Another large affiliate site acquisition...

blackwar85

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Hello guys,

I remember some years ago we had an interesting discussion in this forum when Wirecutter was acquired for $30 million. Thread is here: https://www.buildersociety.com/threads/nyt-buys-wirecutter-for-30-million.2291/ so I thought I would make a post of another interesting acquisition in the internet space.

It turns out that the affiliate website I have been following for years bestreviews. com was also acquired in Feb of 2018, Tronc acquired 60% of the company for 66 million making this acquisition larger than Wirecutter's. Source: https://techcrunch.com/2018/02/07/tronc-starts-its-new-digital-strategy-with-a-majority-stake-in-product-review-site-bestreviews/

What makes it interesting is that at the time of the acquisition the bestreviews. com traffic and traffic value numbers ( according to Ahrefs ) were way lower when Wirecutter got acquired. Now they are even worse, my own niche site has better numbers.

For those people that don't have Ahrefs:
Bestreviews:


Wirecutter:


Even when we leave SEO statistics alone, I don't think bestreviews. com comes even remotely close to the brand and the community Wirecutter has created. Wirecutter has 218k people searching for their brand name per month and frequently has 100's of comments below their posts.

Bestreviews are spending a lot on Google ads though.

What do you think guys? Why this website got acquired for such a sum?
 

secretagentdad

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Whole economy is flagrantly overcapitalized.

Looks like somebody dumped a turd bomb at a great price.

Alternately they have some sick arbitrage or money laundering going on.
 

CCarter

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What do you think guys? Why this website got acquired for such a sum?
Either TheWireCutter sold for too little, or Tronic the new largest shareholders of BestReviews didn't know how to evaluate the site. BUT this is all assume "SEO" again. We don't know how much revenue BestReviews was generating. It could have been creating $10 million a year and got an almost 3x multiple. Tronic only paid $30 million in cash, there was $36 million in stocks issued.

Looking closer Tronic owns the LA Times - a newspaper - a dying medium - a dinosaur. And TheWireCutter was bought by the New York Times - another dying dinosaur in a dying medium. This is sort of how dinosaurs "evolve" into newer entities. They will overpay just to get in on the ground floor.

If you think about it from a macro standpoint both operations are new potential new streams of revenue for the newspapers. AND they acquire the talent that's needed to integrate into other properties the newspapers have that can utilize the "youthful more energetic and nimble" technology and ways of generating revenue on the internet that the old dinosaurs don't know how to.

So only media companies become new by simply acquiring the next generating and integrating their ideas into themselves. It's almost like a Vampire blood transfusion going on.

As far as TheWireCutter:

"So far, the New York Times' purchase of the Wirecutter has been worth it. In September 2017, about one year after the deal, the publisher said the Wirecutter's sales had grown 50 percent thanks to new categories that expanded its scope beyond tech products."​

So even if Tronic overpaid they have new talent and angles of looking at content that the dinosaur staff didn't have in the past. It could be worth it if they can pull off what the NYT was able to do.

I figure this is a good time to be an affiliate with a decent audience, cause there are other dying dinosaurs looking to "jump" into the future.
 
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While I don't know the exact details, I can bet that this acquisition wasn't focused on their SEO prowess. I am pretty familiar with another competitor in this space and they are an insanely huge Google Ads buyer (probably one of the largest) with a relatively limited SEO presence.

BestReviews likely operates a similar primary model i.e. buying paid traffic for high intent, high converting traffic and collecting affiliate revenue from that.

From my experience, businesses such as this are acquired for IP such as:
1) Ad campaigns with a long and solid history of positive ROI
2) High quality scores / high CTR ad copies
3) Refined and tight targeting (keyword lists, customer segmentation etc.)
4) Direct partnerships with manufacturers/service providers (which generally means higher payouts)
5) Efficient monetization (conversion funnel, customer lists etc.)
6) Large amounts of conversion and keyword data (conversion rates, keyword search volumes)

One other thought - even if the direct ROI from such an acquisition was not a home-run , the learnings and insights that can be gleamed from #6 could be pretty invaluable. Imagine getting a pretty damn accurate keyword tool that none of the other SEOs had access to which in addition showed you conversion rates - could easily leverage that for your other properties where SEO was a big deal.
 
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We don't know how much revenue BestReviews was generating. It could have been creating $10 million a year and got an almost 3x multiple. Tronic only paid $30 million in cash, there was $36 million in stocks issued.
I didn't notice any recent revenue numbers specific to BestReviews (Tribune lumps digital revenues from other assets together) but they did report back in 2018 shortly after they acquired the 60%.

For the three and six months ended July 1, 2018, reported revenues from BestReviews were $5.9 million and $9.1 million, respectively, and reported operating expenses were $4.7 million and $7.3 million, respectively.

https://www.sec.gov/Archives/edgar/data/1593195/000159319518000058/a2018q210q.htm
 

Kevin

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Either TheWireCutter sold for too little, or Tronic the new largest shareholders of BestReviews didn't know how to evaluate the site. BUT this is all assume "SEO" again. We don't know how much revenue BestReviews was generating. It could have been creating $10 million a year and got an almost 3x multiple. Tronic only paid $30 million in cash, there was $36 million in stocks issued.

Looking closer Tronic owns the LA Times - a newspaper - a dying medium - a dinosaur. And TheWireCutter was bought by the New York Times - another dying dinosaur in a dying medium. This is sort of how dinosaurs "evolve" into newer entities. They will overpay just to get in on the ground floor.

If you think about it from a macro standpoint both operations are new potential new streams of revenue for the newspapers. AND they acquire the talent that's needed to integrate into other properties the newspapers have that can utilize the "youthful more energetic and nimble" technology and ways of generating revenue on the internet that the old dinosaurs don't know how to.

So only media companies become new by simply acquiring the next generating and integrating their ideas into themselves. It's almost like a Vampire blood transfusion going on.

As far as TheWireCutter:

"So far, the New York Times' purchase of the Wirecutter has been worth it. In September 2017, about one year after the deal, the publisher said the Wirecutter's sales had grown 50 percent thanks to new categories that expanded its scope beyond tech products."​

So even if Tronic overpaid they have new talent and angles of looking at content that the dinosaur staff didn't have in the past. It could be worth it if they can pull off what the NYT was able to do.

I figure this is a good time to be an affiliate with a decent audience, cause there are other dying dinosaurs looking to "jump" into the future.
I know how much BestReviews was making, and it validates the sale price for sure.
 
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Anyone managed to get in on their Onsite Associates program? I went searching a while back and there was no way to "apply". I'm guessing it's invite only.
 
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According to ahrefs their traffic is at about 100k right now...one of my bigger tech sites does more than that and is nowhere close to those earnings, and I have deals with specific affiliates. According to ahrefs their highest traffic money keywords are best weed killer and best epsom printer.

Now going into spyfu I can see that half their traffic is from paid ads...and spyfu estimates their monthly seo clicks and 2.6 million and ppc clicks at 2.12 which seems much more realistic...maybe ahrefs is way off in this case.

According to spyfu their estimated monthly ad budget is 1.81M.

Again the only thing I can see here is a really heavy ppc push and ahrefs greatly misscalculating their rankings



This is a great post, and gives me some interesting takeaways to consider like would ppc be worth it for my higher converting product pages with higher affiliate commissions. Also those remarketing lists could be gold.
 
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