I
blogged about
AuctionAds a while ago and now
Jeremy "Shoemoney" Schoemaker has sold his company to
Media Whiz, the parent company of
Text Link Ads.
Just to refresh people's memory I refer to AuctionAds as a kind of "eBay AdSense". You slap some code on your site and you can display eBay auctions relating to keywords that you specify. At 4 months after launch they have 25,000 publishers displaying 300 million+ AuctionAds ads per day. So why did Jeremy sell the company? Well, he explains why
here.
Lately on various forums and blogs there has been an ever-increasing number of people reporting AuctionAds outages, and the fact that the site has been offline on more than one occasion. Other times, it hasn't been displaying relevant ads. So its understandable really that Jeremy decided the time was right to sell up and move on as he didn't really want to go down the route of expanding the company himself along with all the headaches that can be associated with it. I totally understand that point of view and don't blame him at all, I would have done the same.
So how much was it sold for? Well, neither Jeremy nor Media Whiz have made the price public so I guess we'll never know. There's also the fact that Jeremy has stated on many occasion that initially AuctionAds doesn't take any of the affiliate revenues from eBay, instead they pass it all back to the publishers. This means that AuctionAds potentially makes money by being on a "secret tier" from eBay, nothing unusual with that, and that they maybe earn another 5% or so (just guessing here) on top of the published commission levels. Or else he really is paying out 100% of the revenue to publishers but at some point in the future, this will decrease and they will start to take an over-rider. Again this makes sense, and giving away 100% of the affiliate revenue is a great way to entice new publishers who may have preferred to stick with eBay direct.
So back to the question, how much was it sold for? My guestimate is no more than $US 500,000. This is purely based on the fact that although its a unique site and nobody else is doing it at the moment, it wouldn't be that hard to copy. Also, the site "only" has 25,000 publishers. Now that may seem a lot but I bet 80% of them only generate pennies, and nothing more. So $500,000 is the price I would pay, given that I think (after some more investment in hardware and staff) the company could easily go on to make more than this in profit per year. But if the sale cost was anything more than $500,000 then I'd simply invest my own money and build a competitor site - after all its only built around the eBay API.
What I'm listening to right now: Ciara - "1,2 Step"
about me
Welcome to my blog. My name is Kieron Donoghue and I am the founder of ShareMyPlaylists.com.
Thing is, Jeremy has such a huge affiliate following that the uptake was rapid. A competitor probably wouldn’t have quite such an easy ride, so a lot of the budget would probably go on promotion, rather than development. Having said that, development probably wouldn’t cost too much anyway as it’s built around the API.
I think that is a way undervalue of the over site(project) I figure at minimum 1 Mil on the high end 5 Mil… You have to think how much Bizness was going thru auctionads even 1% of that is a huge number… If they paid out 99% but I am sure they can still pay a 100% but cut a deal with ebay that if they make X in auction sales a month they get XXXXXXX…. Thats my take…
I wasn’t going to make a comment on this post up until I read the estimated sale price – $500,000. I really think you undervalued the sale price of AuctionAds. I do agree that most of the publishers aren’t making a TON of money with it, but they are making some. I think the reason why the sale price is higher than you estimate is due to it’s ease of implementation.
You’re right, it is just like Adsense, and Adsense is really easy to use which is one reason why it’s been so successful.
I’m sure it sold for more than $500k. I’ve seen sites with sales of $2/mo sell for $299!!!
You really undervalued it. The domain is probably worth more than $20,000. Sites like this aren’t sold by how much revenue they make but by how much potential they have. I doubt shoemoney would even think about selling for half a million seeing he makes millions a year. That would be chickenfeed to him. I think it sold for between 5 and 10 million. Mybloglog sold for 10 million without any revenue.
You are pretty far off with your bet.
$12.5 Million Dollars – this will be a cheap price in one year and many others will slap themself for not picking up AuctionAds when it was still affordable.
Look at it this way, if AuctionAds is giving away 100% of its eBay commissions back to their publishers then how much money is it making? Nothing.
So how can a company sell for $12.5 million that makes zero? Sure, the potential is there to make money but I stand by my valuation.
Remember, $500k is the max I would pay for it. However I appreciate there are people out there who would pay more, it won’t be the first overvalued site thats ever been sold will it?
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Keiron’s absolutely right in his valuation. When people buy businesses, a huge consideration is barrier-to-entry. AuctionAds can be copied without much of a problem. Why pay millions for something you could replicate yourself for thousands? Having said that, there are a lot of foolish people out there that probably would.
$12.5 Million is a LOT of money. There’s absolutely no way AuctionAds is worth anywhere near that amount.