How I bought a podcast, The valuation of podcasts, The risk of being overtaken & more

0:00Ralph, I got a question for you. So this is unique because you bought a podcast, right? Can you speak to that a little bit? How did you think about valuation there? What numbers can you share a podcasting? Yeah, so my CFO, who is very, very smart, very well-versed in M &A, worked for KPMG for years and years. He's going to love to hear that because it'll just pad his ego. But we tried to put together an actual model because if you go Google, like, how do you actually figure out the worth of a podcast? It's nearly impossible. It was like one blog post. So what we tried to figure out is we tried to figure it.

0:40It's probably Neal's. Yeah. It also says that Neil's podcast is worth the best. Yeah, and then sell it to Neil's agency, which is a podcast agency. No mention of Eric on that one too, I'm sure. But the point is, is the thing is, it's like nobody actually knew how to do that. It was really, it was a value. So, I mean, I was negotiating with Ryan Dice, who's a pretty good negotiator. So he's like, it's worth X amount, which is an enormous amount. And we said, well, when we really think about what the revenue is times what it's relatively worth for us at that point in time, they were selling. We said, okay, we'll sell it.

1:17We'll buy it for, I believe it was two to three X what their ad revenue was, which is gross. And we're like, that's a really fair price. But we also knew we went back through all of our leads and we figured out what is this podcast actually really worth? That was a different number. so the number that ryan came up with was higher than what it was actually worth for me but we got it at right around maybe a little bit more than what it's worth to us on an annual basis for what we bring in for an individual customer so it's a great way obviously here we are talking here today you know for for co-promotes this kind of stuff you know teaching and obviously doing presentations and and speaking great for that you guys all know and obviously it's great for business They listen to a hundred podcasts.

2:05Eric, you can't tell me they're like, I listen to a hundred podcasts. You know, like I'm ready to hire a single grain right now. Definitely not Neil. But the point is, is that, you know, you guys, like you understand the value of it. So we valued it based upon what we thought our value was to the podcast. And we paid a little bit more than we wanted. But I think in the end it was, it was a worthy investment. So you didn't pay two to three X on the ad revenue, but you, maybe you came down in the middle, maybe like one, one. We paid, we, we started at two to three X ad revenue. I think we paid like five X ad revenue at that point.

2:43And dice wanted like 20 X, you know, he's just greedy. Wow. 20 X ad revenue. That's crazy. He's like, yeah, dude, I could sell a hundred M3s like that. If I was the host. I'm like, well, I don't know if you could, but the point was is, uh, how about you should have said, you can't even sell a hundred M3s. That's right. Doesn't he cap it out at a hundred? Uh, yeah. But anyway, the point was, is like, he got what he wanted. I got what I wanted. We met somewhere in the middle and it all worked out and we're, we're still friends or at least friendly. He hasn't changed his phone number on me. Like, you know, other people have.

3:24You know, it's worth talking about them, Ralph. I mean, it's like we should all talk about it because we've been podcasting for a while. What have we actually gotten from it? We talked about customers, speaking opportunities, like friendships, right? But a lot of people still come up to me. It's like, what do you actually get from it? It's like, it seems like you're just having fun with it. Yeah. I mean, there is that. I mean, I do have to talk to Cosm twice a week, which is just, you know, kind of a burden. You guys are what, like every single day, which I'm sure you batch them all together like we're doing right now.

3:50But the point is that we actually went back like three years to all our leads and we have HubSpot. We just figured out like roughly speaking, how much business did we get from the podcast? And we sorted that back out in a lifetime value. And that's really how we figured it out. But, you know, I tell people all the time, I'm sure you guys get the question like, hey, should I start a podcast? I'm like, well, you know, I started my like eight, 10 years ago. When I thought I was late to the party, you guys started right around the same time. I know for a marketing school, would I start one today to do what I'm doing?

4:29It's a whole lot harder. But I do know that there's a lot of folks that use them. We have a mutual friend, Kasim and myself, who's also in the private equity sort of M &A space. And he probably gets a couple thousand downloads a month. But he gets a couple thousand downloads a month. It's the exact right customer that makes him millions. So it depends on what the lifetime value of your customer is. For us, it's definitely worth it. It was worth our time to negotiate with the digital marketer guys and get the podcast and own it ourselves. By the way, Neil and I have an agency owners group called the Agency Owners Association.

5:08All you have to do, just go to marketingschool.io slash agency. Once again, it's marketingschool.io slash agency to learn more. And now back to the show.

5:21Cool. All right. Well, I can go down this list or you guys can keep, if you guys have something, go ahead and ask. Well, so I've got a question for Eric and Neil, just out of curiosity, the y 'all are among the most prolific content creators, I think online. Right. And that's not unfair to say it. Like I can think of you and then maybe Dennis Yu and then I don't know who else. Hormozy. Hormozy. Say again? Oh, yeah, and Hormozy. You know what's funny, dude, is Hormozy doesn't rank. Hormozy's social. But if you think organic, who else would you pit against these guys? Gary Vaynerchuk does well. Not organic, though.

6:03You're talking SEO organic. Yeah, he's social, too. Like, dude, I think you guys are the reigning kings. So here's why I'm asking. Here's where I'm coming because it's a backhanded compliment. there's nowhere for you to go down at this point, right? You're like, you're on the top. If you get usurped, and that's my question, because you're at the tip of the top. If you get usurped, who usurps you and why? Where do you think your risk is in getting overtaken? Let's make this spicy, Kassam. Neil's already getting usurped. He's gotten called out on Twitter for like, everyone's like, thank God Neil Patel is losing his traffic, right?

6:37So you go first, Neil. So when we tend to get out served, it tends to be by larger brands. It's not, you know, Google admitted to the DOJ years ago that they don't actually understand documents. They fake it, right? You said that recently. Yeah, but I put that out in a tweet recently, but Google said that years ago. And the big misconception is if you have better content, you rank higher. That's not necessarily the case. If you look at it over the last few years, a lot of what's been shifting up in the rankings are bigger, larger brands, which is a hard thing to fake. You know, you can build links, you can do a lot of things, but you have to build a good product and service and you have to give it a long, long time to build a massive brand.

7:26Big brands just typically don't happen overnight. Right. And then the other thing that you end up facing, you know, I'll go back to the private equity example that Ralph gave. We used to be really heavy, prolific content creators for the purpose of SEO. SEO has done amazing for my business and my agency has caused us to be one of the fastest growing agencies. But there's a big misconception. Ranking on Google for terms like SEO or digital marketing produce little to no revenue for us. Right. And that's what we used to optimize for. And then when we saw that we stopped and then people are like, oh my God, Neil's traffic is down.

8:07Well, my revenue is up. My team and I just shifted our focus from ranking on page one of Google for the term discord, which does jack crap for us in driving revenue and ranking high up on page two for terms like Instagram, literally the term Instagram. like that kind of stuff is cool but it's not driving revenue yeah instead you have premier marketing agency now that doesn't have our agencies in there see eric's on that trail right now and now he's pissed now yeah but but what we found is ranking for stuff like should i have my blog on mydomain.com slash blog or a subdomain i'm paraphrasing here but like people typing in those long tail keywords, it's driving us quite a bit of revenue.

8:52Not that one particular keyword, but going after a lot of them that are very technical. That's what's driving us revenue. So we shifted our strategy from SEO to, hey, let's produce content for the masses, for anyone interested in learning about marketing, to let's produce content that's a little bit more technical that enterprise companies would question. How do I structure my blog when I'm in multiple languages and countries? That's not a typical question that someone would ask unless you're a large corporation, right? And what we found is creating content around that has increased our revenue.

9:30And we've seen it in our numbers. We're having a growth year this year over last year, right? Overall, our business has done well, even with the economy. If the economy wasn't this bad, we would have been probably still growing at 40 to 60 % a year. But we found that the growth is coming from really unique content that's solving complex problems versus what is digital marketing.