How media outlets are turning online forums into big ecommerce revenue

How media outlets are turning online forums into big ecommerce revenue

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Op-ed by Chad Billmyer, co-founder of Panjo

Want more traffic and revenue? 

In 2014, auto, sport, and hobby enthusiasts will sell an estimated $5.4 billion to fellow community members in forum-based transactions. You should cultivate your slice of that ecommerce pie to benefit your members and the community’s valuation.

logo-pbnationIn the last few days, VerticalScope agreed to acquire PBNation.com for $1.38M (a paintball vBulletin forum) and Freelancer.com paid $3.2M for Warrior Forum (a digital marketing vBulletin forum). You can grow the value of your community higher than that.

To quote the Sean Parker character in The Social Network, “A million dollars isn’t cool. You know what’s cool?” A billion dollars. Forum valuations are based on trailing revenue, traffic growth, and audience desirability. To maximize the value of your community, evolve your forum into an ecommerce media giant.

Evolve your forum into an ecommerce media giant.

In a recent interview with Fortune Magazine, Ben Lerer, founder of Thrillist.com, explains, “Now we’re at the beginning of Commerce 3.0. Every day you surprise and delight people by showing them interesting things, and then you layer on great storytelling on a daily basis…. People come to your store more often because they never know what they’re going to find and what they could discover. When they get there, they spend more money buying the basics that they actually need. It’s been four years since we acquired JackThreads, and we’ve gotten really good into making a reader into a shopper and a shopper into a reader. We will do more than $100 million in revenues this year, and I believe we can be a $1 billion business.” [source]

This past March, Lerer spoke at the South By Southwest conference in Austin. You can find the slides from his talk, Content & Commerce: The Digital Cronut, on slideshare. There is an excellent recap of the presentation in Publishing Perspectives.  In summary, you have thousands of enthusiasts frequenting your site. You have earned their trust. You need to move beyond advertising, subscription, events, and licensing. Says Lerer, “you’ve got to actually physically sell something to that consumer” to have a chance at that billion-dollar goal.

Through his research, Michael Brito, author of Your Brand: The Next Media Company, found that successful media companies share five characteristics:

  1. Storytelling
  2. Content
  3. Relevance
  4. Ubiquitous
  5. Agile

Perhaps the sentiments of Lerer and Brito are a bit too theoretical or macro for you. You are in the trenches, building and moderating your community and keeping sponsors happy. What is your next step?

  1. If you don’t already have a content management system (CMS) attached to your forum, add one.
  2. Create a plan for the creation of compelling, original content. Focus on storytelling.
  3. Identify the ecommerce opportunities within your vertical. Who are the entrepreneurs, small businesses, and major vendors who want to reach your audience? What is the best way for those partners to sell product through your web property. What ecommerce platform will you use to power that commerce?

To help you execute on the three steps above, you can turn to tools and services like RebelMouse, Panjo, Contently, DivvyHQ, SingleGrain, Magento, and others. Forums are sitting a few unique assets that lend themselves to ecommerce success like reviews. “62% of customers are more likely to make a purchase from a site with user reviews, increasing conversion rates as well as bringing in more search traffic.” [source: econsultancy] As a proxy for the aquifer of potential resting within forums, VigLink notes that forums outperformed blogs and editorial sites by more than 50% in affiliate EPC (earnings per click).

Warrior Forum

WarriorForum

Returning to the topic of valuation, let’s break down the valuations of the aforementioned forums. Warrior Forum’s $3.2M acquisition price means that Freelancer.com paid…

  • $4.36 per registered user.
  • $0.44 per thread post.
  • $2.62 per monthly organic search inbound visit for the trailing month.
  • $1.23 per monthly visit for the trailing month.
  • $4.36 per email address.

PBNation.com

PBNation Home Page

PBNation’s recent $1.38M acquisition price means that VerticalScope paid…

  • $2.08 per registered user.
  • $0.02 per thread post.
  • $6.40 per monthly organic search inbound visit for the trailing month.
  • $1.66 per monthly visit for the trailing month.
  • $2.08 per email address.

Usually, forums are bought and sold between two privately held companies and there is little, or no public information about the purchase price. These recent transactions involved publically held companies and as material transactions, required public disclosure.

Forums are not bought and sold based on the metrics above. As stated above, forum acquisitions are based on traffic and revenue. Do you want more traffic and revenue? Evolve your forum into an ecommerce media giant.

 

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