I think investing in websites is going to take off over the next decade.
So much so, I've taken to writing a buying and selling websites guide with the fundamentals.
Look, I doubt it's even going to be recognised as an actual investment strategy like acquiring property, buying stocks, bonds and cryptocurrency. There are too many variables at play.
But it is a viable investment opportunity for those with digital marketing skills or even individuals who are willing to learn and develop.
Since I graduated in 2013, I've dedicated my spare time to digital marketing. While I love learning all aspects of digital, being a jack-of-all-trades isn't as attractive to employers as specialising in one discipline and doing it really well.
This is why I live, eat and breathe search engine optimisation. And this is why I acquired a website for £22,375 in May 2018, using my digital skills to reduce the investment risk.
Let's dive in to what happened. (Spoiler: It wasn't all good!)
Why Did I Buy This Website?
Let's address the elephant in the room.
Why on earth would a sane person drop £22,375 on a digital property?
Here's a few reasons I can think of:
- Revenue: First and foremost, the blog was already generating £816 per month;
- Alignment with my interests: The website is in the technology niche and the content consists of product reviews. I love gadgets;
- Professional background: At the time I was working for a digital marketing agency. This is where I learned key web development skills and developed my digital marketing knowledge. I felt comfortable investing in something I was familiar with;
- Risk / reward: I had been looking at buying websites since 2008 (when I started University). Sometimes in life you need to take a risk and I am a risk taker.
Now that we've determined why. Let's look at the return on investment and financials.
Website Investing ROI
The return on investment that you get with digital properties is better than anything else I can think of. Except maybe popcorn at cinemas.
Not only is the ROI good, but the investment is safe if you know what you are doing.
Let's break down an example.
Website ROI example
Let’s say you want to buy a website. That website is making £1,500 per month.
In buying and selling websites, the average multiplier is 25x the revenue. On a marketplace, this website would be listed for £37,500.
So you buy the website for £37,500 that’s making £1,500 per month….You’re now making 4% return on your investment monthly. Or 48% return on your investment yearly.
But this is not taking into account the expenses of outsourcing tasks, marketing tools and web related (domain, hosting, plugins and themes).
Information About The Website I Bought
Here's more information about the site in question.
It was this listing summary, a video chat with the seller and discussions with the EmpireFlippers team that led to me acquiring this digital property.
But what work would be involved to sustain and grow the revenue?
Let's take a look at my approaches and marketing gameplan.
This was a project I was undertaking in my own time, alongside having a full-time job.
As such, I would have to concentrate my time to the marketing gameplan on the most effective areas in order to make the biggest difference to the bottom line.
Here's a few approaches I used.
The Pareto Principle (80/20)
Originally, the Pareto Principle referred to the observation that 80% of Italy's wealth belonged to only 20% of the population.
I came across this theory in the book 80/20 Sales & Marketing by Perry Marshall (and foreword by Richard Koch), highly recommended.
Anyway, using Google Analytics, I quickly identified that 20% of my website posts were generating 80% (or more of the revenue). It then made sense to laser focus my efforts on this handful of posts.
And it worked a charm. These are the pages that made the most money because they already dominated the SERPs (Search Engine Result Pages).
Now onto how I got help.
Outsource Where Possible
Taking over a digital property like this was going to be time consuming. Essentially, I would be doing all the tasks that a small marketing team would.
Using Freelancer websites such as Fiverr, PeoplePerHour and Upwork I would outsource the tasks that were repetitive and long winded.
This would then be noted as a website expense and recorded in the profit and loss figures.
Test & Measure
It's fairly simple, test it out over a predetermined amount of time and measure the success.
Once you have tested and measured, you can continue to enhance and optimise.
The Marketing Gameplan
This was the first time I had ever acquired my own web property generating consistent revenues and it needed a coherent, structured marketing strategy.
Here are a few elements of my gameplan that led to success when selling the site.
Increasing traffic via the organic channel was something I was confident I could improve. And I did.
When I acquired the website in May 2018, it was generating 30,000 sessions on average per month. By 3 months, I was able to increase this by 15% and 6 months 36% increase.
Finally, when the asset was sold, it was generating 51,610 page views which represents a 62% increase from when I bought it.
This is how it looked in a snapshot.
When I Bought
3 Months Later
6 Months Later
When I Sold
Page Views: 32,056
Page Views: 36,864
Page Views: 43,596
Page Views: 51,610
Unique Users: 23,864
Unique Users: 27,205
Unique Users: 31,978
Unique Users: 38,660
The SEO strategy entailed the following:
- Link building
- Keyword build out and comprehensive keyword research (this made everything that followed easier)
- On-page SEO (original site was lacking)
- Site changes which led to increased speeds (SEO is crucial)
- Content creation with rich SEO tactics
- Other SEO tips I've written about before.
So I don't risk boring some readers, I won't go into too much detail about the strategies. I'll reveal more in my newsletter instead.
Next, let's look at the branding potential.
Merchandising, Design & Branding Overhaul
One of the main reasons I purchased the website was the branding potential.
It was clear that the property could do with a bit of a brand renovation and design work.
Here's the before and after. (The images are clickable and will expand to full size)
There were a lot of changes over the course of 10 months of ownership , here are some of the key ones:
- New theme installation - Lightweight and optimised for page speed and schema. This decreased page loading times from 6 seconds to 2.5 seconds on average.
- Logo redesign - It makes a difference. Believe it or not, the same logo cost me $5 plus fees on Fiverr.
- New brand identity and colour scheme - Keeping all marketing materials the same colour. Consistency is key.
Using Google Analytics, I was able to segment my audience data by geographic location. The below is for illustrative purposes only and you can find the report in the Audience > Geo > Location dashboard.
After a while, I noticed that I was receiving clicks from Amazon Canada, Spain, France, Germany and UK yet I was only monetising Amazon USA.
So using GeniusLink a link localisation tool which notified me where the clicks were coming from I was able to increase monthly revenue by 20% overnight.
I still use this tool on a day-to-day basis on my other affiliate sites.
Every digital marketer will have a range of tools they use on a daily basis. Marketing tools attributed massively to the success of this site.
I will make a point to do an expanded post on this, as it deserves a post of its own accord. Also, the tools will be mentioned in detail in my newsletter (I've never revealed this before).
In the context of this post, there were few tools that have high monthly expenses so that would've been taken into account in the profit and loss figures.
It was my intention to create the content and rewrite existing content myself.
Using a solid foundation of keyword research and personal experience with some of the products, I hashed out a decent content strategy for 3 months at a time.
Full disclosure, the was the most difficult part for me as it was difficult to balance with a job and a new baby daughter. This led to me outsourcing content on a few occasions. My advice is to create a well structured brief on what you expect if you want the output quality to be decent.
Conclusion & Key Takeaways
Passive Income Doesn't Exist
If it sounds to be good to be true, it usually is.
Websites are often sold on Empire Flippers and Flippa with the tag "passive income" and that they only require 2 hours to maintain per week.
While I'm sure sites like that exist, in the world of SEO, if you neglect a website for too long it will degrade and you will lose authority. Learn from my experience, you will lose traffic and revenue this way.
As a new dad and still working full-time, I found it difficult to consistently update the website. As a result, I lost some traffic potential. This was OK to me because it was an experiment and a side hustle.
Which leads me onto my key takeaway number 1.
Key Takeaway #1
Keep it Consistent
Even if it's 1 piece of content a month, updating plugins, revamping existing content and link outreach.
This is enough to signal to Google that you are an authority niche site with fresh updates and authentic brand activity.
It's easy to lose motivation. Keep going.
Amazon Affiliates Risk
For those that don't know - Amazon's market share is 38%. The #2 retailer is Walmart with 5%. Amazon is the most profitable option for affiliate marketing like this.
Straight up, with my website I was Amazon's slave. All of my eggs were in this basket.
They also have a history of changing commission rates drastically and have done so as recently as April 21st 2020.
Anyway, this leads me onto key takeaway number 2.
Key Takeaway #2
If you're getting a lot of traffic, consider monetisation via Google Adsense, other affiliate networks and dropshipping.
This is the biggest risk with website investing. You buy an asset worth £30k based on historic affiliate revenue
Diversify. Find a new niche relevant affiliate network!
Ending The Experiment
While my friends were putting down deposits on houses and buying flashy new cars, there I was paying £22,375 for a web domain and 30 articles worth of content.
I reduced the risk of the investment by using digital skills and knowledge I had been developing since 2013. I had a pretty solid marketing gameplan but what was the end game?
This was an experiment. I loved it but I wasn't going to run this website forever.
Key Takeaway #3
Have An Exit Plan
Similar to other investments, you need to know when you're going to call it quits.
Is the plan to grow the website traffic by 20% or double revenue in 6 months then flip it? Or do you need to build an email list?
Create an exit plan or exit strategy and stick to it.
Wrap Up & Discussion
I hope my guide has helped you to understand the pros and cons of website acquisitions.
If you're already involved in flipping websites, perhaps you will have gained some new knowledge (what was it?)
Now I'd like to turn it over to you:
What was your favourite tip or piece of information from this guide?
Or maybe you have an excellent piece of content that you think I should add.
Either way, let me know by leaving a comment below.