Buying Websites as an Investment Vehicle

I joined a Mr Money Mustache Meetup group. MMMMeetup I’ve cleverly called it. On the hike we completed last weekend, I spoke at length about building, buying and selling websites.

lynn-creek-canyon

The investors among the group perked up when I mentioned that websites trade at a P/E ratio of 2. That’s a deal an order of magnitude better than stocks or houses, which trade at ratios of between 20 and 30.

I realise there’s a good reason that websites trade at such a high discount rate; they’re inherently much riskier than owning land, labor or capital. These are some of the risk factors I’ve identified in a conversation with one of the MMMMeetup members. 

Things that go Wrong with a Website

  • A site with traffic based entirely on search might be using shady practices to get search ranking. A google algorithm change can wipe out search traffic. This can be a death sentence for a site, which is why vetting beforehand is so important.
  • Server can get hacked and will require repair. Repair can take hours to days to fix fully. This happens fairly frequently with WordPress installs.
  • A static site might start to slowly lose relevancy and will need fresh content to remain competitive in its space.
  • A competitor site might be launched, taking a portion of your traffic.
  • A site relying on time-sensitive information will become out of date (news sites, science&technology, health fads) and will need to be updated
  • New browsing technology may require a site rebuild. The best example of this is the smartphone trend toward sites that work on any size screen. A more recent example is the move to SHTML as a more important ranking factor.
Not every sudden change is negative.
  • A direct sale advertiser wants to place sponsored posts or custom ads, doubling your revenue for one or more months but requiring an account manager.
  • Your site explodes in popularity and requires a server move and/or content delivery system.
  • A new affiliate program needs to be integrated site-wide

Where to Buy Websites

I’ve identified these 3 marketplaces as the best at this time.
  • Flippa.com – This is the biggest website exchange as far as I know. Lots of cheap sites but there’s a lot of “pump and dump” type sites for sale – buyer beware and know how to do your due diligence on a site before buying.
  • EmpireFlippers.com I don’t know that much about it but a colleague of mine says its the only one she trusts. I think this was built around a book or something.
  • Quiet Light Brokerage – premium sites, usually costing $1 million and up. Well vetted by the brokerage beforehand, and you have to sign an NDA to get on their list. Not that many sites come through this pipeline.
Craigslist has sites for sale too, although it’s not a great fit because Craigs is local focused. I’ve only ever seen one decent site for sale on craigslist.

Considerations for Vetting a Website

  • Start with using SEMrush. Its stats are much more useful than compete.com or alexa, which are popular but I wouldn’t bother with at all. This gives an indication of a website’s potential for passive income through search engines. Although the subject matter of the site will have a huge effect on its income potential – finance related sites for example can push credit cards and startup business sites can push hosting services, which both pay a positively massive commission.
  • Check the website with mozrank, open site explorer and Google Pagerank. What you’re looking for are high quality links and a decent track record. 
  • Also look into their demographics. I have 2 popular sites, one which caters to males in their 20s and another primarily used by men and women over the age of 55. The site for 20 year olds hardly pays its server expenses, the 55+ site performs amazingly.

Fall and Winter Search Traffic Growth

I’ve been looking forward to following up on my Summertime search traffic growth from last August. Today I’ll be focusing mostly on site “B” because the others have been left to their own devices, as I don’t really write on them anymore.

Here’s a refresher of the old graph. Each data point is one week’s organic search traffic.

graph1

week of may 5: 2169
week of aug 18: 3115
growth amount: 946
growth per week: 59

And this is the chart with all the weeks since tacked on. Highlighted in yellow is the summertime period already covered in the previous graph.

site-b-fall-and-winter-growth

Remember, I’m throwing out the last datapoint which represents an incomplete week.

week of aug 18: 3115
week of feb 9: 6223
growth amount: 3108!
growth per week: 124

Growth rate in search has been blistering, more than doubling since last summer. Interesting to note that it’s mostly been plateaus, punctuated by huge boosts every couple of months. It’s been growing steadily since last December, probably due to some algorithm changes that happen to have worked in my favor.

 

Website Speed

The article Why Your Search Rankings Are Dropping (and 7 Ways to Fix It) reminded me how important website speed is. Thanks Tim for linking that! I won’t link to the article because it employs the greatest numbers of “neo-popups” that I have ever seen and I’m disgusted by it.

For website speed, I used W3 total cache for a long time, but it hasn’t worked well for me since I switched to multisite. For multi site I’ve been really happy with WP super cache which isn’t as powerful but is very easy to set up.

This was my site before I added any caching utility to it, tested with the excellent Pingdom speed test. I trust it much more than testing in my own browser, because I’ve got the entire site cached already. I can even test from a server in the state of Texas, where the bulk of my readers happen to be.

I think the correct interpretation of this test is that my main content loads quickly (score of 87/100) but my page size is way too big, loading ancillary content far too slowly (slower than 85% of tested websites.)

website-test-beforeLess than 5 minutes later, after a one-click WP Super Cache install and a 1-click test to make sure it’s working, here’s my latest speed test.

I had to manually add the settings to my htaccess because I locked that file down pretty securely after a recent server hack. I didn’t bother posting about it because I don’t want this site to turn into a  battered fileserver’s support group.

The new page is almost a full megabyte smaller, loads in a fraction of the time, and is now in the top 20 percentile rather than the bottom. My performance grade has actually shrunk, so perhaps it’s a completely worthless metric.

fgi-test-pingdom-after

Testing with this great tool is free! Go to http://tools.pingdom.com/fpt/ to test your own site and see how your numbers stack up to mine.

Link to free caching plugin: https://wordpress.org/plugins/wp-super-cache/

Writing Blogs for a Living

I blog for a living. Not for other people but exclusively for myself. I wrote my ass off for 8 months earning very little to build up enough of a content base to supply me with income to live off. It’s a significant barrier to get through which I think is why many prefer freelancing.

keyboard

I shove words into the ether constantly. I used to write more than one article a day but I’m now down to around 2 a week. Yesterday I wrote half a dozen real shitty ones on DollarEater.com. My best writing always starts shitty and then is endlessly edited. I find editing skills are far more important than writing skills.

I’m interested in hiring a writer to help out but have yet to find one that meets my criteria. I need someone who doesn’t need management, writes in the same style as I do, comes up with high quality original pictures to accompany posts, and will work for cheap enough that I can earn a profit from their articles. The perfect writer probably doesn’t exist so I shall continue to slog through myself.

The Writing Process

Most professional writers use a process called “freewriting” where they shove as much shit on a page as they can in a set amount of time, then wait for a day or longer, then brutally edit what they’ve produced. It’s like assembly lining your creative process. I wrote a guestpost on freewriting on BlogSexier. I’m hoping to read Steven King’s “On Writing” which talks about this plus other techniques.

Writing and Search Engine Optimization

Excellent writing is the most powerful tool – maybe the only tool – that SEO has left. I don’t seek out SEO education anymore. The important stuff seems to trickle through in the podcasts I follow – marketing over coffee & smart passive income. Much is learned first hand from my own experience running a bunch of different sites which is why I take any “pro advice” I hear with a grain.

I learned mainstream SEO when I worked an intern for 6 weeks at an online job board in 2010. It was a much different time. My job was just spamming press releases everywhere and it worked great. It was boring work and each day ran into the next. This way feels a lot better and it actually works a lot better long term.

I don’t employ anyone for my SEO because for me, SEO means words + pictures and see above for my problems with that. It can also mean social media which I mostly don’t like to do, and videos which are a lot of work but are totally worth it.

Cover picture related: it’s the 15$ logitech I’m typing on.

Making Facebook Friday a Little Bigger

Last week I hit my first post with over 1000 impressions. Hopefully I’ll hit this more regularly which will prove that Facebook Friday is working… I think.

Facebook Fridays are a nice break from the normal routine of writing, writing, writing interesting and search optimized content every day.

Now that the habit is established I think I’ll start integrating other social medias like twitter and reddit and pinterest to the regime. I signed up for Hootsuite today which I’m not entirely sure will be useful but maybe I will play around with it a little and see what I can discover from it.

First the ordinary facebook stuff.

  • Sep 13 Flood Prep
  • Sep 14 Moonshine
  • Sep 15 Vacuum Cleaner
  • Sep 16 Unstick Buckets
  • Sep 17 Moving Boxes
  • Sep 18 Bucket Dolly
  • Sep 19 Gamma Seal Lids

Then let’s post a couple things on Reddit without worrying about scheduling.

2 posts on reddit for sites in appropriate subreddit. I’ll repost something if it doesn’t go over well enough. (reddit is a huge traffic get if done properly, traffic quality has risen from poor to fair in recent years.)

And a nice crop of pictures on Pinterest while I’m at it. I tried crosslinking a Pin over to the facebook page with promises of daily updates!

No need to waste time on twitter… I have nothing clever to say 🙂

How about a nice cliche image related to increasing profits through engaging with social media?

Money-Twitter-Social-Media

Perfect.

 

Summertime Search Traffic Growth

These are notes for summertime traffic growth for the 3 blogging sites that have so far stood the test of time. I have other sites but these 3 are the most impressive statistic-wise.

I’m planning a 4th site themed similarly to these sites soon so this data will help me plan for future growth.

This is organic search traffic only, which is a minority segment of total traffic.

Time frame is from May 5 to Aug 24 2013 and is calculated by 7-day period. That’s 16 weeks total.

Note: For each chart, first and last data points shown are not used; they are incomplete weeks.

Site 1: Site “B”

graph1

week of may 5: 2169
week of aug 18: 3115
growth amount: 946
growth per week: 59

Interesting to note that SEMrush is showing this site losing search traffic over the last 2 months. No sign of that in the actual data….

Site 2: Site “G”

graph2

week of may 5: 20
week of aug 18: 203
growth amount: 183
growth per week: 11

Site 3: Site “J”

graph3

week of may 5: 62
week of aug 18: 218
growth amount: 156
growth per week: 10

Take-away

I didn’t realise Site B was growing so quickly. It had seemed to be plateauing compared with the other 2 sites, but by running the numbers the growth seems significant. It only looks like slower growth in the charts because the week-over-week growth represented as a percentage of pre-existing traffic has actually been much lower than the smaller sites. Babies grow the fastest, but that doesn’t mean they are the strongest.

Bonus Chart – Site “D”

Alright, here’s a bonus search volume chart for a mature site that is popular but rarely updated. This site is a loser in revenue but is kept up as an art piece. Interesting to note how stable the traffic volume is over time while fluctuating wildly week-to-week.

chart4

week of may 5: 414
week of aug 18: 363
growth amount: -51
growth per week: -3

Although it looks like this site is shrinking, the 16-week shrinkage of 51 seems to be just within the normal weekly fluctuation. To me this is a positive sign that a blog left to its own devices does not really shrink over time.

Search Growth Changes

My search engine traffic volume stopped growing on the day my server was hacked. No idea if the two are related, but looking at the chart it certainly looks suspicious.
search-graph

search-graph-lines

I had heard that there was a google Panda update around that time, but according to this Penguin&Panda calendar, that’s not correct. March 25 saw a penguin update, as well as July 18 – just a few days ago.

That July 18 Panda update actually looks like it may be a turning point but it’s probably too early to call.

search-graph-lines-jul18