Cross-posted from the new ForumCon blog. ForumCon is the only conference dedicated to the business and future of forums and community management and will be held this year in San Francisco on June 19. Follow this link to join us for the day and get a special VigLink 25% off discount!
Written by Chad Billmyer, CEO, Panjo
Businesses purchase forums based on trailing revenue and traffic growth. Do you want more revenue and more traffic? Evolve your forum into an ecommerce media giant.
In the last few days, VerticalScope agreed to acquire PBNation.com for $1.38M (a paintball vBulletin forum) and Freelancer.com paid $3.2M for Warrior Forum (a digital marketing vBulletin forum). You can grow the value of your community higher than that. To quote the Sean Parker character in The Social Network, “A million dollars isn’t cool. You know what’s cool?” A billion dollars.
According to BuiltWith, the number of forums powering the top million sites on the web has declined by 33% since 2011. In the face of the decline of Web-based forums, you can still grow the value of your community. Now is the time for you to evolve your community into an ecommerce media business.
In a recent interview with Fortune Magazine, Ben Lerer, founder of Thrillist.com, explains, “Now we’re at the beginning of Commerce 3.0. Every day you surprise and delight people by showing them interesting things, and then you layer on great storytelling on a daily basis…. People come to your store more often because they never know what they’re going to find and what they could discover. When they get there, they spend more money buying the basics that they actually need. It’s been four years since we acquired JackThreads, and we’ve gotten really good into making a reader into a shopper and a shopper into a reader. We will do more than $100 million in revenues this year, and I believe we can be a $1 billion business.” [source]
This past March, Lerer spoke at the South By Southwest conference in Austin. You can find the slides from his talk, Content & Commerce: The Digital Cronut, on slideshare. There is an excellent recap of the presentation in Publishing Perspectives. In summary, you have thousands of enthusiasts frequenting your site. You have earned their trust. You need to move beyond advertising, subscription, events, and licensing. Says Lerer, “you’ve got to actually physically sell something to that consumer” to have a chance at that billion-dollar goal.
Through his research, Michael Brito, author of Your Brand: The Next Media Company, found that successful media companies shared five characteristics. He shared the five characteristics in an interview with SocialMediaExaminer:
Perhaps the sentiments of Lerer and Brito are a bit too theoretical or macro for you. You are in the trenches, building and moderating your community and keeping sponsors happy. What is your next step?
If you don’t already have a content management system (CMS) attached to your forum, add one.
Create a plan for the creation of compelling, original content. Focus on storytelling.
Identify the ecommerce opportunities within your vertical. Who are the entrepreneurs, small businesses, and major vendors who want to reach your audience? What is the best way for those partners to sell product through your web property. What ecommerce platform will you use to power that commerce?
Returning to the topic of valuation, let’s break down the valuations of the aforementioned forums. Warrior Forum’s $3.2M acquisition price means that Freelancer.com paid…
- $4.36 per registered user
- $0.44 per thread post
- $2.62 per monthly organic search inbound visit for the trailing month
- $1.23 per monthly visit for the trailing month
- $4.36 per email address
CrowdGather purchased PBNation in 2011 for $2.4M. [source] PBNation’s recent $1.38M acquisition price, a decline of over $1M, means that VerticalScope paid…
- $2.08 per registered user
- $0.02 per thread post
- $6.40 per monthly organic search inbound visit for the trailing month
- $1.66 per monthly visit for the trailing month
- $2.08 per email address
Usually, forums are bought and sold between two privately held companies and there is little or no public information about the purchase price. These recent transactions involved publicly held companies and as material transactions, required public disclosure.
Forums are not bought and sold based on the metrics above. As stated above, forum acquisitions are based on traffic and revenue. Do you want more traffic and revenue? Evolve your forum into an ecommerce media giant.