The sudden phase-out of the URL-shortener service Tr.im raises questions about the role of the service’s ibankers and how those bankers represented Tr.im’s valuation prospects. This post seeks to address those questions in the context of Tr.im’s market position.
In response to the phase-out on August 9, 2009 of Tr.im, a URL-shortener service based in Vancouver, BC, questions appeared on industry websites about the revenue model for URL shortener services and the value of real-time traffic data:
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/09/AR2009080902386_Comments.html
and:
http://mashable.com/2009/08/09/trim-shuts-down/?dsq=14566358#comment-14566358
Tr.im’s primary monetization option is to sell real-time traffic intelligence to advertisers.
In planning for an online ad campaign, it used to be that ad managers could take a leisurely three or four weeks to gradually ramp up, find the right keywords, test ad-text combinations, and increase their spend in a conservative manner.
Now that huge amounts of traffic are coming from social media (over 20% of TechCrunch’s 7 million monthly uniques) and with URL shortners used for a significant amount of that traffic, Tr.im has access to extremely valuable market intelligence. The payoffs for advertisers? Better access to consumers, better ROI, instant results, product placement at strategic moments and the exploitation of unique opportunities.
As someone who does a lot of valuations of online assets, I’d value Tr.im at roughly $4.5 million to $7.5 million.
The challenge with domain-centric asset valuations, particularly where considerable unmonetized traffic volumes are concerned, is that three quarters of the strategic transactions are private. Sometimes we find out about a price a year or more after the transaction, as in the case of Clothes.com, which sold for 4.9 million in 2008 to Zappos but was only disclosed after Zappos was subsequently acquired by Amazon.
A similar sale at a greater valuation came from TrafficZ’s acquisition of NameIntelligence (NI), which runs DomainTools. That acquisition is currently being litigated over representations and warrants – primarily those made by the seller, but the post-litigation valuation is likely to exceed Clothes.com.
Unlike NI, Tr.im owns a big piece of the Internet through the traffic volume they support. Bigger than Kevin Ham and Frank Schilling? If not now, then soon. What makes Tr.im’s volumes important is that it represents hot traffic, trending traffic.
Competitors to Tr.im suffer from weak TLDs/CCs. Anyone care to litigate an intellectual property dispute in Libya? Or better yet, India – which does not follow UDRP and where substantial punitive awards are increasingly commonplace.
Tr.im was the best service of its type, in part because users enjoyed dedicated URLs and because of the statistical tools. It’s too bad they didn’t communicate with their user base about their interest in selling the service before shutting it down.
First-time sellers (like first-time buyers) often don’t know how to work with investment bankers and are reluctant to do so. They don’t understand deal steps or the psychological aspects of strategic transactions and consequently fall victim to self-inflicted pitfalls. Sometimes they stumble by selecting niche-market bankers or by prematurely setting their sights on a short list of preferred buyers or sellers. It’s a movie we’ve seen before. And have just seen again.
