Demand Media’s IPO

January 30th, 2011 by Chris

What is a content site worth?

Previous related posts on this topic here and here.

Demand Media recently went public, they’re now trading at an almost 2 billion marketcap (more than the New York Times, which owns quite a few web properties too). Meaning, the market says they are worth about 20x revenue. It has to be revenue because it is an unprofitable company.

People often try to buy sites for 2x yearly profit, and the market says Demand’s stable of content sites (And domain registrar business) is worth 20x revenue. Even though Google has recently broadcast that they don’t like content farms.

Some people are speculating that Demand Media is going to use all the cash they just generated in the IPO to make acquisitions. If they bid 20x revenue, they can certainly buy me out, and my business is profitable.

This is good for the industry as a whole in anycase. It shows content websites as a real business and may spur other consolidation and acquisitions. You might get a phone call, an email, or a letter one day from someone saying “Hey, I want to buy your website.” and this time they might not lowball an offer.

Internet Brands, Demand Media, and Website Valuation

January 7th, 2011 by Chris

Call this an addendum to my previous post on website valuation.

I’ve never been a fan of people offering 2x profits for an established profitable website, but I explain how and why in that previous post.

Internet Brands, a large online publisher that also happens to own vBulletin, was a publicly traded company until recently, when it was taken private by a private equity firm. The price for this manuever was just over $13 a share and it ended up being… wait for it…. 6x revenue (gross) or 25x EBITDA (profit).

This happens to be roughly the exact same multiple AOL paid for Web Logs Inc, though that was a much smaller transactions ($25m, vs this $650m).

We should know more about valuing content websites soon when Demand Media, that great content factory, goes public. What P/E ratio will they have? I’m betting somewhere north of 25x

Here is a good comparison of Demand Media and Internet Brands for further reading.

Oddly enough… one of those two companies may have offered to buy one of my sites previously and what they may have offered me was less than the 25x others have paid them. If the offer took place, which I cannot confirm, it obviously did not conclude as I’ve sold no sites, but it looks like that sort theoretical aquisition would have been profitable for them, since I wouldn’t ask for 25x (for the record, I’d sell pretty much any site for 20x earnings).

CRELoaded Ecommerce On Sale

December 10th, 2010 by Chris

The shopping cart review I’m working on right now is CREloaded.

I’m not done with it, but I like the software, it does a lot of what I like out of the box, has good support, a community surrounding it, thousands of templates, hundreds of mods, etc. And it is very competitively priced.

It does happen to be on sale right now for 50% off, making it just $125, which is a really good deal. That is a full 50% off.

I don’t know when the sale will end, I think after the holidays, but my review might not be up by then (judging by my speed, it won’t be) but I didn’t want people to miss out on the sale.

So, let me say this, so long as you’re happy just installing a template (from a huge selection) that you only tweak minorly (with perhaps a new logo image) and so long as you’re willing to put a little time into learning the admin backend, and if you’re on a budget, I recommend this cart. Get it now before the sale ends. There is also a free version, but come on, if you can’t afford $125 for your shopping cart rethink your business plan.

And just so people don’t think I’m making the same mistake with this as I did with cubecart (write my review and then use it for a year and decide I was way too kind initially). I actually have used CRELoaded for over 5 years. Just not the newest version that my review is on. So I know the foundation is sound.

Oh… and I guess by nonlegislative decree from our nonelected leaders at the third reich FTC I must disclose to you that I received a free copy of this software to perform my review on. I’m glad they finally did that, because otherwise, us bloggers, you know, we could have destroyed society.

Do Not Track Tool for Online Advertising

December 1st, 2010 by Chris

From here.

WASHINGTON – Federal regulators are proposing to create a “Do Not Track” tool for the Internet so that people could prevent marketers from tracking their Web browsing habits and other online behavior in order to target advertising.

The proposal, inspired by the government’s existing “Do Not Call” registry for telemarketers, is one of a series of recommendations outlined in a privacy report released Wednesday by the Federal Trade Commission. The report lays out a broad framework for protecting consumer privacy both online and offline as personal data collection becomes ubiquitous — often without consumer knowledge.

This is one of the stupidest ideas I have ever heard.

What can you track online? Cookies and IP addresses. Cookies are fully 100% in the control of the individual user, if a user does not know how to block them in their browser settings they need eduction, not legislation. I cannot fathom that anyone would actually propose a law to limit the right of a website to read and write cookies to a browser if the browser software is set by the user to explicitly allow it.

So, I can only think that they believe that we need some sort of IP based do not track list.

The problem is that people can share IPs (to the tune of thousands on one), that one person can have more than one IP, and that IPs can and do regularly change.

So if paranoid Bob adds his IP to the “do not track list” he is also adding it for Shopper Susan who happens to like getting relevant and tailored advertisements, because they share an IP. Or perhaps one day the ISP switches IPs and suddenly George, who never signed up for the same reason as Susan, is on the list because he has Bob’s old IP.

What is perhaps more interesting is the fact that to sign up you would have to claim your IP address via some government database. So the government would have a free database of people and their related IP addresses. Right now the government can only get that data from ISPs with a court order. And, in general, unless you give a website your personal information, they will never know the name behind the IP.

So paranoid Bob who signs up with the big government do not track list is actually REDUCING his privacy because now his name and his IP are on a list. Could be that this information is then made public. So you go from an anonymous number on the Internet, to a name. Privacy this does not make.

People, if you really don’t want to get ads for stuff you might actually want to buy, turn off browser cookies. If you don’t know how to do that, ask a teenager. If you still can’t figure it out, pay some overpriced security company for their software to do it for you. Then tell your government to deal with real problems, like the economy and North Korea.

And another thing… how would you even tell if someone violated the “do not track” list unless government is looking over the shoulder of every Internet business in the world and requiring daily reports? You know when the Do Not Call list has been violated because you get a phone call. How do you know when the do not track list has been violated? “Hello Government, Bob here, yes again, I just saw an ad that was just a little too relevant if you ask me. Do something about it.” Really you’d need to legislate companies do the reporting, probably by filing out some form outlining compliance practices, with random audits. Lovely.

I can see a lot of false positives too. Poor old Bob is going to get confused by IP geolocating when he stumbles upon an AdultFriendFinder ad for “Hot girls in Springfield” and panic “Oh my god they know where I live!”

Cyber Monday: Black Friday for Publishers

November 30th, 2010 by Chris

Black Friday, the day after Thanksgiving in the US, is called “black friday” because it is supposedly the day the average brick and mortar retailer becomes profitable on the year. Black means positive or profitable in accounting.

Retailers launch special, stampede inducing (people have died), sales on this day for people out buying Christmas gifts. It has gotten pretty crazy in some sort of retail arms race they’re opening earlier, and earlier. A few years ago it was 6 AM, then 4 AM, then midnight, now some places start the sales on Thanksgiving while football is still being played and turkey is still warm.

A while back someone noticed a pattern, people would shop at stores and the malls on Black Friday, and the Saturday and Sunday that followed, only to end up on the Internet when they go into work Monday morning and do their online shopping. The largest online shopping day of the year is ACTUALLY December 14th or 15th (or around there depending on where Christmas falls each year, the last reliable day for free/ground shipping to make it in time). However, Cyber Monday (the monday after Thanksgiving) as it is called, has become a marketing cliche with many online retailers holding special promotions.

These online retailers typically also offer special promotions on Black Friday, in their desire to take even more marketshare from brick and mortar types, but they get Cyber Monday too.

The people who really benefit from all this hoopla, I think, are us publishers. The ad dollars spent yesterday announcing Cyber Monday sales are off the charts. I personally had my best day ever with multiple ad networks, and for the first time passed $1000 in ad (CPC or CPM) revenue (net) with a single website. I’ve done $1000 a day with CPA/affiliate programs before. I’ve done it with ecommerce frequently. I’ve done it with regular ads overall as a total of all my sites, but yesterday was the first time a single site managed to break the $1000 mark all by itself with just CPC/CPM ads. It wasn’t a traffic spike, traffic was normal, even a little down, it was premium CPMs and eCPMs that suddenly showed up.

I don’t know if this was a one day Cyber Monday celebration, or simply the start of what is going to be a very good holiday shopping season, but it would seem to me that online ad spending has DEFINITELY recovered from the recession, and if we’ve still got room to grow, well, it is a good time to be a publisher.

If “Black Friday” is the day when brick and mortar retailers get in the black, then Cyber Monday would seem to be the day for website publishers to do the same.

Edit: Just in comScore reports Cyber Monday biggest online ad day in history with over 1 billion spent. Can you feel it? I sure did.

Do you use AddThis? Read This.

November 11th, 2010 by Chris

AddThis is a great service. It allows webmasters to easier add social media integration to any page of their site. I like the service, I use the service, I recommend the service.

However… there is an issue you need to be made aware of. Something I have overlooked previously, and I am not the only one I’m sure.

Older style AddThis buttons use standard anchor tag links as part of their functionality. These links point to AddThis.com and of course AddThis has benefited by getting a Google PageRank of 9 out of it.

For every legacy AddThis button you have on your site you’re sending a sliver of PageRank to them. And like a death by a thousand cuts, those slivers can add up to serious weight if you have enough pages on your site, like many do (especially people with forums).

Of course, maybe you were smart and back in the day you edited the code to make the link nofollow. Unfortunately with Google’s change to how they handle nofollow you’re not helping yourself at all by using it anymore. By using it all you’re doing is not helping AddThis. When Google made the nofollow change I went through and changed most of my nofollow links, but I forgot about the AddThis buttons until recently.

On some of my larger sites I literally had tens of thousands of external links pointing to AddThis.com, taking weight away from my own internal links. This is not a good thing.

Luckily, AddThis has a few newer (beta) buttons using primarily javascript with no standard functional links included. I highly recommend going through your websites and updating to these new button styles. It can be a significant PageRank boost if you plug leaks like this.

Save 20% at Best of the Web

October 24th, 2010 by Chris

Best of the Web botw.org is the one directory I really consider anymore. DMOZ is pretty much a joke, its too hard to get listed, Yahoo has relegated themselves to irrelevancy and having an annual fee as opposed to a one time fee makes it hard to get a positive ROI on all but the highest earning sites. BOTW is a paid directory, but it is a real directory, not just a spam one, it has decent PR, and I find it worthwhile to pay for the listings, a one time fee means eventually your ROI will be positive, pretty much no matter what.

I am buying a listing today and almost forgot about this coupon, only good for October, so not much longer, but its 20% off. If you have a new site or a site you want to buy some link juice for, consider it. The coupon code is “SAVE20.” They only do coupons once or twice a year, so this is a good opportunity.

Record Days on Google Adsense

October 12th, 2010 by Chris

Last month I did a record amount of revenue through Google adsense. This month should surpass that, and yesterday I did a record for a single day.

I did make a purchase of a website this Spring which has added to my daily totals, but even factoring that website out I would have hit the monthly records (if not the daily ones).

Has anyone else noticed better than normal performance?

What I surmise are the redesigns I did this summer on my literature site are paying off well (it took this long because the site’s traffic is tied to the start of the school year). Additionally the economy is recovering, but also I think Google’s redesign of the 728×90 ad unit is making a big difference, and maybe a little Bing powering Yahoo because my rankings on Bing were always better.

What I’m curious about is if others have noticed significant revenue increases thanks to Google’s 728×90 redesign, and if so, I wonder if it is enough to move Google’s quarterly results. They report this week, it could be a good time to buy Google stock. I know in the past, being someone who pays attention to these things, when Adsense has done well for me Google has always reported a blowout quarter, so maybe my sample size is enough to show overall trends. I don’t know, but things are definitely looking up.

Using Facebook’s Ad Platform

October 4th, 2010 by Chris

I recently started using Facebook’s ad platform, and while it is not without it’s faults, I like it, and I see it as powerful and definitely capable of commanding a large share of online ad spending, especially if it is improved over time.

It is fundamentally different from search engine advertising. Suppose you sell digital cameras you might place an ad on Google for “cheap digital cameras” and be confident in the knowledge that if someone searches for those keywords it is because they want to buy a cheap digital camera, perfect targetting.

Suppose, however, you sell a unique digital camera accessory, if you try to bid on generic “digital camera” keywords on Google, you’ll be vastly overpaying and will not likely achieve a positive ROI. If you bid only on your product name and variations, it may be too unique to get enough searches.

Facebook is different, you can target people based on age, gender, location, and interests. So you can target people who are interested in photography, and show them your ad.

To say it another way, search engine advertising is great for advertising products or services people know about and want. Facebook is a great way to advertise products or services people would want, but one they do not yet know exists.

You can also get a social benefit to using their ad platform, as people can “like” your ads, and thus promote them to their friends. This may have the greatest effect around Christmas.

Another example, suppose you are an author, self published perhaps, or just new and unknown. Suppose you just wrote a fantasy novel. You could advertise it to people who like Lord of the Rings, or JRR Tolkein, or The Wheel of Time, or Harry Potter. People who might like your book too, but do not yet know it exists.

There are limitations with their ad platform. Currently when you target ads based on interests they’re done using an OR modifier. You can target people who have indicated they like Harry Potter OR The Lord of the Rings. You cannot target people who have indicated they like Harry Potter AND The Lord of the Rings.

With an AND modifier you would be able to get very very specific. If you know your customers well enough you could, theoretically, get very specific and achieve highly desireable targetting. However, that is not yet a feature. For instance, if your digital camera accessory was an underwater rig of some sort you could target people who like both scuba diving and photography. Instead now, you can only do OR modifiers so you’d get photographers who hate the water and scuba divers who don’t take pictures.

Pricing seems very reasonable, in general I’m paying CPCs that are less than or equal to what I pay search engines.There is plenty of ad inventory, one one ad I’ve gotten a million page views in a week, and you can pay CPM or CPC, your choice.

There are some quirks in their ad auction software I’ve noticed. Some ads will not show anything for days or a week, and then suddenly start showing a lot. I theorize that Facebook only tentatively will show a new, unproven ad, until they can establish a baseline value for it based on CTR and whatnot. Then, once they do so, it’ll make it into the normal rotation. It is just a little inefficiency I’ve noticed which can delay the effective start of your campaign.

All told I definitely think it is worth using if you’ve not yet done so. In addition to the straight up clicks and conversions, because of the type of advertising it is, you’re also just letting people know your product exists, and they may be adding it to their birthday list or whatever, so you could get delayed sales. It won’t be for everyone, but if you’ve got a product related to a something people might “like” on Facebook, you have an opportunity for some good targetting.

Server Hacked Thanks to Insecure PHP Script

September 7th, 2010 by Chris

I get frustrated sometimes. I run my business, and I probably really could benefit from hiring out more of the work instead of doing it myself, but I have gotten burned so many times. People walking off without finishing jobs, cash in hand, I’ve probably lost $10,000 through the years to that problem. That is like a small car being stolen. Or I end up with people providing substandard work, vastly reducing the value I get for my dollar. It doesn’t seem to matter if I take a low bid or a high one, I’ve gotten burned both ways.

I had hired through elance a company called Value on Web to do some programming for me last year. They had good feedback and lots of completed projects, including one just like what I wanted. Their bid was not even close to the lowest.

Look at this code they did:

if ($_POST['submitForm'] == "yes") {
if($_FILES['store_image']['size'] >0){
$image1 =date("Ymds")."_".$_FILES['store_image']['name'];
move_uploaded_file($_FILES['store_image']['tmp_name'],'../store_pic/'.$image1);
//@resize_img('../store_pic/'.$image1,150,100, false, 80, 0, "");
copy("../store_pic/".$image1,"../store_pic/thumb/".$image1);
//@resize_img('../store_pic/thumb/'.$image1,52,100, false, 80, 0, "");
}

This is a bit of a script to handle an uploaded image.

These so called professionals thought this was good enough, can anyone see the problems?

You absolutely always need to check what sort of file is being uploaded when you accept uploads or you could unwittingly allow people to upload malicious scripts and code. You can check the mimetype of the file, and definitely the extension. If the file is not an image mimetype, reject it. If the file does not end with (not include, but end with, otherwise someone could upload image.jpg.php) .jpg (or .gif or .png, etc) reject it. Also, have the system generate the filename randomly, so the user cannot access it after upload.

This isn’t a secret, this isn’t complicated code, had they done a basic google search for how to do a php image upload they would have found numerous examples of code that they could copy and paste that would do this. They were just lazy, or they didn’t know any better. I’m not sure which is worse.

I expect when I pay thousands of dollars to a company I don’t need to go over every line of their code to make sure it works, if I need to do that, I might as well just code it all myself.

So, my server was hacked, website homepages were defaced, and I spent an evening cleaning it up. The extent of the infiltration was such that I am no longer comfortable with this server, it is tainted. So I’ve decided to get a new server and migrate all sites. Thankfully cPanel/WHM has AWESOME migration tools that can move a site in minutes instead of the hours it used to take me manually. This is hugely beneficial when you have many sites. Also, the server was 4 years old so probably about time to get a new one anyways, and because of Moore’s law and whatnot, my new server will be 3x more powerful for the same monthly price.

Don’t think that this can’t happen to you, it can. Botnets scour the Internet for insecure forms, no matter how small and insigicant your site is you can and will be targetted because everything is automated. I believe most servers end up probed within minutes of being hooked up to the Internet.

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