Search Engine Optimization Firm Sold For $95 Million

Search engine optimization is sometimes characterized as a cottage industry, but there are plenty of companies that take an industrial approach to generating traffic for clients. Case in point is Website Results, which was purchased by Internet advertising company 24/7 Media in a $95 million stock deal. That’s a lot of cottages.

To my knowledge, Website Results is the first major SEO firm ever to be acquired. It certainly is the first to receive such a high valuation. Any other SEO firm that I can think of remains privately held, so values are hard to come by. In an investors conference call after the acquisition, 24/7 said that Website Results is profitable and earned over $6 million in the first six months of this year. The high-margin revenue stream from Website Results is part of what 24/7 expects to help drive its company to profitability.

Website Results is almost certainly what I would describe as a doorway page firm. Companies turn to doorway page firms seeking traffic from search engines. To generate this traffic, doorway page firms create pages they hope will rank well for particular terms, on particular crawler-based search engines. The more advanced doorway page firms combine this with “cloaking,” which means that human beings see pages different from those shown to search engine spiders. Cloaking allows doorway page firms to bill clients only for traffic they actually receive, plus it protects the coding of successful pages from competitors.

I can’t confirm that Website Results operates exactly in this fashion, because despite having over a week of lead time (and well before today’s US holiday), 24/7 failed to schedule a phone interview and only managed to respond to email questions by last Friday. In my email, I asked specifically whether Website Results used a cloaked doorway page system, and 24/7 chief financial officer Andy Johns essentially ducked the question, with this response:

“Website Results combines proprietary technology and business processes to help sites drive incremental traffic. Their solution is focused not only on getting additional referrals, but also on making certain that the referrals are highly-qualified, so that there is also the best conversion rate. Their proprietary systems provide a means to measure the incremental traffic, which provides accurate billing.”

All clear? Let me do some translating. Website Results probably does used cloaked doorway pages — every major performance-based SEO firm I know of does. “Incremental” traffic means that Website Results clients are probably told the company’s work will drive additional traffic to them, rather than being a major source of visitors. This is because search engine optimization is not an exact science and no one can guarantee anything on the non-paid placement search engines. However, clients can probably expect the traffic to be extremely well targeted, which converts well. “Proprietary” technology and systems probably means cloaking or some other method built in house to measure traffic and maybe some automation in trying to reverse-engineer what search engine ranking algorithms prefer in pages.

The use of cloaked doorway pages is a charged issue in the search engine optimization industry. Some SEO providers hate it, feeling it doesn’t serve clients well, and there are also concerns that it can be used to hide copyright infringement. Other SEO providers recognize that it can be the perfect solution to helping clients. It can be difficult to impossible to get major web sites to make design changes that would help their sites produce more traffic from search engines. Indeed, some sites that are built using frames or those that deliver pages out of a database can be virtually invisible to crawler-based search engines. The use of doorway pages can sometimes be the only way these sites may be found.

As for the search engines themselves, attitudes vary. The typical response is that they don’t like cloaking, but when described in less aggressive sounding ways (“relevant content targeted toward particular phrases”), most of the search engines will grudgingly admit they either don’t have a problem with cloaking or won’t take a hard look at reports of it, if the pages are ultimately redirecting users to content relevant for their search.

Obviously, a negative attitude on cloaking in the future could affect the profitability of Website Results and similar companies. But, at the moment, 24/7 feels it is on firm ground.

“In our due diligence process, we talked with many of the search engines. Their reaction to optimization was neutral to slightly positive. As long as the optimization process is handled properly both technologically and ethically, then search results actually will improve for the individual consumer, which is beneficial for the search engines’ relationships with the Internet community.”