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Answers.com Acquired for $127 Million in Cash

     
4:08 pm on Feb 3, 2011 (gmt 0)

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Answers.com Acquired for $127 Million in Cash [businesswire.com]
Answers.com, (NASDAQ: ANSW), creators of the leading answer engine Answers.com®, today announced that it has entered into a definitive merger agreement to be acquired by AFCV Holdings, LLC, a portfolio company of growth equity investor Summit Partners, for a total cash consideration of approximately $127 million. AFCV will acquire all outstanding shares of Answers.com common stock, Series A convertible preferred stock and Series B convertible preferred stock. Under the terms of the agreement, Answers.com common stock shareholders will receive $10.50 in cash for each outstanding share of common stock they own. The holders of Series A and Series B convertible preferred stock will also be entitled to receive cash consideration based on the number of the common stock into which those shares are convertible at the time of the merger.

"This is a great outcome for our shareholders,” said Bob Rosenschein, Founder, Chairman and CEO. “After an exciting six years as a public company, we are very pleased to achieve considerable value for our investors. The acquisition price of $10.50 per share represents a significant cash premium of approximately 33% over our 90-day volume-weighted average closing stock price."

4:14 pm on Feb 3, 2011 (gmt 0)

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Content farms seem to be rushing to cash out before Google penalizes them.
4:33 pm on Feb 3, 2011 (gmt 0)

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Or the competition for it in the future will be too much. Just wait till Facebook starts answering questions.
5:11 pm on Feb 3, 2011 (gmt 0)

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I wish I'd bought this at $4.75 on August 16. Interesting how one content farm goes public and the other one goes back to VC's...
6:08 pm on Feb 3, 2011 (gmt 0)

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Content farms seem to be rushing to cash out before Google penalizes them.


I would guess the sale process started well before Google announced they were going after content farms. A sale this size probably started 6 months ago.
8:20 pm on Feb 3, 2011 (gmt 0)

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Good point, I'm sure the Demand Media IPO was long in the planning, too. Still, I think that the firms were aware of the risk posed by algo changes and that their very success was painting a target on them.

Of course, these particular algo changes haven't happened yet.

The problem I see with these major content farms is that they are built around search. That makes them much more vulnerable than, say, Amazon, who also has tons of pages and great rankings. If Google decide Amazon content wasn't that valuable and pushed it down in the rankings, Amazon would still survive.
8:42 pm on Feb 3, 2011 (gmt 0)

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$127 million for a company that has lost millions, sounds about right.
9:51 pm on Feb 3, 2011 (gmt 0)

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Amazon would still survive


Valued service and a brand = Amazon.

DemandMedia? Valued service? Brand?

Only the emergence of an "idiocracy" [youtube.com...] can save DemandMedia, at which point eHow will be deemed the sacred repository of all great knowledge.

Anyone see any irony in the movie, Idiocracy, being distributed by Fox?
12:27 am on Feb 4, 2011 (gmt 0)

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Content farms seem to be rushing to cash out before Google penalizes them.


Which shows what a liar Google is.

Google said create content for your audience not Google.

Millions of people read and use these question/answer websites on a daily basis. Now, Google says, "Don't listen to what we said before, do as we say now or we will utterly destroy your business model arbitrarily."


3...2...1 before Google creates their own content farm for Answers to cut out the competition like they did to Groupon.
12:57 am on Feb 4, 2011 (gmt 0)

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Anyone see any irony in the movie, Idiocracy, being distributed by Fox?


Oh yeah. They also butched its promotion when it came out so I think they didn't like what they saw. Apparently it's doing well as a cult comedy now.

Back to the topic, does answers.com contain electrolytes?
1:56 am on Feb 4, 2011 (gmt 0)

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Interesting commentary on Business Insider dot com. Some investors are saying that the deal is flawed and the price is way too low.

The claim is that they are only getting $1.25 per monthly unique and that the real price should be around $20 per monthly unique.

Got me doing the math...
2:00 am on Feb 4, 2011 (gmt 0)

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Which shows what a liar Google is.

Google said create content for your audience not Google.


Okay, but how many people are going "I have a question I need answered...I know! I'll go to Answers.com!"? The correct answer would be few.

We're asking Google the question, not Answers.com. Google doesn't want sites in their directory that are propped up by Google, they want sites that people come back to without Google.
2:10 am on Feb 4, 2011 (gmt 0)

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What a boneheaded acquisition and monumental waste of money.
2:21 am on Feb 4, 2011 (gmt 0)

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Clearly the investment community continues to misunderstand how to make money on the web.

For me, that's called job security. ;)
3:46 am on Feb 4, 2011 (gmt 0)

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$20 per monthly unique with a site that has such low engagement and stickiness? Doubtful. I wonder what their bounce rate is.

Any additional pageviews likely come from the first answer being rubbish and the user trying to find something more useful.
4:46 am on Feb 4, 2011 (gmt 0)

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Okay, but how many people are going "I have a question I need answered...I know! I'll go to Answers.com!"? The correct answer would be few.


And you would be completely wrong. Answers is ranked the top 22 website in the world with 40 million monthly unique visitors.


[siteanalytics.compete.com...]
8:32 am on Feb 4, 2011 (gmt 0)

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I'm sorry but NO website with user generated content can be valued based on that content alone. It's the traffic that's valuable and since the content isn't unique and is readily copyable the smart thing to do is cash out when the cashing is still good.

The model was good 6 years ago and $127M was good today but the domain name and brand itself is worth more than the content ever will be. Moving forward that's not solid ground to be on imo, eyes can be diverted more easily today than ever before.
10:10 am on Feb 4, 2011 (gmt 0)

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And you would be completely wrong. Answers is ranked the top 22 website in the world with 40 million monthly unique visitors


Actually, according to [quantcast.com ] who have "directly measured data" Answers.com receives around 109 million unique visitors a month with over 60 million being US visitors. This explains the [businessinsider.com ] comment ($1.25 per monthly unique). I wonder where shareholders got the $20 per monthly unique idea. This would mean over $2 billion!
3:27 pm on Feb 4, 2011 (gmt 0)

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I'm sure a few sites with lots of pageviews per unique and strong monetization could score a higher number per unique like the $20. I just don't think "answer" and "how to" content farms are engaging, nor are they a direct destination. They rely on search engines to keep their traffic going.

And, to answer my own question, the Quantcast link shows about 2.5 pageviews per person. A little better than I expected, but not fantastic.
5:08 pm on Feb 4, 2011 (gmt 0)

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And you would be completely wrong. Answers is ranked the top 22 website in the world with 40 million monthly unique visitors.


And how many of those people find the site using Google? You're missing my point, Answers is completely dependent on Google's front page ranking. Take that away and their business model implodes overnight.

I've been to Answers many times but it's ALWAYS through Google. I doubt there are many people who go to Answers directly and bypass Google.
5:14 pm on Feb 4, 2011 (gmt 0)

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You know folks, what matters is "109 million" monthly sets of eyes. Whether you like the business/traffic model or not doesn't matter. The fact that they have verified high repeat traffic has a value more than $1.25 per person IMHO. Try to get that rate or reach out of Adwords.

Repeat eyes have value and most importantly potential - if these folks can figure out how to get 100% return on their monies within five years, then will be kicking caboose.
7:10 pm on Feb 4, 2011 (gmt 0)

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You know folks, what matters is "109 million" monthly sets of eyes. Whether you like the business/traffic model or not doesn't matter.


It DOES matter if Google drops them in the rankings like they say they will.
5:58 am on Feb 6, 2011 (gmt 0)

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So buy a great domain, scrape a ton of content, profit.

It DOES matter if Google drops them in the rankings like they say they will.

Google isn't going to penalize major sites like that. Especially ones that run Adsense.
6:42 am on Feb 7, 2011 (gmt 0)

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The fact is that end users do not want content farms, they want good quality, authoritative, answers. Content farms are just human powered scrapers.

@bears5122, Google will penalise them, because everything Google Search does depends on the quality of the SERPS.
3:55 pm on Feb 7, 2011 (gmt 0)

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Repeat eyes have value and most importantly potential


I would think just the opposite. Ad blindness, saturation, etc all lead to the degradation of repeat visitor's value.
4:34 pm on Feb 7, 2011 (gmt 0)

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Maximillianos, that's true to a degree. Very sticky community sites, for example, have notoriously low click rates on ads.

On the other hand, the fact that a property keeps people onsite and brings people back via bookmarks adds value in another way. These sites don't have to advertise to maintain traffic, and they don't have to worry much about rankings.

If I had a major income site that derived virtually all of its traffic from Google searches (not counting navigational searches, which seem to be growing), I'd sleep poorly at night.
 

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