The Twenty Five Most Valuable Blogs – 247 Wall Street
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.