February, 2006 Archive

Why I Almost Bought Blog Herald for $72,000

I was the original high bidder for Blog Herald and came this close to buying it. I’ve heard lots of people ask how it could possibly be worth that much money, and others have thrown out their own theories about what I was going to do to the site, so now that it has sold and closed, I wanted to give my perspective on the sale and why I thought it was worth every bit of $72,000.

The Value

One of the things I do is buy sites and renovate them—much like real estate investors who buy properties and rehab them to bring out more of the home’s value. Like them, I’m always looking for good prospects.

Reading through ProBlogger.net on January 12, I came across Darren’s post about a Top 100 Blog for Sale and was immediately interested. I emailed Jeremy right away, and he responded within minutes. We emailed back and forth several times, and he was more than forthcoming with any information I requested—even going so far as to give me the login for the Blog Herald stats so I could poke around for myself.

After doing my initial investigation, I saw great value in several places:

800,000 Page Views/$2,000 Revenue
The site was seeing 800,000 page views and $2,000 in revenue every month, and was growing at a significant pace. The revenue alone made the site worth at least $36,000, and the consistent growth quite possibly warranted an even higher multiple. Additionally, $2,000/month for 800,000 page views seemed low, so there was the possibility of growth there as well.

Small Percentage of Traffic from Search Engines
The site was only getting a small percentage of its traffic from search engines—an amount I felt was incredibly low for a site with that kind of prominence—and I felt like I could easily double that. This was the area of greatest growth potential.

PageRank 7
PageRank is vastly overrated. There are so many other things that go into a page ranking well, but so many see PR as the end-all-be-all of ranking well. It’s not.

That said, I knew from experience that a PR7 was throwing around a lot of weight. Pages like that can make other pages rise and fall significantly with just a single text link, so there was a lot of potential here as well.

The Bid

So what I was looking at was a site that was very high regarded in the eyes of its readers, blog-industry observers and search engines, and also had room for additional growth. I felt that it was easily worth $36,000 but I wanted to avoid a public auction so I went as high as I was comfortable going: $72,000. At $72K, my absolute worst-case projections showed it returning a 30% ROI after two years based on a very conservative valuation, so I felt good there.

I did end up being the high bidder, and Jeremy announced the following Monday that the auction was over. Then the due diligence process began for me. I needed to be very sure about all the factors that went into my bid before the deal closed.

Changing My Mind

During the due diligence process, I found some statistics that varied from the ones we had been working with just enough that, in the end, it was enough to make me unsettled about my bid.

Now, statistics are often very subject to interpretation. (That’s why there are so many great quotes about them.) So, not suprisingly, Jeremy and Duncan didn’t fully agree with my analysis. Even so, they did agree to accept the withdrawal of my bid.

Now Duncan has found a new buyer, and it sounds like he got a good price for it. Better yet, it looks like the new buyer will be an even better fit than I would have been. That’s outstanding. I wish them, and b5, the best of success.

WTF 2.0

Russell Beattie posted a great, long rant yesterday about how “Web 2.0″ doesn’t seemed to have learned any lessons from “Web 1.0.”

An excerpt:

Somehow the focus flipped from “making” platforms to “using” them. Ajax came along, Social Software and Tagging took over, RSS alone was considered an API, a few companies got bought, mobile was forgotten about completely and somewhere along the way the whole part about the “business” stuff went totally out the window. Hey, I’m all about creating useful and innovative software for your users, but if you can’t make a profit, you won’t be around long enough to make any sort of difference, and will probably cause more harm than good.

Great, great business observations all the way through. Definitely worth a read even if you have no idea what Web 2.0 is; you’ll still understand most of his points.

Google Takes on eBay

When Google launched Google Base back in November, it didn’t take a genius to figure out that they were moving awfully close to eBay territory.

Then when word hit in January that they were launching an online marketplace (albeit only for video), it was obvious that they were then only a short hop away from competing head on with eBay.

Well, now it’s official. Google announced yesterday that they were adding a payment system to Google Base, the last piece of the puzzle:

While Google Base provides data structure and distribution for a wide range of content and information, a subset of items are for sale. To help users more easily purchase and sell Google Base items, we’re planning to enable people to buy items on Google Base using their Google Accounts. … For buyers, this feature will provide a convenient and secure way to purchase Google Base items by credit card. For sellers, this feature integrates transaction processing with Google Base item management.

If your business currently has an eBay presence, this is something you’ll definitely want to investigate and keep an eye on. With Google’s power to drive users to this new service, it will only be a matter days after the full release (which is still upcoming) for them to present a very major threat to eBay’s established base.

Free Web Stats That Actually Pay You

In a perfect world, the stats you need to make your site successful would be free, and they would be much more accurate than the free stats that your web host gives you.

In a really amazing world, the company providing the stat tracking software would actually pay you to use it.

Well, guess what: we live in a really amazing world. My latest advice article, Free Web Stats that Actually Pay You, details just such a service. The biggest surprise may be that it’s one you already know—you just never realized that they provide some of the most reliable stats available.

Current Style in Web Design

Just found another great web design article over at Web Design from Scratch. It focuses more on the actual physical appearance than the website design how-to I posted Friday, so it’s a great complement to it.

They give lots of examples and note seven common features among today’s best websites:

1. Simple layout
2. 3D effects, used sparingly
3. Soft, neutral background colours
4. Strong colour, used sparingly
5. Cute icons, used sparingly
6. Plenty of whitespace
7. Nice big text

Google PageRank Update Underway

For those of you who watch PageRank (PR), Darren’s reporting that an update to the toolbar PR is underway. Remember two things:

1. The toolbar PR is just a snapshot of a page’s current PR. Google regularly updates all its ranking factors, but only updates the public number every so often.
2. There are so many factors other than PageRank that determine where your page ranks in a search. It’s nice to see, but don’t get obessed with it.

You can use this tool to check a page’s current PageRank:

Future PageRank Tool © SEO Chat™ URL Valid URL

New Website Design How-To

When I’m buying sites, I especially like ones with bad design—the worse the design, the better. That’s because nothing makes more difference in the success of a site than design. On sites with little more wrong with them than the design, a good renovation usually doubles the site’s peformance at least, and in most cases that I’ve seen, the results are much greater.

So the key to making your site more successful may be the design. If so, I’ve just posted a great new article titled Website Design: Step by Step. I can say it’s great because I didn’t write it. It comes courtesy of Peter Flaschner, the founder and creative dictator over at The Blog Studio. I owe him a huge thanks.

Even though the article was originally focused on blogs specifically, the advice is just as applicable for websites in general. I think you’ll find it a great start if you’re looking a new design for your site.

Google Making It Easy to Advertise in Print

From Google’s Inside AdWords blog yesterday:

Last week, we told you about a special test we were running to place ads from our AdWords advertisers in select print publications. The auction allows you to bid for ad space in well-known magazines. Since the auction is a new process for many, we are providing some extra time for you to get your bids in; the auction will now close on February 24th. So for those of you who are reading about this for the first time, and for those who are interested but have been procrastinating, be sure to visit http://www.google.com/printadsauction and name your price.

Really interesting concept. If you’ve ever wanted to get into print, this could be your chance. Check out the list of magazines:

Automotive
Car and Driver
Import Tuner
Motor Trend
Road & Track
Sport Compact Car

Lifestyle
Dwell
Ellegirl
Entrepreneur
Home
Martha Stewart Kids
Martha Stewart Living
Outdoor Photographer
Pregnancy
Women’s Health
Women’s Health & Fitness

Technology
Computer Shopper
Computerworld
CRN
Information Week
InfoWorld
MacAddict
Network Computing
PC Magazine
PC Photo
PC World
OXM - Official Xbox Magazine

Wedding Information Site for Sale

Wedding Guide, a great-looking wedding information site, is up for sale over on Search Engine Forums. The asking price is $10,000, which seems a bit high based solely on revenue, but there appears to be some good content and the design is a really good one.

Might make a good business for you if you have an interest in the wedding niche.

Give a Valentine to Google

In his book, The Five Love Languages, Dr. Gary Chapman says that there are five ways that people show love to others: Words of Affirmation, Quality Time, Receiving Gifts, Acts of Service, and Physical Touch. The really important point is that that’s also how they feel love from others. So if the love language of your significant other is Quality Time, for example, but you continually show your love through Acts of Service, it’s not having the full effect—despite your most heart-felt efforts. By discovering their love language (or languages) you can ensure that your efforts are truly being appreciated for what they are.

In the same way, your website may be a thing of beauty. Anyone looking at it would stare in amazement at how great it is, call their friends over, email it to others, write about it own their on sites. But when a search engine spider looks at it, they see something completely different—something like:

You don’t have the latest version of Macromedia Flash Player. This web site makes use of Macromedia®Flash™ software. You have an old version of Macromedia Flash Player that cannot play the content we’ve created.

Nothing says “I hate you. Go away.” faster than a cryptic message like that, and all your fantastic work leads to no search engine traffic at all because you didn’t speak their love language.

Thankfully, that’s easy to fix. There are three basic search engine optimization principles that, when implemented, will ensure that you and the search engines enjoy a fantastic relationship for years to come.

So show the search engines how much you love them today, and start speaking their love language. You’ll be glad you did.