In 2022, many firms have chosen to follow an “aggregator” business model in order to merge with and acquire businesses that generate consistent revenue. In large part, professionals have seen business aggregators “roll-up” eCommerce companies such as Amazon sellers. By definition: Aggregation is the act of a larger company buying up smaller entities that will (hopefully) add to that business’s overall mission. This business model is depicted by firms like Thrasio–a group that purchases, manages, and brings together eCommerce businesses.
Similarly, other businesses have materialized which intend to focus on the acquisition of websites. Over the last two years, startups have been formed to buy, support, and build content websites, blogs, and online portals. Such teams hope that “digital demand aggregation” (as it has been called) is the future of online content. Over the next five or more years, it is probable that this industry will see an increase in the quality of digital content, a boost in website valuations, and growth in online competition.
Why Are Aggregators Buying Blogs?
Rather than turning to the evening news or local radio channel, the average consumer gains information from independent streams of media. This tendency has driven the advancement of nonpartisan journalists, expert chefs, seasoned travelers, and other individuals who deliver helpful information.
Usually, digital asset owners get their start by blogging about the activities they find most interesting. These content creators distribute breaking news, “how-to” cooking shows, nomad lifestyle guides, or other info about a niche industry. Whatever the topic may be, professional bloggers that have opened up “digital property” online are now cashing-in.
By spreading helpful information, these site owners generate revenue from display advertisements, affiliate marketing, and cost-per-click deals, among other income avenues. In 2022, 80% of eCommerce advertisers also utilize affiliate partnerships they’ve cultivated with content websites. As eCommerce continues to prosper, there will continue to be a need to support sales with digital content. As of now, 40% of eCommerce merchants label affiliate programs as their top sales acquisition avenue.
Digital asset owners use informational blogs to garner online traffic, grow their readership, and generate income. When blogs begin to perform well enough, aggregator firms begin to show interest. With help from investors, these corporations offer standardized processes, larger professional teams, and bigger budgets.
“The need for high-converting traffic will increase over the next few years, as the ecommerce sector grows, and competition in ecommerce increases,” said Benjamin Schardt, the Co-Founder & Co-CEO of one digital demand aggregator startup. “We believe there is a bright future for digital demand aggregation.”
Investors Approach as Business Aggregators “Dig” for Treasure Online
These firms aren’t mining underground or diving under the sea. Instead, aggregating firms are finding digital treasure. To these corporations, “hidden gems” come in the form of content websites that bring about passive profit. The most sought-after assets are niche content sites that generate hundreds of thousands in USD each year.
If the “digital treasure map” is right, many of the assets along with the search already turn a profit. Despite consistent income, blog owners often have other pain points that corporations can solve. Aggregators hope their business plan acts as a solution or exit strategy for individual site owners and small teams that have reached operational limits.
It is common for digital asset owners to create their blog as a side-business or passion project. In this case, there may come a time when the venture reaches operational limits. Business aggregators step in to grow the digital asset that started as a side-project into a full-time business.
When looking to annex an individually-owned website, aggregators enlist their teams to standardize processes. These firms often bring together professionals to work on an asset’s SEO blueprint, marketing map, content strategy, social media plan, website development, and advertising/sales processes. The end result should be a more profitable and efficiently-run website that sits under the aggregator’s “canopy” of brands.
Striking Gold On the Worldwide Web
For aggregators, the “secret treasure map” starts with mining data and uncovering leads that could be “hidden gems”. Using dedicated M&A teams, these firms conduct due diligence efforts to evaluate and price-out the digital assets discovered. At the end of this search, these firms hope to provide a mutually-beneficial acquisition contract to the blog owner(s). Oftentimes, these contracts ask site owners to join the aggregation team to grow the asset–otherwise, the asset owner will sell and step away.
While investors must be satisfied, there are other considerations that business aggregators must make that fall outside the profit and revenue reports. Once the asset changes hands, the aggregator’s team must work to assess and retain a website’s “DNA”. This procedure keeps the characteristics that make the website special, retains content and tonality that the audience finds helpful, and discards processes that drive more obvious drawbacks of the asset.
“We know that when we step in, the blog has already gained an organic following and invested audience. So, we conduct interviews with the owner to assess the content and tonality that makes the asset special,” said Schardt. “We want to keep that established base and implement our team of professionals to scale up.”
Without changing too much of the blog’s content, corporations utilize their teams to increase the asset’s value. In June 2021, one exemplary startup acquired its first asset, called reisefroh.com. Since then, this German travel blog has undergone a substantial increase in revenue due to newly-defined processes around sales optimization, traffic stimulation, and content management.
“In the future, we also hope to use our network and portfolio of sites to find comparable synergies that end in mutual growth,” concluded Schardt.
Only time will tell if the “digital asset aggregation” concept will be truly fruitful. Yet, if aggregators are correct–the internet landscape will be rapidly evolving. As this trend moves forward, business aggregators expect to own a large portion of “internet property”. In the end, an aggregator’s goal is to place their company in a position of power if competitive digital asset grabs occur.
“We have goals to grow these assets 10x in the years after acquisition, ” said Schardt, whose team is in the process of onboarding new websites. “As we look forward, we intend to acquire several assets from North America, Europe, and all around the world.”