RE: Appraising Your Web Site

From: Jeff Allen <jeff_at_summerjobs.com>
Date: Mon, 2 Aug 1999 16:24:04 -0500 (CDT)

Mark,
Good luck in selling your web site. I have used it (at
markwelch.com) since its inception and think it is a very
valuable resource.

My feeling about appraising web sites is that it simply can
not be done until there are interested buyers.

We have tried to appraise our own network of career sites
based on unique visitors (sorry, private info) and page
views (also private). We also try to take in to account
the number of employers who use our sites and our five
year estimate of revenue growth.

We have no illusions that we will be able to find a buyer if
we look for one or that we will be approached by an
outside company looking to take advantage of our audience.
Our focus is on revenue growth so we can continue to
rapidly grow our sites and profits.

However, in the event that another company was to approach
us we try to valuate our sites based on the following:

1) Yearly page views. Banner advertising is still here, and
even with other forms of advertising page views are a
decent measure of the potential to earn advertising and
sponsorship support. Even if you can't sell your
advertising well, someone who acquires you might be able
to sell it at a higher rate. I like this self-made formula:
(yearly page views) * 5 years * 10 CPM. If you have 20
million page views a year you can start the valuation at
500,000.00. Then take in to account:

2) Yearly unique visitors. It is hard to value a visitor
- a visitor to a high-end stock site may be worth more
than a visitor to getstuffforfree.com (just made up that
name). Don't use crazy numbers from yahoo valuations
(43.00 per visitor based on market cap). Realistically, I
think you can evaluate a site based on $1.00 to $3.00 a
visitor. If you have 100,000 visitors a month you will
reach a valuation of 1.2 million at $1.00 a visitor pretty
quickly. (Some in-between of page views and visitors
probably makes the most sense).

3) Site content. Do you have unique, hard to produce,
well-organized and well-produced, copyrighted content? If
they are not after your huge audience they are after your
content. Make sure you copyright it and have the right to
sell it.

4) Technology. If your site features a cool, unique piece
of technology then there is no objective way to valuate
your site. Just look at www.askjeeves.com - their unique
concept and simply technology just put them through the
roof.

5) Licensing deals, marketing arrangements. The more
long-term arrangements you have with other high-profile
sites to co-brand your content or do cross-marketing, the
more your site will be worth. These types of arrangements
bring instant recognition and traffic to your site - and
save your buyer the time and effort to put these deals in
place. We are actively pursuing licensing arrangements
with other sites to co-brand our job listing databases,
with this in mind.

6) Revenue. Some people say it isn't important. But, in
the long run the buyer of your site is looking to make
money from what you are selling. You don't have to make a
lot now, but you should show revenue growth and the
potential for big earnings. If you don't have great
revenue then you should have a ton of page views or
visitors, or really great content or technology.

7) Market Share, History, Niche and Leadership. For
example,our site www.summerjobs.com is one of only three
sites offering a significant database of summer employment
and has been on-line since 1996. I would subjectively say
that it is one of the top career sites on the web (top 40
by www.hot100.com). Several thousand employers use our site
each summer. It took a lot of work, time and money to get
there. This fact alone would probably an incentive for a
buyer to approach us, as we have done all the work to
establish a market position. The number of links pointing
to your site is a decent measure of how well your site is
established. (Mark's site has around 2,000 links to it from
other sites - this is a very substantial number that
guarantees a buyer a consistent and relatively large level
of traffic in the future).

Obviously, there is no formula, and there certainly isn't
much data around to support my off-the-cuff theories. I
think that on an individual, site-by-site basis you should
use your own formula's (like mine above) to decide what
your site will be worth five years from now to you. Then
try to figure out what it would be worth if you had the
will and the way to put millions of dollars in to it. Come
up with a minimum number based on a merger of these
figures and your personal situation and make that your
selling price. We have a figure of millions that is our
minimum selling price. We don't expect an offer, don't
depend on one and are trying to run our business like a
real business so, if we aren't acquired, we will make our
fortune (fingers crossed) from continued hard work.

Everyone's situation is different, but I think that taking a
long-term approach to building a real, solid business
on-line is the best way to contribute to the Web and to
make it financially at the same time. Then again, the
Internet is a crazy place and people are making millions off
an idea alone. It sounds like Mark has a real reason to
sell now, but given the usefulness of his site and its
revenue growth, I would do all I could to hold on to it.
If his growth holds pace and he continues to add content
and to grow his advertising inventory he will be earning
several hundred thousand a year from it a few years from
now. Not bad for a work-at-home business with low
overhead.

I would appreciate responses to my comments above. Trying
to evaluate our sites is a very subjective process. If
anyone has a better way - that doesn't relate to the
valuations of public companies - I would love to hear
about it.

Sincerely,
Jeff Allen

AboutJobs.com Network
http://www.summerjobs.com
http://www.resortjobs.com
http://www.internjobs.com
http://www.aboutjobs.com (Aug, 1999)

mailto:jeff_at_summerjobs.com

========================================================================
------------------------------------------------------------------------
        This week's Online Advertising Discussion List sponsors:
                   Flycast, Streammedia, and AdFlight

 WEB ADVERTISING THAT MAKES YOU A HERO. Our Web experts optimize your
buy across 1000 sites. All for what you'd normally pay for placement on
   one. Call it superhuman. http://WWW.FLYCAST.COM/OA

                                        ---

              Evolve, she said. RADICALMAIL.COM
   Streaming multimedia email that puts your advertising back
     on top of the food chain. http://www.radicalmail.com

                                        ---

AdFlight (formerly Immerce) - The Internet Advertising Exchange: Your
high choice, low price source for Internet ads! WEEKLY AUCTIONS,
DAILY DEALS! Go now to http://www.adflight.com/default.asp?source=oad

------------------------------------------------------------------------
========================================================================
Received on Mon Aug 02 1999 - 17:11:30 CDT