How Much Are Blogs Worth And Indicia Of Value In Blogs For Sale

I’ve been kicking myself for not getting into the bidding for The Blog Herald when it was for sale by Duncan Riley. At the time, blog sales were a new thing (and it still is) and I didn’t know how to value a blog. Also, the public price bidding war was up to $72,000 and there was no way I was going to pay that much for any blog. Eventually, the public bidding fell through and a private deal was negotiated.

The Blog Herald had some intangibles at the time that I really liked. It was well established but not yet top tier (i.e., not yet considered an “A”-list blogging site). There were many citations to the site but at the same time it was also essentially the mouthpiece of one man–Duncan Riley. Thus, there was room for improvement (e.g., by adding more writers).

Also, I thought The Blog Herald’s advertising space was not fully optimized nor had all advertising avenues been explored and implemented. Therefore, if one could acquire the site for a reasonable price, there was certainly opportunity for improvement and gaining a respectable or better return on investment.

It was with that background that I watched with interest the sale process of Aaron Brazell’s blog “Technosailor”. Until I had heard about the sale at Problogger, I had never visited Aaron’s site. But, I do know who Aaron is from his associations with B5 Media, and his writings and mentions in problogging websites.

I visited Technosailor and I must say it didn’t immediately strike me in the head what the site was about. The domain “Technosailor.com” didn’t give any clues except that maybe there was a technical slant to the site (though the tagline in my browser window did say “Technology, Blogging and New Media”). Also, the “About” description was kind of vague (it discussed the power of “people” and “communities”)

However, once I delved into the posts at the site, it was evident that the site was a problogging site (meaning that it was about blogging professionally) with a strong focus on blogging news and ideas. There was also a mix of technical posts (e.g., on changes to the WordPress publishing system, etc.). Then there was a distinct tone of the posts there which I guess must be attributed to the author, Aaron.

Unfortunately, it looks like the sale of Technosailor has been cancelled. I’m disappointed for Aaron that there wasn’t a deal because the site had much potential. You can read about his reasons for canceling the sale in the previous link. And that brings me to the main point of this post: How much are blogs worth and what are the indicia of value in blogs for sale.

Various people have thrown around figures like 12-18 times monthly income as a measure of a blog’s worth. I don’t think that’s accurate in and of itself and is dangerous if taken too literally. A blog’s worth is a combination of many factors including:

1. Age – How long has the blog been in existence?
2. Quantity of posts – How many posts does the blog have?
3. Frequency of posts – How often is the blog updated?
4. Quality of posts – What is the relevance, currency and depth of the posts?
5. Design – How does the design relate to the content? Does the design convey the appropriate feelings for a visitor to the site? Is the design appropriate for the subject matter? Can the design be improved?
6. Monetization avenues – Has the site fully explored all monetization possibilities and revenue streams?
7. Personality – Does the content of the site convey a particular personality? Is that personality desirable and/or congruent with the future direction of the site?
8. Subscriber quantity – How many subscribers does the site have?
9. Subscriber loyalty – How likely are the subscribers going to continue after a change in ownership?
10. Subscriber growth – How likely am I able to grow the subscriber base after a change in ownership?
11. Cult of personality – How many of the subscribers are subscribers because of the person who is writing the blog posts and what are the costs should that person leave?
12. Statistics – What are the sources of the traffic the site receives?
13. Number of authors – How many writers are there for the blog? What are the opportunities for growing the blog by adding more authors after a sale?
14. Real costs – What are the current and future anticipated costs of running the blog?
15. Intangible costs – What are the non-out of pocket and opportunity costs you expect to incur to implement the above improvements? For example, what is your sweat equity worth?
16. Transferability of revenue streams – Are the revenue streams transferable to the new owner or do they go with the seller?
17. ROI timeframe – How fast do you expect a return on your investment?
18. Current revenue – How much does the blog take in on a monthly basis now?

You should notice that I list current revenue last. That’s because it is the least relevant of all the considerations. To properly value a blog, you need to consider each of the points above and to see if it is a detriment or an advantage to you–whether you can improve on each one to bring in more revenue, how long it will take you to improve and how much it will cost you to do so.

After you’ve done all that, it’s simply a matter of determining what your acceptable level of return is and what the required purchase price is and seeing if the return on investment is acceptable for your time frame–those of you with a business background would do a net present value test of expected future cashflows at this stage.

If I were selling a blog, I would take a hard look at the points listed above and try to remove as many roadblocks as possible to a smooth sale. For example, if the blog has a voice that is centered primarily around me, then before I sell, I would have other authors/writers make posts for a consistent time in order to let my regular readers get used to other writers and to remove my personality from the mix and alleviate a buyer’s fears that the site will go down in value after I leave.

I would appreciate any thoughts on the above. Chris Garrett also has an interesting posting about his thoughts on blog sales.  As does Lorelle at The Blog Herald. Please DO comment if you have any additional thoughts/ideas.