Selling A Blog

Buying and selling a blog can be exciting. But watch out for the pitfalls that can doom a deal. Here I list seven to avoid.

1. Moving too fast.

Just like buying and selling real estate, moving too fast with a sale or purchase can bring buyer’s/seller’s remorse.

Seller

As a seller, have you considered all the opportunities to sell your blog? Have you approached potential buyers and asked them to submit “indications of interest”? Sometimes the best deals are the ones that are not listed on Sitepoint’s auction site but rather found from approaching other blog owners who can integrate the blog into an existing portfolio. Those owners may be willing to pay more for your blog because of it.

Buyer

As a buyer, have you considered how the new blog will fit in with your existing business? Have you done all your due diligence? Carefully consider whether you’ve made a wise decision before you part with your money.

2. You don’t know what you want.

Seller

If you are the blog seller, do you know what you want for your blog? What do you think is a fair valuation for what the blog is worth? Is that in line with what others view as your blog’s value? If you are listing the blog on an auction site, at what point do you close the auction and declare the blog sold? If you list your site with a long deadline for ending the auction, you are limiting the number of bidders who would otherwise bid. Nobody wants to bid on an auction that will end many weeks into the future until the time is close to the end date.

You should know how much you would be willing to accept for a sale to occur. Therefore, I recommend setting a buy-it-now price. Just like searching for a house, the buyer wants to know what the listed price is or else know that at some point certain, the blog will be declared sold to the highest bidder no matter what. Not doing either indicates that you don’t know how much your blog is worth and are more likely to keep cancel an auction.

Buyer

If you are the blog buyer, you should come to an independent price and not rely on the stated buy-it-now price. What the blog is worth to you as the buyer is dependent on a number of factors particular to your situation (and that situation may be entirely different from the blog seller’s) including redesign costs, integration costs, maintenance costs, etc.

3. You’re not ready for due diligence.

Seller

As the blog seller, you have to be prepared to present concrete statistics before you even put out to the public that your blog for sale. Statistics potential buyers want include obvious information like number of visitors, page impressions and revenue sources. Not so obvious information buyers may want knowledge of include details of long-term contracts with existing bloggers to continue blogging after the sale (if there are bloggers other than yourself), hours spent blogging on average, and the sources of blogging inspiration. The blog seller must anticipate as many questions as possible to minimize the time spent addressing due diligence questions.

Buyer

As the blog buyer, you need to be prepared to ask these and other questions particular to your business that will allow you to seamlessly integrate the new blog into your existing network (assuming you have one already). If either the buyer or seller is not prepared for proper due diligence, the sale process will be bogged down.

4. You skimp on advisors.

Buyer and Seller

The selling and buying of blogs is not like a big corporate merger and acquisition with many advisors on both sides. But you still want to make sure you aren’t being fleeced as either the buyer or the seller. If the blog has enough value to it, you may need to consider consulting appropriate advisors. Advisors may include those who have already brokered deals in the past, blog designers, coders, others in the blogging industry. Engaging advisors on both sides will allow the buyer/seller to make sure that the valuations and costs have been properly considered and evaluated.

5. You don’t acknowledge your weaknesses.

Seller

As the blog seller, you want to present the best picture for your blog. You’ve likely already dressed up your blog to create the best curb appeal. But, if there are any hidden skeletons in your blogging closet, now is the time to fess up. Skeletons may include having had the domain banned by a search engine in the past, or buying links to artificially boost up Page Rank and number of links, etc. Once the sale has been consummated, the buyer who finds out that the seller has been less than honest about critical issues may seek restitution in a number of ways. Besides, despite the number of blogs in the world, you’d be surprised how quickly your good name’s reputation may be tarnished by allegations of impropriety.

Buyer

As the blog buyer, your concern is making sure that the new blog fits within your professional profile. You have to ask yourself whether you are suited to the type of blogging involved. Are you able to blog three times a day? Do you have the contacts for a successful celebrity paparazzi site? Acknowledge your weaknesses before you even consider buying a blog–don’t be blinded by the potential income a new blog can generate. You may not have the skills to take that blog to the next level.

6. You don’t do your homework.

Seller

As the blog seller, you are not only selling your blog’s physical plant (i.e., its design, coding, content), you are also selling an introduction to your visitors to the potential new owner. You’ve spent many months, years even, building up a relationship with your readers. Don’t ruin your good name by introducing your readers to a new owner who wouldn’t be able to uphold the standards you’ve set in the past. In other words, don’t be blinded by the money offered, consider your readers as well. Your future reputation and endeavors depend on it.

Buyer

As the blog buyer, you need to make sure that the seller is someone you trust. You are relying on the information he/she is providing you. Investigating your seller is not difficult. Ask for references, speak with people who have worked with the seller before, correspond with other bloggers.

7. You ignore the importance of chemistry.

Seller

Just like making sure your soon-to-be former readers are taken care of by the new owner, you should consider how the new owner is going to integrate the blog into his portfolio. In what direction is the new owner going to take the blog? Does that direction fit well, in your opinion, with the new owner’s competencies and experience? Selling an established site to someone who has the money to pay for the site but not the experience to run the site would be doing a disservice to the loyal readers who visit your blog regularly.

Buyer

As the buyer, not considering the chemistry of how the new blog will integrate with your existing portfolio can be disastrous monetarily. How will you promote the new blog? How does it fit with the direction of your existing blogs? Who will blog for the new blog? If you have a network of sites dealing with gadget news, how does a blog on personal development fit in that portfolio? The more distinct the new blog is from your existing blogs, the less synergies there are to cross-promote and cross-pollinate your ideas across blogs.

My Inspiration

I hope you found this list useful. In case you were wondering where I came up with this list of ideas, I can tell you I was at the Barnes & Noble in Union Square in Manhattan yesterday and happened across a magazine article in Inc. called “8 Private Equity Pitfalls and How to Avoid Them“. That Inc. article served as the inspiration for this article on blog sales.

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.