In the midst of economic doom and gloom, exits can still exist. PaidContent and ProBlogger are both reporting on a story of a blog exit that’s nothing short of jaw-dropping. Financial services blog Bankaholic has been purchased by financial information portal BankRate for a stunning $14.9 million. Bankaholic is a one man shop, operated by John Wu, who is supposed to stay online with the blog after the transition.
BankRate has made a number of acquisitions recently, according to PaidContent:
BankRate, of course, is exposed to some of the nastier aspects of the economy, though it’s held up fairly well and continued to grow. It’s also made acquisitions in order to diversify its range of financial products—last December it acquired Savingforcollege.com and Nationwide Card Services for at least $29 million.
The real question, though, is how this could in any way be a business move that will ever pay off. As Darren Rowse noted, the blog has an Alexa ranking of 42,168 and averages less than 20 comments per post, but does have a solid and net positive growth trend on Google.
After poking around in the comments at ProBlogger and elsewhere, I think I found the answer. Izea’s Ted Murphy pointed to an interview Robert Scoble did with MoneyAisle’s CEO Mukesh Chatter. From the interview:
“Just in last three years alone, the prices for some of the bids have gone up 200% to 300%,” said Chatter. “As an example from Google, to be one of the top three advertisers for ‘high yield savings,’ you have to pay $13.20 for a click. With a 1% conversion, it costs you $1,300 to acquire a customer.”
Ted Murphy brings the quote around to the context of the Bankaholic acquisition: “Those are the numbers behind this sale — essentially, it’s lead generation.”
Several years ago, I served as chief technology officer for a financial services and credit restoration company, and assisted in setting up our systems to work with our AdSense buys at the time. At the time, bankruptcy laws were in extreme states of flux and people were looking to get in quick on matters relating to their credit ratings before the legal changes went into effect, and AdSense keyword buys were sometimes north of $48.00 a click.
It was around that time where it became far more efficient to look to social media as a means for promotion than CPC advertising for lead generation, and I suspect that’s what’s going on here.