Answers.com has agreed to acquire Lexico Publishing Group, LLC, owner of Dictionary.com, Thesaurus.com and Reference.com, for $100 million in cash. The transaction is subject to financing and customary closing conditions and is scheduled to be completed by fall of this year.
Both companies are Google Advertising partners, with Google powering their sponsored search results. Answers.com does also serve content from Yahoo Answers via a distribution partnership.
- Lexico is a leading online provider of reference products and services, which attracted approximately 11.5 million unique monthly users in the U.S. during the month of June 2007, according to comScore Media Metrix.
- In 2006, it generated revenues of $7 million, EBITDA of $2.9 million and net income of $2.8 million.
- Dictionary.com and other Lexico properties will remain standalone brands, as they are today.
- According to Hitwise, in June 2007 the Lexico sites ranked #3 in “Education-Reference” and the Answers sites ranked #4, out of nearly 4,000 sites included in the category. The combined properties would rank #2, behind only Wikipedia.
Key benefits of the acquisition include:
- Page Views: Lexico’s Web properties currently generate approximately three times the total page views of Answers.com.
- Monetization: Lexico’s Web properties currently monetize at approximately one-third the rate of Answers.com, presenting material revenue upside.
- Direct Traffic: Over 85% of Lexico’s traffic is direct from end users or people searching specifically for the term “dictionary” in search engines. The resulting shift in traffic mix should significantly reduce Answers.com’s current reliance on search engine algorithms.
- Market Leadership: Based on the June 2007 comScore data, the addition of Lexico’s Web properties will increase Answers reach to over 22.5 million monthly unique users, which would rank #28 in the top U.S. properties.
We’ve watched Answers.com grow over the past 3 years from a spin-off of GuruNet, which was an old school Q&A search tool, to now a partner and quasi-competitor of Wikipedia with a vast selection of important content partnerships:
- GuruNet Spins off Answers.com
- Answers.com & IceRocket Partner for Blog Search
- Wikipedia & Answers.com Launch One Click Answers Tool
- New York Times integrates Answers.com Content
- Yahoo Answers Partners with Answers.com
- Answers.com Launches WikiAnswers
Here’s an interesting quote from Robert S. Rosenschein, Chairman and CEO of Answers Corporation, on the planned acquisition;
“We estimate that over 70% of our total traffic will now be direct from end users or people searching specifically for the term ‘dictionary’ in search engines. Our combined size and available ad inventory should provide greater exposure among online media buyers, which we expect will lead to increased advertising sales.”
70% of total traffic from users searching for the term ‘dictionary’ is amazing. That’s a little over 7 million Internet users searching for the term dictionary per month, and finding Dictionary.com, which does not include the listings for Dictionary.com in Google and other engines when users search for word definitions.
Answers.com also sees an excellent loyalty building opportunity from these Internet users, along with enhanced monetization via contextual, display and search advertising.
“The bottom line is, with three times the traffic and one-third the monetization rate, together with our monetization expertise, the upside potential is compelling,” added Steve Steinberg, Chief Financial Officer. “We will also offer cross-promotion to other Answers sites. For example, this acquisition will allow us to introduce our WikiAnswers property to Lexico’s 11.5 million monthly unique users.”
