Interview with John Lamerton from Net Free Stuff about the sale of his site to IBG
The Internet Business Group acquired well known affiliate site Net Free Stuff in late January this year. IBG is perhaps well known as it is the owner of the UK Affiliate network Affiliate Future. So will we see more affiliate networks buying up affiliate sites this year?
The sale is mentioned in the IBG Preliminary Results For The Year Ended 31 October 2006 which was published on the 12th February.
I thought it would be cool to have a chat with John, the owner of Net Free Stuff, Big Idea Media and drinking partner on his thoughts regarding the sale of his site.
You’re one of the “old timers” in Affiliate Marketing 
how long have you been involved in the business?
Old timer! hah! cheers buddy! I started my first site back in the summer of 2000. The press was full of the crashes of boo.com and the like, whilst hyping up the next big things such as lastminute.com, and I fancied a slice of the action. I was a civil servant at the time, and hated my job with a passion so that certainly helped with motivation. After 18 months working the day job plus affiliate work at night, I was finally able to go full time from late 2001.
What made you start Net Free Stuff?
Net Free Stuff was my very first site although you’d never know it to look at it. It started out as a “Here’s a list of stuff I can earn money from” site made and hosted on Geocities. Its aim was very simply to earn me enough money to give up the day job. Over the next 18 months it evolved into a freebie site as I noticed that the only things I was earning from were competitions and “paid-to” companies. The site was then finally branded as Net Free Stuff in 2002.
Net Free Stuff has grown into one of the biggest freebie sites on the web, do what you attribute the success to?
Organic growth has to be the main factor. From day 1, every penny I made went back into the site, buying more advertising, better hosting, professional graphics etc. I didn’t take any money out of the business until I went full time, as that was (at the time) my end goal - to make enough money from “this interweb thingy” to not have to work a job I hate.
I’ve also thought the freebie sector must be really hard to make money in, with most CPA’s being very low, often only a few pence. So how do you make this sector work well for you?
Yeah, it’s really hard to make money getting paid to give stuff away for nothing lol… Obviously to make it work really well, you need to have volume - if you can email 200,000 people that want to know about freebies and tell them they can have a free sample of Ariel for example, and you know you’re going to be paid £1.00 for every one that takes a free sample, it doesn’t take a genius to figure out you’re going to earn a few quid!
Net Free Stuff is obviously a sector leader and doing well, what made you want to sell?
To be honest, there are a number of reasons and collectively, it just felt right to let go at that point. Like an actor who fears being typecast if he plays one role too long, people thought that we only did freebies and nothing else. I remember one merchant at a g2g actually saying to my face “Oh, you run a freebie site - I won’t waste my time talking to you then!”
Selling NFS enables us to concentrate on our other sites fully - A freebie site can be incredibly time-consuming to manage a large userbase.
IBG paid you £120,000 for the site. How was the valuation reached? And how did the deal with IBG come about?
You would need to ask IBG how they came up with the valuation - From our viewpoint, it was certainly in the ballpark we were looking for in terms of the revenue we would lose by selling, and the plans we had to move on. IBG approached us via a third party to test the water regarding a possible sale. We knocked them back initially, but after sitting down with a calm head and re-evaluating our business plan, we realised it might be worth us doing a deal. I certainly hope that is the case, as it’s too late to change our mind now!
What are you going to do with the money?
I’ve given it all to Tyson from buy.at, and he’s going to place it on black for us! Seriously though, I believe that the organic growth model I used to build NFS from scratch is a pretty good model to follow, and we’re now going to be applying that to all of our sites, using the money to buy advertising, SEO, PPC, good content, recruit members etc. And if that fails, I’ll put it all on black!
Some affiliates seem concerned that as IBG also own affiliate network, Affiliate Future that NFS may get preferential treatment as an affiliate site. Do you think this is likely?
No, I don’t think this is likely at all. It’s something I brought up with IBG during the sale process, and it’s obvious that isn’t their intention. I think a certain other network did take advantage, with “their” site getting campaigns before anyone else, and if there was any left over, putting it on the network. I don’t think that will be the case with IBG. They’ve been running the site for nearly 6 weeks now, and have not shown any preferential treatment to NFS - From my dealings with them, I honestly feel they’re too professional to risk potential lost 100,000’s in revenue from AF just to make a few extra quid on NFS.
What’s next for you and Big Idea Media?
We’ve got big plans as always, only now we’ve got the time and money to actually see them through. We’re laying the foundations right now for a couple of (hopefully) massive sites, and bulking up existing sites. We’re busy promoting 2 sites at the moment: PrizeBug and Bingo Bongo and central to that is the affiliate programs - Prizebug’s is on Affiliate Future, and Bingo Bongo has an Independent program which pays a profit share for the lifetime of the customer rather than a flat CPA - For those who know me, you know I love received residual commission, so it’s great for us to be able to offer it now too! We’ll also be launching a CPA program on AF next week for those who prefer to work on a CPA.
What music are you listening to right now?
Ash - Girl from Mars
So there you go, thanks to John for taking the time to answer my questions. All the best and I will see you on the cruise soon!
What I’m listening to right now: Fergie - “The Duchess”
Affiliate Marketing - IBG - Net Free Stuff
Friday, March 2nd, 2007 at 2:25 pm and is filed under Affiliate Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Welcome to my blog. My name is Kieron Donoghue and I run UK Offer Media Ltd. I thought it would be fun to post a daily (well hopefully daily) blog, writing about my experiences in Internet Marketing and more specifically Affiliate Marketing. I'll include some personal stuff too, probably about my other passions, music and cars. Please feel free to post your comments and thoughts too.
March 2nd, 2007 at 5:34 pm
Interesting interview, well done John.
Is it possible to expand on the comment “approached us via a third party to test the water regarding a possible sale”.
Who was the third party? How did the process operate?
This may be valuable to other affiliates that may be approached in the future.
Good luck for the future John!
March 2nd, 2007 at 7:37 pm
Interesting interview! The being typecast bit is interesting… but I think you will always be John from NFS as much as Kieron is UKOffer and I’m associated with a yellow duck!
You did take some time out of AM, and I’d love to know whether that had any significant influence on your decision? Was going back to what you’d left behind a step back as opposed to moving forward?
Also, in essence you’ve sold your “baby”, your first site, how do you feel knowing someone else now has it? I’m not really sure how I’d find seeing Loquax in another’s hands for example.
Still, I can fully understand the “it takes time” to run these kind of sites. Anyway good luck with everything NFS John ;o)
March 2nd, 2007 at 9:31 pm
Really interesting interview.
I’d love to know what sort of revenue it makes.
There seems to be a feeling that freestuff sites don’t make much money, but to sell for £120k must have been doing reasonably well.
It’d also be nice to know how the figure was arrived at - how much they valued the members vs income vs traffic etc
March 5th, 2007 at 5:49 pm
Hi guys, thanks for all your comments.
The third party was someone who used to work for us who we’re still really good friends with - and whom I owe a few beers to methinks!
I can’t really say how the valuation was arrived at, as obviously that was done by IBG. They did initally ask what ballpark figure we would be looking for, and the final selling price wasn’t too far away from that figure.
It’s an interesting point that Jason makes about whether my time out had any influence on the decision to sell - It’s not something I’d thought of really, but I guess it must have in some way, although if I hadn’t had the time out, I probably would have sold earlier!
I’d like to think that the decision to sell was purely a business decision, but as you say, it’s my baby - my first site, so emotions are bound to come into it.
However, I now feel that my baby is all grown up, gone to uni, got a job and settled down with a nice girl (or fella I suppose), and doesn’t need me any more, leaving me free to enjoy having a life again.
And yes, I know I’ll always be John from NFS, same as you will buried with that duck - but isn’t that the point… to be remembered for creating something fantastic? I hope that in a few years time I’ll also be remembered as “John from Bingo Bongo” or “John from PrizeBug” or whatever long after I’ve sold them for millions and retired to my island in the sun…