Reimbursement rates can vary from 1% and upwards. Google Adsense is a prime example.
Visitors access blogs throughout the Internet primarily through search engines. If your blog does not have a post appearing in the top ten search engine rankings, the chances of visitors reaching your blog is low. A blog’s presence on relevant search engines is a significant medium for maintaining a blog’s success. Search engine ranking and pages indexed in search engines is critical for generating traffic to a blog. Having your blog among the top results of a search or receiving a high Google PageRank (a system for ranking blog posts) would increase your blog’s overall value.
High quality content will always be a key factor for determining a blog’s value. As has been said time and time again – Content is King. Moreover, search engines can only “read” a blog. What attracts a search engine are the words, the content of a blog that explains, informs, shares and educates readers. Good content increases blog value.
All these aforementioned objective metrics can be considered in assessing the value of a blog. Added to all these, a talented management team behind a blog, its underlying tools and blog technology in use can further help to estimate the future value of a blog.