Valuing Blogs: Is $20 Million For The Right Figure?

News May 19 that an offer had been made to acquire for $20 million has raised some interesting questions about valuing blogs.

Any exit in the tens of millions for a celebrity gossip blog does show that the space has value, but the figure relative to the traffic raises concerns over whether $20 million is a fair valuation.

The Traffic Equation

On traffic alone, $20 million grossly undervalues According to public stats, the site does something in the vicinity of 200-300 million page views a month on 8-10 million uniques.

The uniques figure vs the page views figure is relatively low, which could drive down the acquisition price, but at this level other public stats need to be considered, such as 572 on Alexa and 844 on Compete. That’s a reflection on the reach has, even before we get to the influence the site has over Hollywood Gossip.

Consider that ContentNext (the publishes of Paid Content) were acquired for $30 million and they do 600,000 uniques a month: sure, celebrity gossip doesn’t convert as well in ads, but does the $20 million for sound fair by comparison?

The Personal Brand Fail

Mario Lavandeira has done an amazing job with the Perez Hilton brand, but it’s a catch 22 when it comes to selling the site: blogs closely affiliated with a person are devalued by the link, vs a stand alone brand. Although Perez Hilton isn’t Lavandeira’s real name, it’s the name he uses everywhere he goes, so it is intrinsically linked to him; you couldn’t simply swap him out and give someone else the name.

The question then becomes one of how the site would go without Lavandeira there. Content is the easy part: by all accounts the site is now exclusively written by ghost writers, so not having Lavandeira there to write wouldn’t change much. The hard part is assessing how much of the sites success is due to Lavandeira’s self promotion skills vs the quality of the site.

My suspicion is without Lavandeira the site would still be successful, but not nearly as much as it is now.

Simple Money Math

One unique thing about is that we can make an educated guess on how much money the site makes as the ad rates are publicly available on

The taller ads take $10,000 a week, and the smaller ads take $4000, with next to no discounting for longer buys (the monthly rate is the same as buying 4 single weeks.) There’s 7 x $10,000/ wk and 1x $4,000, so say $74,000 a week. We’ll call it $70,000 a week as there are some smaller non-US ads running, and to allow for slower weeks.

That’s roughly $225,000 a month. He pays for writers, hosting, admin, accounting and legal, which is hard to put a price on but say $50,000-$100,000 /mth range, meaning the site nets at least $100,000 a month, if not closer to $150,000.

At $100,000 a month, that puts the acquisition price of $20 million at 20x monthly net. That’s not a good number for a premium blog buy; 8-15x monthly net is a multiple for a standard, fairly ordinary blog, not a premium blog like Presuming the $100,000 net figure is right, I’d put the price on the site of something closer to $30-40 million, so a 30-40x multiple on net. I’ve seen blogs sell though for up to 80x net, so it could potentially be worth more.

That said, given the aforementioned personal branding problems and inherent risk in the acquisition, 20x might be a reasonable enough figure, be it a surprising one.

I Wouldn’t Hit It

Suitors Avid Media know the business well, and are well qualified to run the site, however if I had the money to spend I wouldn’t use it to buy The brand is too linked to Lavandeira, and inserting Zack Taylor and Nik Richie in to run the site and write for it is a recipe for fail. Richie has been successful running The Dirty, but there’s a distinct difference in style. Zack Taylor is a lesser known quality: a better fit perhaps in writing style, but running a site with an Alexa rank of 180,000 odd with a .ca address doesn’t exactly shout “I’m capable of running,” does it ?


From a blog market perspective, the attempt to acquire is interesting because top of the market blogs rarely come into play. I’d suggest that while the $20 million might undervalue the site, it’s not a site that would be easy to sell, nor particularly a desirable acquisition.

Lavandeira would be mad to turn down the offer, but likewise given the leverage it offers him, I doubt he will accept it either.

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