In all of the chaos that is the global economy, a story about the sale of a blog for $15m probably received less attention than it would have under different circumstances.
22 year-old Johns Wu started the Bankaholic blog in 2006 to help individuals obtain the best rates for bank savings products.
Late last month, it was announced that BankRate, a publicly-traded company that operates a number of online personal finance properties, had acquired Bankaholic for $12.4m up front with an additional $2.5m earn-out.
The acquisition had some observers scratching their heads.
Duncan Riley at The Inquisitr noted:
“You would presume the site was making good money by the sales price, but nothing else about the site stacks up. Traffic isn’t brilliant, matched by irregular posting at best. Quantcast shows 156,000 uniques on 263,000 visits, Compete puts the unique number at 300,000. The site has an Alexa ranking of 42,168. Since September 14, there has been only 9 posts to the site, and comments vary from a few through to the highest at 20.”
In an interview with WebProNews, Wu credited BankRate’s interest in Bankaholic to the “user engagement” factor.
“Bankrate is a boring old school corporate website that offers no platform for visitors to interact with each other. Now that they have Bankaholic, they will be positioned to spinoff a more interactive brand that will attract younger, web savvy consumers. Tom Evans, the CEO of Bankrate, affirmed this view in the conference call he had with investors regarding the Bankaholic acquisition [sic].”
But is “user engagement” really all that it’s cracked up to be in this case?
Probably not. BankRate’s interest in Bankaholic was more likely the result of Bankaholic’s SEO.
In BankRate’s press release, BankRate President and CEO Thomas Evans stated:
“We have been working with Bankaholic in a co-brand relationship since July and have seen first-hand the volume and quality of its traffic. Bankaholic is ranked high in natural search for both deposit and credit card keywords. We believe their organic traffic will increase our deposit and credit card revenue, and with a high composition of free traffic, will help to improve margins. [Emphasis mine]”
In a WebProNews interview with Jeremy Schoemaker, who runs the successful Shoemoney blog, Schoemaker stated his belief that BankRate was attracted by Bankaholic’s “authority in the banking industry. Especially with all the banking news going on, now those keywords are hotter then [sic] ever.“
WebProNews’ Chris Crum went on:
“Schoemaker didn’t really think that the engagement factor was integral to Wu’s deal with Bankrate. When I asked him if he thought it played a particularly big role, he said, ‘In this case I do not think so. I think the most important factor was that it was an authority in a very highly competitive niche.'”
From this perspective, one might say that Wu was more an SEO than he was a “blogger.”
He identified a niche, found a way to serve it via a blog and went to work on a strategy that eventually turned Bankaholic into a property that was an attractive target for a company like BankRate.
Who got the better deal – Wu or BankRate? Time will tell, although it’s definitely worth pointing out that BankRate deal or not, Wu almost certainly ran a profitable operation with Bankaholic given the reported characteristics of his traffic and the lucrative niche he was serving.
While Bankaholic is clearly one of those one-in-million stories that most internet entrepreneurs can only hope to write, there is an entrepreneurial lesson to be found in Wu’s success – oftentimes it’s the simplest things that work the best.
To succeed, an entrepreneur doesn’t necessarily need millions of dollars in capital, a huge staff, a complex solution looking for an even more complex problem or a pie-in-the-sky business model.
A simple concept, a receptive market, a way to generate some revenue, a bit of hard work and a little bit of luck usually work just fine. And online, some solid SEO clearly doesn’t hurt.
Just ask Johns Wu.