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PlentyOfFish surveyed 100,000 US members, the results are interesting.
People get sick of PoF and go join a paid dating site, PoF is actually helping paid dating. I’ve been saying this forever.
People pay for one dating site, but belong to one or more free sites. All the hype about belonging to multiple dating sites has always been incorrect.
People who took the survey in the US are older than I expected.
I also asked a few questions about ads, only 30% of people admited clicking on them, most said they look at the ad and than check out the site later and signup.
As long as PoF sets a tracking cookie, Markus makes $30 or more every time someone signs up for a dating site through PoF. What a great business model.
The survey is too focused on the relationship between PoF and paid dating sites. I wish they had asked more questions about social networks and other free dating sites. He’s most likely going to sell the site and wants to make the strongest case possible for PoF revenue potential and as a traffic driver to paid dating sites.
Dating sites traditionally sell for around 2x revenue, depending on the quality of the membership database. If PoF revenue is in the neighborhood of $25 million a year, that’s somewhere between 50-100 million.
Markus doesn’t collect credit card numbers, which is why most sites are acquired, the ongoing re-billing revenue is often worth the initial cash outlay.
Monthly traffic is a factor as well, even if they’re not clicking the junk ads on PoF, they’re on the site and can be marketed lots of stuff if a more lucrative advertising plan and cross-promotions are put in place. Imaging the new IAC/Match.com ad platform running on PoF.
What do you think PlentyOfFish would sell for?
Category:Marketing, Research Tags: MarketingBlog reactions
10 responses so far ↓
1
Anthony (Check me out!)
// Jun 25, 2008 at 1:48 pm
I thought Match.com bought POF not to long ago for 195M?
2
Fernando Ardenghi (Check me out!)
// Jun 25, 2008 at 5:22 pm
How to honestly value PlentyOfFish or other dotcom company:
No more than
1.5 times its revenue
OR
15 times its profit (earnings after taxes, depreciation, etc)
Prospective Investors should carefully analyze PlentyOfFish Media’s tax declaration.
I wish the survey had asked more questions about how many dummy/fake/repeated profiles users have.
I remember PlentyofFish’s owner had previously said:
“Everyone lies about what they want, or they don’t know what they want,” he says. “I look at who they’re messaging, not what they’re saying.”
From
http://www.canada.com/topics/news/politics/story.html?id=6ea70f26-747a-45b2-a111-671de5b398d8&k=44884&p=2p=2
Regards,
Fernando Ardenghi.
Buenos Aires.
Argentina.
ardenghifer@gmail.com
3
Sam Moorcroft (Check me out!)
// Jun 25, 2008 at 7:02 pm
With respect, Fernando, you are wrong (again) - in fact, waaaay off, when it comes to valuation:-) Good dating sites sell for more like 4-6x revenue. Just check sales of dating sites in the last 3-5 years.
POF has a different model, as it is not based on subscriptions. However, comparing sales of sites with lots of eyeballs, he would likely expect to make somewhere north of $100M, perhaps even as high as $250M.
4
Fernando Ardenghi (Check me out!)
// Jun 26, 2008 at 4:18 am
test
5
Fernando Ardenghi (Check me out!)
// Jun 26, 2008 at 4:24 am
Hi Mr. Moorcroft!
I suggest to wait and see because many dot com companies were overvalued
and
PoF is an special case:
it is a site mainly a parasite of Google.
his owner seems to be the only person who exactly knows how PoF works, i.e. without his day to day management, will PoF be able to continue operating?
6
Fernando Ardenghi (Check me out!)
// Jun 26, 2008 at 4:25 am
If the real numbers of PoF are a USD15M revenue per year and a 1.5X (USD22.5M) valuation.
Assume earnings margin: 40% and Canadian tax rate: 40%.
Without taking into account depreciation of servers.
USD15M revenue, USD6M earnings, USD3.6M profit after taxes.
USD22.5M valuation / USD3.6M profit == 6.25 years to recover the initial investment
Regards,
Fernando Ardenghi.
Buenos Aires.
Argentina.
ardenghifer@gmail.com
7
Fernando Ardenghi (Check me out!)
// Jun 26, 2008 at 4:26 am
Suppose a USD20M revenue and a 5X (USD100M) valuation.
Assume earnings margin: 40% and Canadian tax rate: 40%.
Without taking into account depreciation of servers, a simple calculation
USD20M revenue, USD8M earnings, USD4.8M profit after taxes.
USD100M valuation / USD4.8M profit == 20.8 years to recover the initial investment
(Without taking into account depreciation, inflation and others, the possibility of reselling the site to other prospective buyer)
20.8 years to recover the initial investment it is like a real state investment!
8
Sam Moorcroft (Check me out!)
// Jun 26, 2008 at 12:53 pm
Fernando,
Again with respect, I think you are way off base. Less living in an ivory tower and more living like an entrepreneur would be better! ;-)
Dating sites (good, profitable ones) cannot be compared to “many (overvalued) dot com companies”. This is an apples-to-oranges comparison.
Assume POF earns $15M/year. Assume also profit is around 85% of that (what costs does he have?). That = $12.75M. Why would he sell for a mere $22.5M? That’s only a year and 9 months of earnings! Yes, there are tax rates to consider, & cap gains is half the tax rate (in Canada). So, let’s say he actually gets 3.5 years earnings up front. Why sell for that? It makes no sense (at all).
Sure, POF’s main success factor is Marcus. However, a large media company won’t care. They want the eyeballs (as much as the ad earnings). To describe it as a “parasite of Google” is a bit much. Google may have a nice motto, but it is in the business of making money, not permitting “parasites” to feed off of it.
If advertisers weren’t getting their money’s worth on POF, they wouldn’t be there (or with Google).
Ultimately, a company is worth what a buyer and seller agree on. However, you can realistically value any company. And, selling for your numbers makes zero sense.
As I said before, just check sales of dating sites in the last 3-5 years. Not the average-over-valued-dot-com-with-no-business-model-in-1999 sale; rather, profitable dating sites bought by serious companies with smart people working for them.
9
Ralph Castillo (Check me out!)
// Jun 26, 2008 at 5:51 pm
Anthony is getting his news from the national inquirer. (With all due respect)
I’m with Sam 100% on this quote “Ultimately, a company is worth what a buyer and seller agree on”
Fernando, your so wrong in so many points that doesn’t make any since to highlight any of them.
Markus and his POF have been called several names in the past but I don’t think that “parasite of Google” has been one of them.
There goes another potential client to your personality test Fernando!
Now, coming back to the subject.
“In my opinion”
The only 3 good things POF has to offer is massive traffic, a very large database of active subscribers and Markus publicity.
Adding those 3 together + any large corporations resources will = lots of lots of $$$$ in revenues. Due to the quality of online daters on POF, the so-called large corporation won’t be in the same industry or market. In other words IAC/Match.com will never buy POF. On the other hand, POF has a conversion rate of 15% to paid dating sites where the majority are from Match.com (based on Markus latest research)
To get a realistic price to any website we need to take in consideration several things:
The size of the market, a 5 to 10 years market study and annual market growth
Take in consideration any novel intellectuals properties the company has and how hard it is to improve upon it.
How much capital has bee invested, how much revenues they are making and the annual growth of the site.
Comparisons to competitors’ sites
Comparisons of same or similar sites that have been acquired in the past 5yrs
And the this list can be much bigger…
Most of these requirements POF doesn’t have or can’t produce, that’s why Markus always go the extra mille to show the value of his site.
At the end we come back to square #1
Sam’s quote “Ultimately, a company is worth what a buyer and seller agree on”
That’s was my 2 cents
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