BankRate Throwing Cash Around

BankRate Inc made a few surprising purchases lately, paying millions of dollars for small one man sites.

First was CreditCardGuide.com, a site that provides credit-card comparisons. According to compete.com it receives close to 200K monthly visitors from US. Still hard to imagine the site revenues being able to justify the $32 million pricetag the company paid a month ago.

Sept 11 (Reuters) – Bankrate Inc said it acquired the assets of LinkSpectrum Co, including CreditCardGuide.com which provides credit-card comparisons, for $32 million in cash, and reaffirmed its full-year outlook.

The operator of Internet-based consumer banking marketplace said it paid an additional $2 million for the company’s working capital, and will also pay up to an additional $10 million in potential earn out.

The acquisition is expected to add traffic, boost revenue and improve margins in its credit card business, Chief Executive Thomas Evans said in a statement.

The company said it will immediately take over the operation and management of CreditCardGuide.com Website, the principal asset of North Carolina-based LinkSpectrum.

Rafael David, the founder and only full-time employee of CreditCardGuide.com will be working with Bankrate through a transition period, Bankrate said.

For the seller it must’ve been like winning the lottery. Site has PR5 and yahoo only shows less than 2,000 backlinks.

Next came another similar purchase of a blog for $15 million bankaholic.com. This one has 300K monthly visitors from the US according to compete estimates. Traffic is very targeted and all are looking for banking information, coming mostly from search engines. So it’s easy to see the attraction, but even that can hardly justify paying so much for a blog.

Here is an interview of the happy blogger, who didn’t even try to conceal his amazement:

Friday, we reported on Bankaholic, a blog written by Johns Wu, being sold for $15 million to BankRate. I emailed Wu (who is apparently a WebProNews reader) with some questions, and he was kind enough to get back to me. Following is the product of that.

Chris Crum: How did this deal come about?

Johns Wu: I’ve been working with the folks at Bankrate since late July, and it just felt like a good fit. I was a one-man show looking to take some money off the table, and they were a traffic hungry financial powerhouse looking to broaden their portfolio of online properties.

CC: What was your reaction when you were approached with the offer?

JW: I was blown away! I’m going to be 23 in November, and never in my life would I have imagined having so much money, especially at this age! I don’t even know what I will do… I mean, I live a simple life. I live in an apartment, I eat lunch at Subway, and I go drinking on weekends. This moneys inevitably going to change my lifestyle a bit, but I’m looking forward to that!

CC: Is it true that you will stay on to continue blogging for the site?

JW: Yes, I like blogging, so I don’t mind. Especially right now, with the financial world in total chaos, there’s no shortage of topics to write about. This is history in the making, and it’s fun to document it.

CC: Do you know if they intend to add additional bloggers as well?

JW: If I were them, I would hire more writers.

CC: How long have you been blogging at Bankaholic?

JW: I started the site in July of 2006, so I’ve been blogging at Bankaholic for about 2.5 years now.

CC: Do you have other blogs?

JW: LOL! Ironically, I had a website in college called “Future Young Millionaires”. I’m too embarrassed to tell you the URL because the site looks like garbage, but if you’re savvy enough at Google, you will probably be able to find it.

CC: Can you provide a little info about yourself just so we can get to know a little bit about who you are?

JW: Sure, my parents are from Taiwan, but I was born on the east coast. I grew up in Arcadia, CA and went to college at UC Berkeley. After that, I worked for a couple months at an online jewelry e-tailer before I quit to work on Bankaholic full time.

CC: There’s been a lot of criticism of blogs as credible news sources. What is your position on this?

JW: I trust blogs WAY more than mainstream media. Some people will say that corporate media is more accurate b/c stories are screened by editors and lawyers, but this is also one of the flaws. I like to read articles that are raw and unedited by people who are qualified to write about the topic. The perfect example is the Iraq war. Who would you trust more? an article from Fox News or a blog post from a Marine on the front lines?

Throwing that much money in times of a serious financial crisis looks strange at least. Judging by the guy’s reaction he’d be pretty happy with just a million for the blog. BankRate could find itself soon out of money with a bunch of smaller sites that can hardly support the cashflow.

On the other hand the real moral of the story is that these two sales just come to show that anything is possible and good sites are highly valuable. While not everyone gets to sell their site for 8 figures, long term development plans always pay off at the end.