The Sinking of Site5 – Tracking EIG Brands Post Acquisition

"You'll notice their ratings, in general, are not very good with Site5 (their most recent acquisition) being the exception. iPage was acquired before I started tracking data. BlueHost/HostMonster also had a decline, although the data doesn't start pre-acquisition. JustHost collapses post acquisition. NetFirms has remained consistently mediocre. HostGator collapses with a major outage a year after acquisition. Arvixe collapses a year after being acquired. Site5 is still very recent and hasn't shown any signs of decline yet." - The Rise and Fall of A Small Orange, January 2016

Review Signal Rating Calculated Pos/(Pos+Neg), without duplicate filtering

Review Signal Rating Calculated Pos/(Pos+Neg), without duplicate filtering (January 2016)

That's what I wrote at the beginning of 2016 as I watched A Small Orange's rating collapse in a pretty popular post called The Rise and Fall of A Small Orange, which documented ASO's Rise and Fall, but also the fall of many EIG brands. One thing I mentioned was the recent acquisition of Site5 (and Verio) which had a fairly good rating on Review Signal at the time of acquisition. The trend seemed to be roughly a year to see the drop in rating, post acquisition.

Site5 ~ 1 Year Later

The acquisition of Site5 was announced August 2015. Here's the updated EIG brand tracking graph. One thing to note, this now uses the new rating algorithm which has a built in decay function to weight older reviews less. So the new graph uses the new algorithm but calculating each point in time as if it always used it. There will be some differences between it and the original graph (which prompted the change in algorithm). It's minimal for most brands, only when there is a major change in sentiment, it shows a change more quickly. Full details about the change can be read on Review Signal Ranking Algorithm Update.

eig_brand_review_signal_ratings_2016

What you can see is the reputation remained relatively stable until about April 2016 and then started a slow but steady decline where it has dipped below 50% for the first time recently. As with nearly every brand, except A Small Orange, the decline happened within a year.

Since the original post there also hasn't been much movement in any other brands beyond Site5 crashing and A Small Orange continuing to slide downward. Verio didn't see a dip post-acquisition, but it had a pretty low rating to start with that put it in the bottom half of EIG brand ratings already.

Why Do EIG Brands Go Down Post Acquisition?

The longer I am in this industry, the more stories I hear. A Small Orange was such an interesting exception and I've heard a lot about it from a lot of people. It's relative independence and keeping the staff seemed to be the key to maintaining a good brand even within the EIG conglomerate.

Site5 offers what I imagine is more business-as-usual in the EIG world. Cut staff, migrate to EIG  and maximize profit (in the short term). Site5's founder, Ben, reached out to a competitor, SiteGround, and arranged for them to hire a large number of Site5 staff that EIG had no plans on keeping according to SiteGround's blog. A very classy move from the former CEO and a seeming win for SiteGround, one of EIG's larger hosting competitors. I also saw similar behavior of long time staff all leaving when A Small Orange started to go downhill and staff from other EIG brands showed up.

Beyond simply trying to cut costs, you have to wonder why would you spend all that money acquiring these brands that have lots of customers, good reputations and talented staff that obviously are keeping the operation running successfully only to get rid of nearly all of that except the customers. But once you gut the staff, it seems like the customers notice, because it certainly shows up in the data I track.

Conveniently, EIG just published their Q3 2016 10-Q.

We have certain hosting and other brands to which we no longer allocate significant marketing or other funds. These brands generally have healthy free cash flow, but we do not consider them strategic or growth priorities. Subscriber counts for these non-strategic brands are decreasing. While our more strategic brands, in the aggregate, showed net subscriber adds during the quarter ended September 30, 2016, the net subscriber losses in non-strategic brands and certain gateway brands contributed to a decrease in our total subscribers of approximately 42,000 during the quarter. We expect that total subscribers will continue to decrease in the near term.

Overall, our core hosting and web presence business showed relatively slow revenue and subscriber growth during the first nine months of 2016. We believe that this is due to flat marketing expenditures relative to 2015 levels on this business in the first half of 2016 as a result of our focus on gateway products during that period, and to trends in the competitive landscape, including greater competition for referral sources and an increasing trend among consumers to search for web presence and marketing solutions using brand-related search terms rather than generic search terms such as “shared hosting” or “website builder”. We believe this trend assists competitors who have focused more heavily than we have on building consumer awareness of their brand, and that it has made it more challenging and more expensive for us to attract new subscribers. In order to address this trend, during the third quarter of 2016, we began to allocate additional marketing investment to a subset of our hosting brands, including our largest brands, Bluehost.com, HostGator and iPage. We plan to continue this increased level of marketing investment in the near term, and are evaluating different marketing strategies aimed at increasing brand awareness.

So the result of their current strategy this past quarter has been a net loss of 42,000 customers. They say their strategic brands on aggregate had a net subscriber increase and named the largest ones (BlueHost, HostGator, iPage) and they are going to focus on a subset of brands going forward. But the phrasing would seem to imply that some of the strategic brands experienced losses as well. It also means that the non-strategic brands lost more than 42,000 customers and pulled down the net subscribers to -42,000 customers last quarter.

The cap it all off, I got one of the most surprising emails from Site5 a couple days ago.

We wanted to let you know that we’ve decided to terminate the Site5 Affiliate program as of November 30th, 2016.

We want to thank you for your support of Site5, especially during our most recent move into Impact Radius, and we hope that you’ll consider promoting another one of Endurance’s other programs.

I guess Site5 isn't being considered a strategic brand if they are killing off the affiliate channel on it entirely, right after a big migration from Site5's custom affiliate program to Impact Radius. They also asked that affiliates promote HostGator now, which certainly fits in the strategic brand category.

It's extremely disappointing to see this trend continue of brands collapsing after a year in EIG's hands. What will be interesting going forward is that EIG hasn't acquired any new hosting brands for a while. They seem to be focused on their existing brands for now. I wonder if that will mean we will see any noticeable positive change or improvements in existing brands (or at least some of the strategic brands).

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Kevin Ohashi is the geek-in-charge at Review Signal. He is passionate about making data meaningful for consumers. Kevin is based in Washington, DC.





3 thoughts on “The Sinking of Site5 – Tracking EIG Brands Post Acquisition

  1. avatarPaul D. Bain

    At once fascinating and sad. I wonder how long EIG can remain in business. So far, they have demonstrated that buying Web hosting companies and gutting the staffs of those companies is highly profitable, at least in the short term.

    Reply
  2. avatarDaJamMaster

    Here’s an interesting chat I had with the weekend support team:

    Chat ID: 39637019 Initial Question: Sucuri scans.
    4:14:46 PMSystem James O has joined the chat!
    4:14:56 PMSystem James O has joined the chat!
    4:15:07 PMJames O For security purposes, and to verify account ownership, may I have you log into your billing area and provide the Support Code found on the left side of the page? https://customers.site5.com/clientarea.php
    4:16:40 PMTom ———–
    4:17:30 PMJames O I’ve got you fully verified Tom, how may I assist you today?
    4:18:55 PMTom I have purchased Sucuri, which I don’t seem to be able to control in any manner I know of. Thus, I use WordFence to check to see if my site has been compromised again. It appears that it has. Are you doing regular Sucuri scans? If not, why not?
    4:20:01 PMJames O We can submit a ticket to have us do a full scan for you. Randi.
    4:20:10 PMJames O Sorry Tom
    4:21:21 PMTom There already is an open ticket for this. A scan was done, but the ticket was never closed. As a matter of fact, I have five open tickets that all should have been closed.
    4:21:49 PMTom Since you don’t close tickets, I figured I could use them over again for related issues.
    4:22:18 PMJames O I see you can either respond to the ticket or create another one. Those previous tickets will be closed off eventually
    4:22:24 PMTom Furthermore, I thought that Sucuri was set to run on a regular basis. If not why not?
    4:23:32 PMTom Yeah, but I don’t have the patience for your lackluster performance. I’ve got tickets that have been open for MONTHS. Once upon a time, I could put a ticket in and someone would respond to it in minutes. Now, I have to start a chat just to get anyone’s attention.
    4:23:39 PMTom I don’t like having to do this.
    4:24:04 PMTom It’s annoying and wastes my time. Why isn’t there someone working through these tickets?
    4:24:53 PMTom One ticket says “NEEDS REPLY” and the last post on it is from me saying “Close this ticket!”
    4:24:58 PMJames O I do apologize about, I honestly couldn’t answer that question for you. Do you have a specific Ticket ID you would like me to look at?
    4:25:02 PMTom It’s been like that for several weeks.
    4:26:06 PMTom Here’s what I really want. I want to get off of Google’s Blocked Website list. You guys are KILLING MY BUSINESS! GET SUCURI ON A REGULAR SCAN SCHEDULE – DAILY!!!
    4:26:10 PMTom DO IT NOW!
    4:26:24 PMTom LEAVE IT TO KEEP CLEANING MY SITE.
    4:30:42 PMJames O Are there any other questions you have for me today?
    4:31:04 PMTom What? Demands don’t count?
    4:31:33 PMTom Is this f***ing Jeopardy?
    4:31:55 PMJames O For the sucuri scans please respond to one of those open tickets
    4:32:13 PMTom And how long should a wait?
    4:32:18 PMTom a) a month
    4:32:24 PMTom b) a quarter
    4:32:28 PMTom c) a year
    4:33:00 PMJames O Unfortunately I cannot give a timeframe I do apologize about that
    4:34:28 PMTom How about can you send me over to your supervisor?
    4:35:44 PMJames O Unfortunately we do not have a supervisor available I do apologize about htat
    4:36:06 PMTom So you have no escalation strategy for chat?
    4:36:19 PMTom And you don’t have any idea how long it takes to answer a ticket
    4:36:25 PMJames O We can submit a ticket for you to speak to a manager
    4:36:26 PMTom And you don’t answer the phone.
    4:37:29 PMTom That makes a ton of sense. You don’t respond to any of my tickets, so I start a chat in which you offer to put in a ticket to talk to someone else. I what universe does that make sense to you?
    4:38:13 PMJames O I do apologize about that
    4:38:49 PMTom Let me guess. It is the weekend and the REAL support people aren’t here, so your just stalling until Monday. Right?
    4:39:56 PMTom Alright. So to summarize. You apologize. Nice.
    4:40:32 PMJames O Are there any other questions you have for me today?
    4:40:48 PMTom Here’s some light reading for you in your spare time: http://reviewsignal.com/blog/2016/11/08/the-sinking-of-site5-tracking-eig-brands-post-acquisitio

    Reply

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