The Return of Monetized Eyeballs

Business 2.0 magazine recently reported that "for highly trafficed websites, bubble-era buyouts are back.  The reported how websites like blogspot.com, myspace.com, askjeeves.com and about.com… and other recent sales… have priced eyeballs at $38 per monthly visitor.

This article got me to thinking… what is a hotel or inn website worth?  How does one valuate a hotel’s website?  If you got 10,000 visitors a month your website, it would be priced at $380,000 according to the valuations in Wired magazine.  That sounds a bit high to me.

The equation we have recommended in the past is: Replacement Design + Replacement Traffic – Existing Ongoing Maintenance = Replacement Cost. 

  1. So, lets say you get 10,000 visitors a month or 120,000 visitors per year.  You spend $500 a month to maintain your website and its traffic, or $6,000 per year in "Existing Ongoing Maintenance".
  2. If you had to "replace" that, you might plan on spending $4,000 in "Replacement Design" (to design a replacement website)
  3. But, you also need to replace the marketing of that website if you are starting from scratch.  You might, by example, spend another $2,000 monthly to market your website and drive 10,000 visitors per month — the "Replacement Traffic".  That would put your cost at close to $24,000 per year just to replace the traffic.

$4,000 + $24,000 – $6,000 = $22,000 replacement value for a website getting 10,000 visitors a month.

So, if you are determining the value of your website on the back of a cocktail napkin, try taking the number of visitors per month and making them each worth about $2.2 a visitor.  Of course, your math will be different.

What Works: The Return of Monetized Eyeballs; For highly trafficked websites, bubble-era buyouts are back" by Om Malik, Business 2.0, December 2005, Pp 55-57.