24/7 Wall St.: The Twenty-Five Most Valuable Blogs http://www.247wallst.com/2008/03/the-twenty-five.html 1 of 4 3/31/08 5:38 PM The Twenty-Five Most Valuable Blogs There is no way to accurately put a value on blogs and blogging companies. All are privately-held and, as is true with many content businesses, the value of the company is based on what a buyer will pay. The figures we have put together look at advertising revenue and income from related businesses like conferences. We have not included blogs affiliated with larger media companies. It is too difficult to break-out what their traffic may be and how their income is divided with the parent. Some blogs are fronts for other businesses like O’Reilly Radar Those have been left out. A lot of big blogs do not make the list because they bring in very little commercial revenue. Treehugger probably falls into that category. We looked at unique visitor and page view measurement services when possible: Alexa, Compete, and Quantcast. These services are often criticized for estimating website traffic too low. We have tried to take that into account. We also looked at data at blogs which gave their own ad rates and page views. Our estimated page CPMs are based on quality of ads and number of ads on each page. We looked at margins based on headcount and our opinion of howmay of the people are full-time. Current growth rate based on our measurement sources was also taken into account. A site with traffic doubling year-over-year was give a higher multiple than one with flat traffic. Because not all blogs make money, we looked at multiples of operating income and revenue. These are completely estimates because o the tiny number of blogs which have been sold and lack of information about what the multiples may have been. Finally, large blogs with big “moats” got higher multiples than smaller ones. Blogs with one founder who contributes a substantial amount of the content got lower multiples than those with several good writers. Blogs which appear to be well-funded or have operated for a long time got better multiples than newer sites or ones where it was not clear that there was a big pool of money behind them. In short, the task of valuing the largest blogs is impossible. That makes it much more interesting than writing about the P/E at General Electric. 1.The Gawker Properties: $150 million. Gawker, ValleyWag, Gizmodo, Wonkette, and a number of smaller websites. The company claims 30 million monthly unique visitors. According to audience measurement service Quanc ast, that number is fairly close. Compete shows that traffic to most of the large sites in the group more than doubled from a year ago. If the sites generate one-and a-half page views per unique visitor and the total CPM value of the multiple advertisers on each page is $20, Gawker is an $11 million business which is still growing quickly. The company does not appear to be staff-heavy, so it is imaginable that the margins on the business are 50%. Would the business be worth 15x revenue or 30x operating profits? Could be. 2.MacRumors: $85 million.Blog knows more about Apple than Apple management does. It ranks No. 2,700 in Alexa. Compete shows 544,000 visitors and moving up quickly. Quantcast puts global unique visitors at 5.3 million. Page views at 33 million, which seems a bit high. Advertising looks high-end and solid, probably at least $30 per page CPM. Business should do at least $12 million and have a high margin, estimated at 60%. At a 12x multiple. 3.Huffington Post: $70 million. Several websites commented that HuffPo might be worth $100 million when it raised $5 million late last year. Arianna Huffington said to Portfolio that the business was in the process of becoming profitable. In late 2007 management claimed that the website had 4 million unique visitors per month and would bring in $7.5 million for the year. The website is now in the top 1,000 according to Alexa and its ranking has been climbing, probably due to the election. Compete shows a similar trend with the website reaching over 1.8 million people in February, up 245% from the same month last year. The problem with the business now is that its value has probably peaked. The huge increase in visitors is likely to fall-off once the election is over. HuffPo has tried to building out other content sections, but it is likely that they cannot replace the visits from the core audience which vis its the sit e for oli tic al commen t. That means that the com an wil l hav e all of the cos ts 0 or 0 eo le and a
