Is Flickr Worth $4-Billion? | Mark Evans: Mark Evans does some financial analysis and asks the question, is Flickr worth $4 billion (with a “b”)?
Evans suggests that if Flickr were able to better monetize their traffic that they could generate much more revenue than they do today.
Of course part of what has made Flickr as successful as they are in my opinion is exactly that advertising is fairly sparse on the site. It’s Flickr’s clean attractive look as much as anything that makes it a pleasant place for people who love visual stimulation to hang out at.
From Evans: “With online advertising gaining so much traction, Flickr would be a very attractive target given its traffic and user demographic. For the sake of argument, let’s assume Flickr changed business tactics and introduced two high-profile advertising slots throughout the service. I choose two because it would be significant without pissing off most of Flickr users, who regard Flickr as their property and are resistant to change of any kind.
If Flickr could get $5/CPM, that would generate $10-million in advertising/year based on the assumption it’s getting about 100 million global pageviews/month. It’s not a lot of revenue given the conservative approach to how much advertising Flickr would present and how much it would charge but, nevertheless, it would give Flickr an additional $250-million based on Blodget’s formula.
Then, you’re looking at a company worth $1.75-billion to $3.25-billion. Add on a takeover or IPO premium of perhaps 25%, and you’re looking at a valuation of $2.2-billion to $4-billion.”
I do question Evan’s $5 CPM guess on Flickr. I’m not sure that Flickr could get CPMs this high. Google doesn’t include ads on their image search pages. My guess is that when people are looking at and for specific imagery that advertising may be less effective than when used contextually in other ways like Adsense.
Still a $4 billion valuation on Flickr is interesting nonetheless. As a very active Flickr user though I sure hope I don’t see all those monetization advertisements any time soon.