Premise: Over the past year, more and more media companies and blog networks are buying up blogs for sometimes vast sums of money. The most famous case of this is AOL buying Weblogs Inc for $25 Million, but this is no longer a rare occurrence. Many of the potential buyers are now forced to assess an individual blog’s worth, and unfortunately this is not an easy thing to do. There have been a few programs so far written to calculate blog worth, but as many have noted, they are drastically unrealistic in how much worth they assign a blog. The most famous program is this one, which vastly exaggerates a blog’s worth for two reasons: As my research (which will be outlined below) showed, a blog’s worth changes based on 1. The niche of a blog, and 2. How many inbound links are coming in; as in a blog’s worth grows exponentially with incoming links, not with a steady, fixed rate.
An example of the exaggerated prediction:
So while we can look at that worth calculator with some hopeful amusement, I don’t think very many people think that their blog is actually worth that much.
Because of this, I set out to statistically find a formula for predicting a blog’s worth, so somebody that is thinking about buying a blog can use it to estimate how much money he or she should spend buying out the blog. Please note that this only predicts the worth of the blog itself, not the blogger as well if you’re planning on bringing him/her on board.
Methods of experimentation: Obviously, I could only use blogs that had transparent advertising methods for my study. What this means is that they had to use an advertising program which allows anybody to view how much money they are making per week. The main two programs that do this are 1.Blogads: a combination of picture and text advertising that allows you to place an ad for a given amount of time for a set rate, and 2. Adbrite: a link-text advertising program that allows you to place a text ad for a given amount of time for a set rate.
For each of these programs, you know exactly how many people are advertising and how much they are paying for those ads.
Now, many people will point out that people who use Blogads and Adbrite also have alternate forms of advertising on their site, usually Google adsense or some kind of affiliate program. To compensate for this possibility, I used this rationale: Blogads, in return for its services, takes out 1/3 of your income for themselves, which means that the blogger only gets 2/3s of the listed price. With Adbrite, they take out 1/4. Also, if you only advertise for a week, you’re buying a much more expensive ad than if you were to buy a bulk package of 2 weeks or more. So by not subtracting these amounts out and going only by the one-week ad rate, I’m attempting to compensate for what the blogger is making through other advertising programs.
When trying to figure out how much any company is worth, many people will tell you that you should spend as much as that blog/company will make in an entire year. So to figure out a blog’s worth, I merely took those weekly rates and multiplied them by 52.
I surveyed 100 blogs that use transparent advertising programs, and divided each blog into a niche. I was somewhat broad with the niches. They are as follows:
7. miscellaneous/ non-niche
After figuring out each blog’s yearly worth and then placing it in a niche, I then used Technorati to find out how many blogs were linking to each blog. For those who don’t know, Technorati, in its ranking system, only counts the number of blogs that have linked to you in the past 6 months when calculating your rank. So for instance, you can see that Bloggasm has 115 blogs linking to it as of this posting. There has been a lot more than just 115 blogs linking to us, but that’s the number that has linked to us in the past 6 months, and so that’s the number I used when I calculated the money-per-link worth.
After I knew how many blogs were linking to a particular blog, I divided that number into the amount that blogs makes in a year (aka, its total worth), and by doing this, I was able to tell how much each link is worth and devise a formula for calculating a blog’s worth within its niche.
After all this was done, I averaged all the amounts together in each niche, so that you can use the forumula below to calculate a particular blog’s worth:
1. If your blog is a miscellaneous blog that doesn’t adhere to a specific niche (example: BoingBoing), take the number of blogs linking to you and multiply by $21.57 to figure out your blog’s worth.
2. If your blog is a Political/military/legal/feminist blog take the number of blogs linking to you and multiply by $27.64.
3. If your blog is a Gossip/movie/television blog, take the number of blogs linking to you and multiply by $52.58.
4. If your blog is a Gadget/technology/software/”nerd” blog, take the number of blogs linking to you and multiply by $34.89.
5. If your blog is a Regional/city/location-oriented blog, take the number of blogs linking to you and multiply by $51.70
6. If your blog is a Literature/books/art/poetry/publishing-industry blog, take the number of blogs linking to you and multiply by $13.75.
7. If your blog is a Sports/gaming/outdoor-activities blog, take the number of blogs linking to you and multiply by $46.80
Interesting observations: 1. As the number of links to a blog went down, so did each individual link’s worth. So if you have a blog with 100 people linking to you, each of those individual links is worth less than a blog who has 200 blogs linking to it.
2. The blogger who was #1 in his/her niche had a VASTLY higher money-per-link ratio. The #1 bloggers always outperformed the #2 and #3 blogs in their niches by much more than I expected.
3. There were a surprising number of blogs who only used Blogads as their single source of income. I can understand that adsense doesn’t pay very well in some niches, but I still think that a lot of these blogs could have brought in a significant amount of extra income to their blogs by including it.
Results in action: For fun, I’m going to take some random blogs and calculate how much they’re worth. Here we go:
Whatever is worth $20,750, Guy Kawasaki is worth $151,387, Gladwell is worth $27,221, POD-dy Mouth is worth $2337, Infothought is worth $9804, Unclaimed Territory is worth $74,932, Fosfor Gadgets is worth $42,180, Cinematech is worth $8,833, Organizing LA is worth $1912, CrimLaw is worth $2128, War Liberal is worth $864, Bookdwarf is worth $1038, Feministing is worth $42,012, Cinecultist is worth $7150, Professor Bainbridge is worth $27,363, Yet another comics blog is worth $1072, Basketbawful is worth $18,579, Got Gay? is worth $3154, Open Book is worth $7493, Sports Law Blog is worth $8704, Valleywag is worth $75,327, PSP Hacks is worth $9036, The Movie Blog is worth $50,108, The ADD blog is worth $563, Is That Legal? is worth $6,965, Wordyard is worth $1722, LA voice is worth $14,837,Screenhead is worth $43,168, Pajiba is worth $26,973, Dispatches from the culture wars is worth $18,337, Cinematical is worth $130,661, The Blog Herald is worth $54,334, Norwegianity is worth $9,936, Queerty is worth $47,778, The Mumpsimus is worth $2,791
Conclusions: 1. It’s still very hard for a person to make a full time living off of a single blog.
2. Blogs which don’t fall into any sort of niche are at a serious disadvatage. This probably owes to the fact that it’s far easier for niche blogs to find niche advertisers.
3. Gossip blogs, gadget blogs, and regional blogs have great advertising potential.
4. I’m surprised at this, but Lit Blogs aren’t pulling in a lot of money yet.
5. If you have fewer than a hundred people linking to you, your blog probably isn’t worth anything yet from a buyer’s standpoint.
Flaws in my experiment: 1. Obviously, even though I try to compensate for the ad programs other than Blogads and Adbrite, I probably didn’t even come close in some instances. From reports I’ve read, gadget blogs make a ton of money off adsense, so most gadget blogs are actually worth a lot more than I predicted. Though I think if we want to avoid another dot com bubble, we should be conservative in our estimates, so perhaps my estimate isn’t that bad of a starting point.
2. Some niches just don’t work well with Blogads or Adbrite. For some, text/based advertising is the way to go. For others, it’s image-based advertising.
3. There are some niches that only use Affiliate marketing, like poker blogs and sex blogs, and from what I’ve read, they can make a good living.
4. I would need a bigger band of blogs to get a more accurate study. For some niches, there weren’t very many blogs that used transparent advertising programs.
Criticism: Now, I have a feeling that this case study is going to get a lot of criticism from bloggers. You can place this criticism in the comments section or email me at Simon.email@example.com
Just remember, if I got my math wrong, I didn’t do it out of some kind of hatred towards anyone, or any kind of malicious intent. So please be civil while you’re criticizing my work. If I get enough intelligent emails regarding this, I’ll have a follow-up post with them so people can hear your feedback.
Thanks for tuning in to this weeks Bloggasm Case study, come back next Friday for our next one.