Friday, February 24, 2006

Arriving at Blog ROI and Valuation

At the Boulder Software Club seminar earlier this week a common question was once again raised…how is it that a meaningful ROI may be calculated for a given blog? Well I am not going to address that one here rather I would like to bring to your attention something rather cool I have stumbled upon.

Dane Carlson created an applet using Technorati’s API which assigns a dollar value to a given blog. Among commonly accepted metrics for benchmarking blog traffic measurement, or popularity, is the number of incoming and outgoing links.

In November of last year America Online purchased Weblogs, Inc., the reported sale ranged from $25M to $40M depending upon source. This transaction got Tristan Louis’s wheels spinning about how to use this value as an anchor point to move toward deriving one method for arriving at a valuation by first leveraging the Technorati web ranking data and then arriving at a dollar value (based upon the AOL transaction) per link.

Let’s call this ratio the Tristan (T) and note that 1T = ~$564.64

Have fun with that…

3 comments:

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