How to Buy a Profitable Website & Increase Its Value
The following is a post from Greg of EmpireFlippers. While I’ve talked in the past about brand new sites, EmpireFlippers are the experts when it comes to investing in sites that are already profitable or established.
Purchasing a website can be a big shortcut.
It cuts out a lot of the legwork that a niche site builder has to do. Instead of doing a bunch of keyword research, ordering content, and buying a good domain in the hopes of making money, you can jump right ahead to the making money part. When you buy a website, you already have profit coming in; so instead of guessing what will make money, you are in a position to optimize a website so it earns even more money.
Before you go out there thinking that you should just buy any website and start optimizing it, it is important to slow down and ask yourself what kind of skills you already have.
Here are some common skill sets that profitable niche site builders have:
- Writing great high quality content
- Researching keywords effectively
- Understanding both Grey Hat SEO (such as Private Blog Networks or PBNs) and White Hat SEO (such as guest posting)
- Employing Paid Traffic (typically on just one ad network, such as Google Adwords or Facebook’s advertising platform)
- Outsourcing effectively
Now, you might be just starting out, with none of these skills at your disposal. That is okay. You can still purchase a website and learn these skills.
If you are new and want to “shortcut” the process by buying a website that is already profitable, you will want to play it a little safer. For example, a website that depends on paid traffic will probably have a steeper learning curve than a content site reaping the rewards of free organic search engine traffic.
Regardless of your skills, the best time to see if a website can be improved is before you buy the actual website. This is the due diligence phase, and it is extremely important.
There are always low hanging fruit that don’t take much skill at all to change or to improve, and then there are the more advanced strategies.
We are going to cover a bit of both here, so you get a good idea of how to start looking at potential websites to purchase.
The Low-Hanging Fruit
Google Speed Test
The speed test is a fantastic first place to start when researching a potential website purchase. Most people in the SEO community realize the importance of site speed. The faster your site loads, the better experience it provides for the end user, and the more likely Google is to rank you over the competition.
It is a very simple test to use, and you know it is official because it is a speed test actually designed by Google itself — you get the information you need right from the horse’s mouth.
All you have to do is enter the domain of the website you want to test. I’m going to put in Empire Flippers and see how we do:
Hit the blue “ANALYZE” button and we are off to the races…
As you can see, we have some low hanging fruit ourselves in terms of speed, that we need to work on.
The greatest thing about this test is that it gives you both the mobile version and the desktop version for your website. Considering that right around 60% of internet surfers today are on mobile, it is incredibly important that your website is optimized for smartphones. As times move on, this will become even more important, as mobile traffic continues to overtake desktop traffic.
The other thing that makes deficiencies in speed so easy to fix is that the test literally tells what you need to fix to obtain a score of 100.
You can either learn how to fix it on your own through some clever Google searching, or just go to Upwork and pay someone $50-100 bucks to do it for you.
Most of these fixes are pretty simple to implement, and they can be an incredibly effective method of raising your rank in the organic search for your keywords.
Split Testing Affiliate Products
Split testing is a fundamental skill when it comes to increasing revenue. To do a split test, you test one aspect of your website or marketing funnel to see if the test converts people visiting your site into leads (i.e. potential customers) or paying customers at a higher rate than the control.
When it comes to split testing, the control is the way the website is already set up. The actual test is the variant from the way you already have things set up (the control) to see if it will work better.
You might have an Amazon affiliate article talking about dealing with beard itch, and while the article is a generally informative article, you include a link to a product on Amazon that is supposed to help with beard itch.
In this case, there is probably more than one product on Amazon related to this problem. So why not test more than one at once?
You can use a link rotator service such as Click Meter (which starts with a free plan) or one of the many link rotators that are out there on the internet.
Link rotators are exactly what they sound like.
If you have 1,000 searches a month coming towards that article, and 500 of the 1,000 visitors click on the link, the link rotator can send 50% of the traffic to the control Amazon product (the one that was originally linked to in the article) and 50% to the test Amazon product (the similar product that solves the same problem, but was not originally featured on the article).
At the end of the month, you can look in your Amazon back office and see which one sold more. You could get even more in-depth here by adding in two unique Amazon tracking links, which would show you not only which product was bought more, but also which person bought the most from Amazon during that 24 hour cookie window.
Amazon is just one place where you can do this kind of split test.
If you use any kind of Cost Per Action (CPA) offer from one of the many networks that are featured over on OfferVault.com, you can use this method to split test between offers, as well as to split test the exact same offer featured on several affiliate networks.
When you do, send 50% of the traffic to one network and 50% to the other network. The reason why two affiliate networks offering the exact same product might convert at such drastically different rates, is because there is more going on in the actual sales process than just the offer itself.
Every network has their own loading speeds, sales funnels, payment processing carts, and dozens of other moving parts that could seriously affect your conversions.
That is why testing, as always, is paramount.
Split Testing Ad Placements
If you are running an Adsense site or a similar monetization strategy, there are a few things you can do. First off, it could be worthwhile replacing Adsense with another display ad network such as Media.net.
Usually Adsense is going to outperform Media.net, but this is not always the case. Also, it is often effective to use both Media.net and Adsense in conjunction with each other.
Outside of split testing different content display networks, you should also be testing where your actual ads are placed on your website.
I am not going to go into too much detail here, as NicheSiteAzon has got you covered on this topic with their blog post concerning Adsense.
As their blog post lays out, you can dramatically grow your net income just by split testing. Split testing is not terribly difficult to do, and it can dramatically increase your monthly net profit.
The skills you will learn from training yourself in split testing will also aid you later on, should you ever decide to explore creating your own products or building sites that direct visitors to higher ticket items.
Ask for a Pay Raise
This is probably one of the simplest methods that affiliates who invest heavily in paid traffic use to increase their profit margins. Most website owners, bloggers, and SEOs never really think about doing this, though.
After all, margins from free traffic are always pretty high, and most of us rely on drawing free organic traffic to our websites.
While this will not work for Adsense and Amazon sites, it does work when you are using a smaller affiliate company or even an affiliate network that utilizes Affiliate Managers (AMs).
When you find yourself converting your traffic on a consistent basis, with little refunds and few complaints about the quality of your traffic from the AM, you’re in a good bargaining position.
Just reach out to your AM and ask them upfront if you can get a pay bump on the offer you are converting on.
While we can’t scale traffic as easily with organic traffic as we do with paid traffic, this is such an easy thing to do. For less than thirty minutes of your time, you can bring in some extra cash flow, with no real work needed on your part.
The Not-So-Low-Hanging Fruit
Now that all the easy stuff is out of the way, there are other things we can do to grow our site’s income into a total profit juggernaut.
None of these are exactly easy, and not all of them will work for every website. When you are doing your research on a potential site purchase, keep these ideas in mind. If you find the right site to implement them on, some of these tips could improve your revenue dramatically.
These tips will likely require you to learn new skills, but hey, that’s the reason why these aren’t low hanging fruit!
New Revenue Streams
When purchasing a website, consider whether or not there is any room to add a new kind of revenue stream to the website that could earn it even more money.
There are quite a few options available to you:
- Creating a product (it could be just an info product that solves a problem people have in the niche).
- Promoting items that are relevant to the site’s niche. (What items relevant to the main core niche of the website are not being promoted or reviewed to the website’s audience? This could both expand revenue and create some new high-quality content for your website.)
- Drop shipping certain items that you are currently selling as an affiliate.
- Evolving an Amazon affiliate site into an Amazon FBA website.
One of my favorites on this list is taking an Amazon affiliate site and evolving it into an Amazon FBA site.
Amazon FBA businesses ship products directly from the manufacturer to one of Amazon’s warehouses. The FBA stands for Fulfilled by Amazon, which means Amazon literally holds your merchandise, processes it, and ships it whenever someone buys it from your Amazon listing.
Some of the really great things about this kind of evolution:
- You still get to keep affiliate sales, as you just change your affiliate link to point to your Amazon FBA listing.
- Your profits will go up because now you are collecting a larger profit margin on each sale.
- Your market research is already done, as you have data in Amazon’s backoffice from affiliate sales that people are buying this type of product from you, before you invest any money into purchasing your own product.
- You can rank your Amazon FBA listing in the search engines much more easily than your website article since Amazon’s domain authority is so strong.
From Niche to Authority Site
If the website you are looking at is in a broader niche and doesn’t have a domain name like BestBlendersforVegans2016.com, then the website could be a prospect to become an authority site. For those who are unaware of what an authority site is, it is a much larger website than most niche sites and covers broader subjects, rather than, for example, the best blenders for vegans in 2016, which is a pretty specific niche.
Unlike most niche sites, authority sites are not exactly a passive endeavor. You will need to add content on a consistent basis, and you will also need to make sure the content is high quality.
There can be no cutting corners here, as the real product of the authority site is the content.
An authority site wants its visitors to come back again and again to review the content.
If you are willing to put in the work, an authority site can become a huge income-producing machine. They are able to expand outside of just a single traffic channel as well.
Instead of relying just on Google organic search traffic, these kinds of websites might be utilizing Facebook ads, Twitter sponsored tweets, or a huge Instagram following as their main sources of traffic.
Likewise, the potential to add new revenue streams is often much higher than it is with a niche site.
This is especially true if you are going to expand your site by promoting your own product. Since you are an authority, people respect you in the niche. Therefore, when you come out with your own product, you will have an audience that is primed to buy your product.
If you really want to grow an authority site, you will need to develop a good content team.
You could do it all yourself, but unless you are very passionate about the niche, I would not advise this. Creating content will take up most of your time, and it is difficult to have several different projects going at once if you are handling everything on the authority site.
Besides, if you end up selling the website later, it is better to have a team in place that can go with the sale — or at least some knowledgeable people who can create good written explanations of the site’s standard operating procedures, so that new hires can follow and learn.
Email List Building
An email list is not a viable solution for all websites.
Yet it constantly surprises me that despite every internet marketer with a marketing blog preaching that the money is in the list, some affiliates never build an email list for any of their niche sites.
As with taking a niche site to an authority site, there are only a few instances where you will want to add an email list.
This is not a quick win either. Depending on the site, you might have to wait a few months to see if the email list can really move the needle for your website. There is a lot that goes into building a successful email list, including split testing things such as:
- Email subject lines
- The message in the actual email
- The offers you send in the emails
- The time of day when you send the emails to get the most open rates
However, there is a lot of potential when it comes to building an email list.
For an Amazon site, you could be emailing out consumer guides, cheat sheets, and more in order to bring people back to your website.
With an Adsense site, for instance, you could be sending out a weekly content wrap up of interesting articles that would bring that audience back to the Adsense site.
When you start selling higher ticket items or information products and services, having an email list just makes sense. You are able to build on that sales funnel, sharing case studies, testimonials, and more sales copy.
While building an email list is not easy, it is certainly a worthwhile endeavor and will increase a website’s income.
Another advanced strategy to increase revenue is using paid traffic. As we have already mentioned, most websites simply rely on organic traffic. Organic traffic is mostly visitors who find your site through a Google search.
Paid traffic can speed up the process and scale up your entire operation in a hurry. Paid traffic comes from visitors who have clicked on a linked ad which you have paid to post on another site, such as Facebook.
One of the cool things about purchasing a proven money-making website is that you already know the website is converting traffic into customers.
Now you just need to find out what your average profit margins are per customer, and drive traffic to those pages that are proven to convert customers.
As long as your paid traffic advertising expenses are lower than your profit margin, you will be able to scale up your traffic source. Since paid traffic can scale very easily just by increasing your daily ad budget, even a small profit margin can become a lucrative win.
While there are several different ad networks out there, my personal favorite is Facebook advertising for a couple of reasons:
- They are incredibly targeted and can grow my organic social reach at the same time.
- The social traffic will help me get ranked on Google for all my site’s other pages as well.
I’m also a huge fan of AdEspresso.
If you decide to dive into paid traffic and you want to take advantage of everything that Facebook advertising offers, I highly recommend split testing and running all your campaigns through AdEspresso to help you optimize your campaigns fast.
New Organic Traffic Channel
Creating a new organic traffic channel is similar to building an email list. This might be one of the hardest of the “not so low hanging” fruits to implement.
Nevertheless, it can increase your bottom line significantly and open the doors to a whole new audience that you would never have had access to otherwise. Once it’s set up, the kind of traffic created by this system will start coming in more or less automatically.
If you are unfamiliar with what an organic traffic channel is, it is basically what NicheSiteAzon is teaching all the time. While NicheSiteAzon focuses on Google organic traffic, there are other organic channels available where traffic can start coming in regardless of what you do once it is set up.
This is usually done through social media and search engines. While social media at first is not a passive channel, it is still organic in the sense that when done right it does not cost any money to bring that traffic in.
Some social channels below can become very passive (such as Pinterest & Youtube).
It is not easy — you will have to learn new skills — but these are good skills to have to diversify your traffic and increase the actual revenue of the website.
There are a few places to grow these new channels; here are some of the most common:
- A Facebook Page
- Youtube – this one is especially lucrative because in addition to being social media, you can rank on Google with your videos while simultaneously ranking on Youtube’s search engine, which is the second largest search engine in the world.
Is Your Niche Visual? Try These Channels:
- Pinterest – a site that’s especially great for targeting women, as women tend to use Pinterest more often. Over time, interest can become a nice source of a swathe of free traffic, even if you are not posting as often or stop posting altogether.
- Instagram – you can create a big following here very fast, though it can be difficult to track since you cannot create many clickable links.
While growing a new channel of traffic comes with a learning curve, there are a lot of benefits. For one, if you want to sell the website at a profit, having diversified traffic will definitely add value to your website.
Relying on one traffic method can be pretty perilous. When a potential buyer sees that you have multiple sources of healthy traffic coming in, your site will become much more desirable.
The Waiting Game
After you have implemented all of the strategies discussed above, there is not much left to do other than play the waiting game.
Even if traffic and revenue doubled in the first month from applying all these changes, you still want to wait right around the three month mark at the very least, before selling the website for a higher multiple.
This is because your sales multiple is based off the average monthly net profit that the website makes. The longer you can show the increased earnings, the better your average profit will be, and the larger your multiple will be when you go to list the website for sale.
While the Waiting Game is playing out, there are a few things you can do to prepare for flipping the site:
- Track ALL expenses.
- Look for areas where you can automate the business.
- Cut back your personal workload, and remove yourself as a bottleneck for growth.
Finally, after all of your hard work, you will be ready to flip this site for a serious increase in cash.
Say you bought the website initially for $20k, and the website was roughly making $1,000 in net profit per month. If in a year, the website is making $3k a month before you list it, that website will sell for right around $60,000.
After broker fees (15% at Empire Flippers), this means you make $31,000 in net profit for the year.
That doesn’t even include all the extra monthly net profit earned via your improvements to the website.
If you become a master of tweaking websites for both the low-hanging fruit and the not-so-low-hanging fruit, you can create an incredibly viable business just by buying and flipping site after site.
Unlike real estate, stocks, or almost any other investment class out there, nothing can return such crazy ROI like buying and selling websites.
If this post has you fired up, feel free to check out our marketplace to see our current listings of profitable websites for sale.