I talked to Wu and got to know him a little better. We found out that he’s a young man who lives in an apartment, and lives on Subway and weekend drinking. I can relate to that. When I was 22 I had a similar lifestyle, except you could replace Subway with McDonald’s and $15 million with basically broke.

Yes, Wu certainly did something right. But what was it that he did so well as to net him such an astonishing amount of money for a blog that he had only been running for a little over 2 years? What was so enticing about Bankaholic that BankRate was willing to plunk down $15 million?

I talked not only to Wu, but to hugley successful blogger Jeremy Schoemaker of Shoemoney (see our video interview with Schoemaker at BlogWorld) as well. I asked Schoemaker why he thought Wu had gotten such a great deal, to which he replied, "Simple. It was an authority in the banking industry.  Especially with all the banking news going on, now those keywords are hotter then ever."

There’s no question that the keywords Bankaholic ranks for played a role in the acquisition. Bankrate even talked about the hot keyword traffic in the press release, but was that the sole motivation for BankRate to pay such an expensive price for the blog? 

Wu himself said that Bankrate was a "traffic hungry financial powerhouse looking to broaden their portfolio of online properties." We at WebProNews have speculated that perhaps they were looking for a property to allow for more user engagement. When you look at Bankrate.com, there is not much of a community or social element, a blog is the most obvious way to engage readers, and when you have a blog that can bring in such a good amount of  organic traffic, the potential for opening up that engagement increases tremendously.

Schoemaker didn’t really think that the engagement factor was integral to Wu’s deal with Bankrate. When I asked him if he thought it played a particularly big role, he said, "In this case I do not think so.  I think the most important factor was that it was an authority in a very highly competitive niche." That’s not to say that Schoemaker was downplaying the importance of engagement in general. In fact, he places a "huge amount" of importance on it when it comes to the success of a site. "There are millions of blogs out there that never have any direct interaction with their audience," he says. "You can set yourself apart by doing this." He cites responding to commentators and meeting users at shows specifically.

Responding to commentators is huge indeed. I’ve talked about this at SmallBusinessNewz before. You should treat your blog like your own social network. Wu does this. It is not uncommon for a post at Bankaholic to have over 40 comments, and within those comment sections, Wu is actively participating. He’s engaging his readers in conversation.

Engagement tends to come natural when you love what you do though. Wu doesn’t seem too concerned about retiring just yet. He’s going to continue blogging at Bankaholic. "I like blogging, so I don’t mind," he says. "Especially right now, with the financial world in total chaos, there’s no shortage of topics to write about. This is history in the making, and it’s fun to document it." He will remain blogging at the site for an undetermined amount of time, but he said that if he were BankRate, he would hire additional writers as well, so it’s hard to say if he is looking at this as a permanent gig.

Authority leads to engagement.

If you can become an authoritative source for information as a content site in your particular niche, engagement will naturally follow if you allow for it to do so. Enable commentary from your readers. Participate in discussion with them, so they know you are involved. It’s amazing the amount of discussion that can be generated, and not only will this benefit those involved in the discussion itself, but it will be there for all readers to read and learn from, which is why I still consider new media to be a legitimate source for information.

Advertisers will also be drawn to a site that is seen as an authority in its niche, particularly when that is evident by the level of user engagement. If a site has a lot of legitimate comments, advertisers will see this basically as a community of professionals in the target market they are interested in. With enough authority and user engagement, a site is likely to attract offers from potential buyers as well. Just ask Johns Wu.

What are your thoughts on the combination of authority and user engagement? Is this the recipe for success?

Update: I’ve posted a follow-up interview with Wu. It was originally supposed to be included as part of this article, but due to conflicting schedules, we were unable to get it together. He talks about negotiation, and engagement.

"I have Shoemoney to thank for getting me into web publishing in the first place," said Wu in a comment on our previous article. "I was in college when Shoemoney’s famous Adsense check picture was circulating around the web. When I saw it, I was like DAMN, I wanna be like that guy! That’s what inspired me to launch my ‘Future Young Millionaires’ site which eventually led to Bankaholic."

The following interview is from the second round of questions I had for Johns, which were originally intended to be part of the last article, but due to conflicting schedules, we were unable to get that sorted out in time. However, Johns still had plenty more interesting things to say, so without further ado, here is the Q&A to come from that:

Chris Crum:  We have speculated that BankRate was attracted to the user-engagement aspect that your blog brings to the table. What are your thoughts on this?

Johns Wu: Definitely. Bankrate is a boring old school corporate website that offers no platform for visitors to interact with each other. Now that they have Bankaholic, they will be positioned to spinoff a more interactive brand that will attract younger, web savvy consumers. Tom Evans, the CEO of Bankrate, affirmed this view in the conference call he had with investors regarding the Bankaholic acquisiton.

CC:  What importance do you think user engagement has on the web in general?

JW: A HUGE deal. User generated content sells. For instance, last week I wanted to eat some good BBQ—I jumped on Yelp, looked for the restaurant with the best reviews, reserved the table, and had a great meal. A while ago when I wanted to learn more about DIY beer making, I went on Amazon, looked for the best rated book, and completed my order with 1 click ship and Amazon Prime. That’s 100% conversion rate in both instances! Companies need to learn how to take advantage of UGC or they will be left in the dust!

CC:  What tips would you give to an aspiring blogger or webmaster to help make their site more successful?

JW: Take a look at your competitors and figure out what you can do to distinguish yourself from the crowd. There are about a dozen websites out there where you can lookup interest rate information, but a lot of them either have out-of-data or very poor user interfaces.

CC: How much negotiating was involved for the sale of Bankaholic and how long did the negotiation process take?

JW: Ahhh the process was extremely stressful. For the record, I’m really sad to sell Bankaholic… The negotiation itself took about 1 week, but it took almost a month for the stupid lawyers to settle things on paper. The fact that the financial world was in meltdown did not help either.

CC: How did you get started working with BankRate in the first place? Did they approach you?

JW: Yes, they reached out and we bounced some ideas back and forth before we decided to team up.

CC: How about when the idea of the sale came about. Did they approach you about this?

JW: Yes, they were the ones who suggested the sale. Ideally, I would have liked to hang on to it a little longer b/c I still have a lot of ideas on improving Bankaholic that I’d like to implement.

CC: How many page views and unique visitors does Bankaholic get?

JW: I’d love to tell you, but Bankrate would not be very happy with that!

That’s understandable, Johns. We don’t want to get you in trouble. I’d like to thank Mr. Wu again for taking time out to talk to WebProNews, so we can share his story with all of our readers, many of which are aspiring to find success online and can look to Wu’s story for inspiration and motivation.

Chris Crum: How did this deal come about?

Johns Wu: I’ve been working with the folks at Bankrate since late July, and it just felt like a good fit. I was a one-man show looking to take some money off the table, and they were a traffic hungry financial powerhouse looking to broaden their portfolio of online properties.

CC:  What was your reaction when you were approached with the offer?

JW: I was blown away! I’m going to be 23 in November, and never in my life would I have imagined having so much money, especially at this age! I don’t even know what I will do… I mean, I live a simple life. I live in an apartment, I eat lunch at Subway, and I go drinking on weekends. This moneys inevitably going to change my lifestyle a bit, but I’m looking forward to that!

CC: Is it true that you will stay on to continue blogging for the site?

JW: Yes, I like blogging, so I don’t mind. Especially right now, with the financial world in total chaos, there’s no shortage of topics to write about. This is history in the making, and it’s fun to document it.

CC: Do you know if they intend to add additional bloggers as well?

JW: If I were them, I would hire more writers.

CC: How long have you been blogging at Bankaholic?

JW: I started the site in July of 2006, so I’ve been blogging at Bankaholic for about 2.5 years now.

CC: Do you have other blogs?

JW: LOL! Ironically, I had a website in college called "Future Young Millionaires". I’m too embarrassed to tell you the URL because the site looks like garbage, but if you’re savvy enough at Google, you will probably be able to find it.

CC: Can you provide a little info about yourself just so we can get to know a little bit about who you are?

JW: Sure, my parents are from Taiwan, but I was born on the east coast. I grew up in Arcadia, CA and went to college at UC Berkeley. After that, I worked for a couple months at an online jewelry e-tailer before I quit to work on Bankaholic full time.

CC: There’s been a lot of criticism of blogs as credible news sources. What is your position on this?

JW: I trust blogs WAY more than mainstream media. Some people will say that corporate media is more accurate b/c stories are screened by editors and lawyers, but this is also one of the flaws. I like to read articles that are raw and unedited by people who are qualified to write about the topic. The perfect example is the Iraq war. Who would you trust more? an article from Fox News or a blog post from a Marine on the front lines?

I’d like to thank Johns for taking the time to talk to WebProNews. I’m sure he is quite busy thinking about what to do with his newfound wealth. I’m not going to hunt down his college site and embarrass him. Although, if he got to where he is now by starting with that, how embarrassing can it really be? Congratulations Johns!

Darren Rowse who knows a thing or two about blogging success says, "If this price is true it’s a fairly decent sale for Mr Wu (understatement of the year) – the blog has an Alexa ranking of 42,168 and averages less than 20 comments per post. The blog does seem to rank very well for a lot of bank terms and I’m sure drives targeted traffic and would convert well with affiliate products – but this is still a fairly inspiring sale!"

"Inspiring" is an understatement itself. If ever there has been motivation to make money blogging, this should be it. This is even more inspiring than the Wine Library TV guy getting on Conan and Ellen. His story was impressive. He did turn it into a $45 million business, but it was already a $4 million to begin with.

As far as I can tell, Wu just started a blog, and here he is sometime later selling it for $15 million. I think most bloggers would find that very impressive. "I was looking at this deal and was thinking if this isn’t the highest price tag paid for a single WordPress blog than it must be the most profitable WP blog ever sold!" exclaims blogger Patrick Gavin. "A deal estimated at $15M, seemingly all organic search traffic (so no cost for the traffic, the site is highly ranked for many top banking terms, ie ‘CD Rates’), and one employee! Well done John[s] Wu."

BankRate confirms that natural search ranking was indeed a factor. "We have been working with Bankaholic in a co-brand relationship since July and have seen first-hand the volume and quality of its traffic," stated Thomas R. Evans, President and CEO of Bankrate. "Bankaholic is ranked high in natural search for both deposit and credit card keywords. We believe their organic traffic will increase our deposit and credit card revenue, and with a high composition of free traffic, will help to improve margins,"

John Chow talked to Wu and confirmed the $15 million price. I have contacted both Wu and BankRate with some questions, so hopefully I will get some more info on the deal from one or both of them. If so, you’ll be the first to know. According to a press release, Wu will stay attached to the blog during the transition period, and for an undisclosed amount of time following that.