What is Clutch’s valuation and why so low? SEO strategy analysis

What is Clutch?

If you are active in the field of B2B service marketing, especially targeting Western markets, you have probably already come across Clutch.co. There’s also a good chance that it’s actually your primary lead generation tool. That’s the case for many Polish software houses.

So what is Clutch? It is a website that collects information about companies providing B2B services – marketing agencies, software houses, PR companies, etc. Clutch creates their rankings for individual locations, taking into account such aspects as the number and amount of ratings, price level and team size.

How much is Clutch.co worth today?

USD 80 million

When analyzing the value of startups, it is worth starting with information about the last round obtained from the VC market.
In the case of Clutch, the latest information is from a year ago, with a valuation of $80 million.

(…) the company raised about $18 million in new funding at about an $80 million valuation, figures the company confirmed.

Source: https://www.bizjournals.com/washington/news/2020/03/26/we-now-know-how-much-business-ratings-startup.html

Is this a high valuation?

It’s surprisingly low, taking into account the value of acquired organic traffic. Why do I think so?

Ahrefs analytical tools provide us with an interesting indicator, “Organic Traffic Value” – the equivalent monthly cost of traffic from all keywords that the target website ranks for if it has paid for Google ADs instead of ranking organically.

$7.3 million

The value of Clutch’s organic traffic is as high as $7.3 million per month! For comparison – Masterclass.com (which I analyzed here) values Ahrefs’ traffic at $2.2 million. With 4x More SEO Traffic!

So how does website SEO affect valuation?

To understand this, we first need to analyze the SEO of this website.

Organic on-site traffic 

Here, the Similarweb and Ahrefs tools are amazingly compatible and estimate SEO traffic level at 1 million visits per month (which is ⅔ of total traffic).

Why is organic traffic so high?

In the global Internet, one million visits is still niche level. What distinguishes Clutch is the type of phrases that it ranks for. 

Examples for the US market:

• content marketing agency – 1st position  
• web design company – 1st position  
• web design agency – 1st position  
• app developers – 1st position
• android app agency – 1st position    

… there are thousands of such examples.

The same for phrases containing a location (e.g. city):

• real estate companies in new york – 1st position  
• branding agency new york – 1st position
• it consulting new york – 1st position  

…These are called “Highly transactional phrases” – the user’s goal is often to establish cooperation. Additionally, the value of the transaction (establishing business cooperation) is often counted in hundreds of thousands of dollars. This makes the cost of paid advertising in the search results one of the highest on the Internet.

These are the current Google Ads click rates for the phrases mentioned above:

• content marketing agency – CPC $22.93
• web design company – CPC $41.28
• web design agency – CPC $41.38
• app developers – CPC $41.56
• real estate companies in new york – CPC $4.51
• branding agency new york – CPC $9.68
• it consulting new york – CPC $20.85

Source: Google Ads, US market

The extremely high stakes and high rankings of Clutch.co make the average opportunity cost of each organic visit around $7.

Why is Clutch so high in the search results?

Here, it is worth mentioning two main factors:

1. User Intentions
   Contrary to appearances, there is no room for 10 agency websites on the first page of the results for “web design agency”. The algorithm recognizes the intentions of users behind the entered phrase and adjusts the type of results to them (preferring, for example, agency rankings), but also cares about diversification to be able to address various intentions.People typing general terms such as “Web design agency” usually need to choose from many companies based on characteristics such as reviews, company size and price lists. And here we come to the next point, which is industry specialization. Marketplaces find it easier to get high positions than websites of individual businesses.

2.  Businesses strengthen their competitors in SEO
   It was agencies and software houses that helped Clutch stay ahead of the search results and be in the top Google results. Links from websites of companies in a given industry are the source of the most valuable inbound links and Clutch knows it. Here are some of the link building tactics they have implemented:

• Rankings and badges:

The company will gladly boast of its place in the ranking of the best in its industry or location. The Clutch growth department takes great advantage of this, ensuring that almost everyone has a chance to be included in some TOP B2B companies ranking.

 

• Guest posts:

You don’t have the head to write a note about your position in the Clutch ranking? No problem – Clutch’s editors will write a note for your blog for you – of course with a link to their website.

An example of a link to Clutch from a Guest post.

Source: https://www.eggmarketingpr.com/blog/6-red-flags-to-watch-out-for-when-hiring-an-seo-company/

• Widgets with feedback:    

Clutch offers widgets – dedicated code snippets that, when pasted onto a website, will display an attractive box, e.g. with customer references:

So how does visibility in organic results affect Clutch.co’s valuation?

Stable SEO, based on natural links and implementing users’ intentions. This is definitely a strong business foundation. However, Clutch has one serious threat – a very strong competitor in the form of Google. Today, Google My Business is not yet able to fully occupy the niche in which Clutch and its clones (including Manifest and Goodfirms) have built their businesses. This certainly won’t change in a year or two. However, I think Clutch will feel increasing pressure from the search engine. Those $7 million a month are too much of a snack, even for a giant like Google. The case of flight search engines should be a warning here.

Summary

Undoubtedly, Clutch still has a lot of potential to increase its value. I assume that since the last round in March 2020, the company’s valuation has significantly increased (increased visibility in organic, growing valuations of the entire digital market), and in addition, the company’s managers are intensively working on improving the monetization of their traffic – e.g. by introducing the model of paid PPC campaigns in their ranking of B2B service companies. The threat that drags the valuation down is the strong dependence of the business on the search engine, which will itself want to increase its presence in this category.

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Looking for a consultation on digital strategies?

Feel free to email me directly at: maciej@agencjawhites.pl or reach out via Linkedin: https://www.linkedin.com/in/wozniakmaciej/

Maciej Woźniak, Whites Agency Founder

Digital marketing strategist with 15 years of experience, founder of a 100+ employee marketing agency specializing in advanced SEO projects.