Exclusive: Dotdash acquires Simply Recipes and Serious Eats

Details: Dotdash is acquiring both properties in all-cash deals from Fexy Media, a Seattle-based food content and technology company. Fexy acquired Serious Eats, a 14-year-old blog catering to food enthusiasts, in 2015. It bought Simply Recipes, a 17-year-old family food blog and recipe site, in 2016.

• While deal terms are not disclosed, Dotdash CEO Neil Vogel says the websites are "probably 3-4 times the size of anything we've bought to-date."
• Dotdash has recently purchased a number of niche consumer-focused websites, including Liquor, Byrdie, MyDomaine, Brides, Treehugger and Mother Nature Network. Most of those sites have audiences of 3-5 million monthly unique visitors. Simply Recipes has more than 12 million monthly unique visitors.
• Dotdash will be acquiring 27 people, the full editorial teams of both websites. "We're not a publisher that cuts editorial," Vogel said. "We're investing in these things."

Dotdash plans to inject sizable capital and resources into the two websites to help them scale.

• "To make a food site work now, you have to make GIFs. You have to have incredible video capabilities," says Vogel. "You have to explore the cultural history of recipes and talk about nutrition. All these things you never had to do 5 years ago, but now you have to do them."
• Dotdash plans to strip out a number of the ads that are currently on the sites, and replace them with more efficient ad units to declutter and speed up performance.
• "One thing we know is building brands online is super hard, but these guys (Simply Recipes and Serious Eats) have done a remarkable job doing it by being super true to what they do. All we have to do give them resources to do more of that," Vogel says.

Be smart: The investment in this vertical comes amid a pandemic-driven cooking renaissance.

• "At the height of this in April and May, we saw more traffic than we normally see during the holiday season," says Eric Handelsman, General Manager and Vice President of The Spruce Eats, a home-focused food website owned by Dotdash.
• The two new websites will join existing Dotdash properties, like The Spruce Eats and Liquor.com, in building out Dotdash's growing food and beverage vertical.

The big picture: This is Dotdash's fifth acquisition since the beginning of 2019. The company's growth strategy differs from most digital media companies because it is doubling down on ads.

• The company, which has long been profitable by a wide margin, makes most of its money from advertising against evergreen, utility content, or content that users seek out to help answer their questions or improve their lives.
• "We're not making TV shows for Netflix. We're trying to make the best content that people need help them manage their time, money, health, etc.," says Vogel.

By the numbers: Dotdash grew its revenue by 18% last quarter to $44.6 million, its 13th consecutive quarter of double-digit revenue growth.

• "Economically, we have done fairly well through this," says Vogel. Most digital media giants can't say the same.
• The company brought in $168 million in revenue and $40 million in EBITDA in 2019.

Yes, but: There are risks to running a business model that's heavily reliant on advertising.

• "A lot of advertisers disappeared, but we still grew 27% revenue last month year over year," says Vogel. "Part of our strategy is that we are super diversified. For example, our health and finance verticals are doing really well, but our lifestyle verticals are mixed, since travel has stopped."
• Still, Vogel says that the pandemic has reinforced that Dotdash's business model is sustainable. "We've proven that we can survive through COVID and there's really a benefit to diversity like we have."

Go deeper:

• Dotdash acquires TreeHugger and Mother Nature Network
• Dotdash acquires Liquor.com