Website valuation trends series continued from part 1..
This post is a continuation from our last post If you haven’t read it go back and read it first 🙂
It’s been about 2 weeks since we wrote our last post, today we got a chance to look at Flippa again for recently concluded deals in the website section.This post will focus more on the content based websites, next one will be on E-commerce.
What do we see in the recent Website valuation trends
Last time we saw that most websites are being sold at monthly earnings, rather than yearly earnings as in the case with stocks.Although this might have surprised many money managers, this wasn’t quite a surprise for most Flippers.
This time, we try to see if Investors are willing to pay a premium for the nature of the website. In the world of stocks, it’s often the case that some sectors like consumer discretionary’s and Technology trade higher than the more defensive sectors like Utilities and Telecom. Is it the same with Websites?.Last time we had refined our search using Adsense verified earnings.This time, we took the last 10 without any filtering metric.
To be honest, the valuations depends more on the revenue stream it uses rather than the sector it operates in. It is quite evident from the table above that flippers are willing to pay more for pure Adsense earnings than anything else.This is because, 1)It is very difficult to cheat google with fake clicks & views & 2) Adsense pays less that many other advertising programs on the internet. Hence, many Internet marketing guru’s preferred to buy a website with verified Adsense earnings and then monetize the content with other affiliate programs. Adsense acts as a validation of sorts for the industry.
Having said that, We also do realize that the Adsense acid test is just one of the factors. There are others which affect Website valuation trends, Most of them are listed below.
1)Organic Traffic: How much traffic does the website get from google. This is becoming that one metric, everyone looks at. we are seeing increasing evidence of website owners buying traffic from sites like Fiverr to boost Alexa rankings. which in our view doesn’t make any difference to the overall valuations? That’s because once you stop paying for the gig, the traffic just stops.Moreover, the majority of the traffic you get would never be targetted.Often in the past, people have shared their analytics report, which shows a majority of such traffic comes from countries like Kenya, India, Russian territories and other such places where the advertisers are not even willing to spend a dime. Google Adsense pays really low for clicks and views from these countries. To conclude, if you are looking to buy a content driven website, make sure the organic traffic is at least 70% if not more.
2)Monthly Uniques: It is good to look at Uniques in relation to the returning viewers. This is especially true for small website buyers.Since a lot of small website owners ask their friends and family to keep the homepage open. Which should disappear as soon as you buy the site. Some smart Ass owners have also resorted to using bots, these bots come from different IP address, a lot of it from Russia. There are also ones which you can’t control, mostly spam visits.Below is one such example of a spam visit.
If the map looks something like this for a content site, you know you are dealing with a Scamster. (possibly a new site too).Although such maps are ok for Drop shipping sites etc.But for a Content driven site, it’s a strict no-no.
3) Years old: Simplest of all variables, Look at websites that have been operating for a period of time, rather than relatively new ones. In the featured table, it is quite evident the sites which are older, do command the highest premium. This is because it becomes an expensive affair to pay for traffic in the long run.Older sites do tend to have more subscribers too, these work as guaranteed traffic after a sale.
Apart from that, the domain Name, the niche that the website operates in also command a value. Most of the Internet guru’s prefer to buy websites that haven’t been optimized for SEO.It makes sense as the ones which are fully optimized for SEO, can’t be Flipped easily. In short you can’t earn more from the property than it’s already earning without adding fresh content.
In coming weeks, We intend to write about valuations of E-commerce sites and other referral based websites, we also intend to write about Flipping, and how it’s done by industry professionals.
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To be continued…. part 3 of the Website valuation trends