The growth potential of social media companies in an internet-driven, modernized world has been robust over the past several years, creating a renaissance of sorts in the technology industry. However, as many newcomers to the space are figuring out, there's very little room at the top, and as the evolution of the industry continues, it's becoming an increasingly niche market.
There is no better evidence of this logical next step than the online message boards and forums segment of social media. Message boards and forums have been around for as long as consumers have been using the internet, and they're just as popular now as they were then. The appeal of message boards isn't that they attract broad, general-interest type crowds. In fact, it is quite the opposite. It's their ability to attract smaller, more intimate communities of passionate enthusiasts in any specific category. Yet, how does that make for a viable business strategy?
CrowdGather, Inc. (CRWG), an Internet company specializing in developing and hosting forum-based Web sites, seems to have found the key. The company has implemented an aggressive strategy acquiring a large portfolio of specialty and niche forum sites. The model seems to be working, as the company currently boasts about 225 million monthly page views in its large network of sites with around 18 million monthly unique visitors.
Perhaps the most enticing part of the strategy; however, is that each individual forum site creates opportunities for highly effective targeted advertising and marketing campaigns. Given the audiences in most forums have a stated and specific goal, Crowdgather’s clients have access to their desired demographic.
“We are focused on maximizing the monetization of user traffic across our network of forum properties, and while the use of traffic analytics is an important measure to consider, a better measure of progress are revenues,” said Sanjay Sabnani, CEO of CrowdGather in a statement.
The company just reported record revenues of $468,296 for the second quarter of fiscal 2012, compared to revenues of $462,925 for the second quarter of fiscal 2011. Sequentially, revenue increased 40 percent and gross profit jumped 108 percent from Q1. Additionally, the revenue figures are comprised entirely of the monetization of CrowdGather's forum ad inventory and do not include any of the lower margin ad agency revenue from Adisn, which had been recorded in prior quarters.
To help put that into perspective; in 2011, the company's revenue increased 400 percent to $1.6 million. Adisn accounted for over 50 percent of that revenue, but in March 2011, CrowdGather decided to focus primarily on its core business to monetize forums.
“Because of this decision, our first quarter of fiscal 2012 revenue appears static when compared to same quarter of fiscal 2011, but the shifting revenue composition from the low margin Adisn model to the core forum business is significant,” Sabnani said.
CrowdGather provided baseline revenue guidance of $1.9 million for 2012, and said the company could breakeven on a cash-flow basis by mid-calendar year 2012. The company is also debt free and has over $3 million in cash available to fund future operations and acquisitions.
Another major milestone for CrowdGather was the acquisition of Yuku.com, which the company completed in September 2011. Yuku.com, itself, was the owner of a large network of forum sites and blogs, including the very popular ezboard family of sites.
With a large portfolio of valuable niche forum sites, CrowdGather is comfortably positioned to benefit from the rise of the social media boom market. Rather than slug it out with the likes of Facebook and Twitter, the company is aggressively gathering assets that are essentially custom tailored to fit advertisers and marketers. “Our business is proceeding according to our plan," Sabnani said. "We believe we are executing on that plan.”
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