Earlier this year, I did a post on Flipping Website Real Estate for Profit. The market for buying and selling websites is even hotter today. The Sitepoint marketplace and Digital Point marketplace are flowing with buyers and sellers. Buying a website, building it up, and selling it for more is a business model that works. However, I am seeing more pure blogs in the mix. If you are thinking about buying a blog, be careful. The metrics you use and value that you place on them must be different than a standard website.
I have read three poignant posts this week that have led me to write this post.
Devlounge – The Dangers of Buying a Blog: David gets right to the point â€“ expect to lose approximately 33% of the current traffic right away. Unique visitors are not eyeballs, they are readers. You have to value why those readers are visiting the site and if that readership can be maintained.
Portfolio.com – What’s Drudge Worth? – by way of ProBlogger.Net: Duff estimates that The Drudge Report should be valued between $10-20 million based on eyeballs, ad sales, and his momâ€™s opinion. However, he goes on to say that it is worth zilch if you cannot lock Matt Drudge into a long-term writing contract. I could not agree more.
Dosh Dosh – Building an Online Empire: Of the 16 website types Maki mentions that you can buy/sell, none of them were a pure blog. He lists a product review blog, but that type of site is more dependent on the product than the author.
There are many more helpful articles if you do a Google search. Or I also recommend reading related forum posts on WickedFire, Sitepoint or Digital Point.
Before buying a blog or any website, you need to know the following metrics:
- Unique visits per month
- Page views per month
- Feed subscriptions
- Posts per month
- Monthly Revenue
- Google PageRank
- Alexa rank
- Date established
Of course, you should ask for the trends and seasonality of these metrics. A snapshot in time or peaks can look great, but they can be pumped up and a single number does not tell the whole story.
Beside statistics, you should also have a clear understanding of the intellectual and technical property you are acquiring. You are not buying a domain. You are buying a website and everything that goes with it, including posts, comments, media, databases, customized themes, etc.
There is no cookie-cutter, rule of thumb for valuation, like $10 per post or 10x monthly revenues. Here is a swag bid estimate calculation that I use:
- Your valuation calculation should start by defining a financial benchmark. Estimate the monthly profit (preferred) or revenue per thousand unique visits or subscriber that you are achieving for your current blog properties.
- Then use that value and apply it to the same measure for the blog in questionâ€¦ less 50%. Remember David said 33%. I go more conservative when making financial estimations.
- Finally, my bid would be approximately 12 months of that estimated profit or 6 months of the estimated revenue. That is my personal valuation rule based on my desire to be rolling full speed with a site within a year.
For example, letâ€™s say your current blogs make $2 profit per thousand unique visits per month and the potential purchase has 20k uniques per month. Then I would expect to make $20 per month ($2 x 20 x 50%). My bid would be in the range of $200-250 (or $20 x 12).
In addition to making a good quantitative decision, you should also be prepared with an action plan to minimize readership erosion and to increase your ramp to profitability. Specifically, make sure you line up engaging writers and content to hit the ground running and get your promotional methods implemented.
Now I am off to see if there is anything on Sitepoint or Digital Point that catches my eye!