Case Study: Anatomy of a $16k Website Sale
If you’re a sucker for nuts-and-bolts posts that include the gory details and insider stuff that goes on behind building and selling a profitable website for a great ROI you’re going to love this post.
I’ve been watching the guys over at NoHatDigital.com make some really interesting moves the last few months. When Greg reached out to offer an in-depth case study on their recent sale with us I just had to take him up on the offer!
Definitely read the post as there’s a ton of value there, but when you’re done go back and check out what these cats are doing with their Internships, Training Courses, and Apprenticeships. It’s like our apprentice program on a larger scale and I LOVE what they’re up to with this.
Their programs offer everything from pay-to-play training courses to paying you to come work for them. They cover new/improved keyword research strategies for 2014, how to add the right kinds of content, and building Private Blog Networks (PBN’s) from scratch.
They’re even bringing a ton of people together down in Mexico to do some amazing things together….definitely worth checking out!
Alright, here’s the post from Greg:
Start a site, rank quickly in Google, and then sell within six months for profit of $1,000 per page of content. Almost sounds a bit pre-2012 in the old “Exact Match Domain/Made For Adsense” days.
This is an account of the start-to-finish process of launching a site, ranking it, making money from the traffic, and then flipping it in 2014.
We’re going to break down some specifics of the site itself, along with the sale process, lessons learned, what the sale means to our business, and hopefully what it will mean to yours!
It all started when we launched our site in late December 2013, along with a batch of three related sites, targeting different aspects of the Automotive niche. We were familiar with the niche, as we had another solid-earning authority site at the time. Our goal was to see if we could rank small 15-25 page niche sites and then flip them for 16-20x at the 6-9 month mark.
We already had a system and process for launching sites that enabled us to create and link build dozens of these sites per month, so the experiment would test if launch-rank-flip was a viable option for the way we built sites at the time.
Our niche site model:
When this batch of automotive sites was launched, we were focused on building niche sites to a fairly set structure (we’ve since shifted our focus to building bigger authority sites). The bulk of our strategy still remains.
Key elements of our niche sites
- Keyword research following an in-house process must show five “Definite Wins” in the SERP for the main keywords. By Definite Wins, we mean five sites that we believe we could beat following our SERP analysis criteria
- Predicted earnings of more than $1,000 per month for the main keywords combined
- Sites are usually in the range of 7,500-20,000 words of content
- Content all written by native English speakers (high quality)
- Most have 3-5 main target pages, each targeting multiple keywords. These pages receive the majority of links we build
- Link building almost exclusively done via Private Blog Network (PBN) links, with some Wikipedia links following a successful strategy we’d developed for securing those links in 2013
- Based on our keyword research model, the main money pages on the sites will usually need 15-20 PBN links for the main keywords to rank (long tail keywords take far less and tend to rank with only a handful of links, sometimes none)
- Sites set up with an out-of-the-box theme (no customization)
- A simple custom header image (only added once a site starts to rank in Google)
- No social media setup, not even Google+
Basically, our niche sites are very plain and our core strategies are thorough keyword research, excellent on-page SEO, and link building with PBN links. We don’t waste time messing around to make a site look “pretty,” as there’s no point having a pretty site if there’s no traffic to see it!
Building simple sites reduces the time and financial cost of producing them, whilst offering plenty of upsides for buyers looking to improve on a site they purchase.
Although we knew the niche site model above worked for ranking in Google and making money (primarily through Adsense), we were unsure if our sites were going to be attractive for buyers. We needed to identify our Minimum Viable Product. Specifically, we wanted to answer the following questions:
- Did we need to do any link building outside of PBN links?
- Would using basic, out-of-the-box themes (simple sites) put off buyers?
- Was diversifying our traffic sources outside of Google necessary?
- Were social media accounts necessary, or at least, was social media traffic necessary?
- Could we flip a site in 6-9 months or would buyers require a longer earnings history?
- Was 16-20x earnings realistic for a young, simple niche site?
As it turned out, all our questions were answered and we learned A LOT in going through the process of selling a site for the first time.
Let’s dive into the details
- Niche: Automotive
- Site launched: 15th December 2013
- Monetization: Google Adsense (potential for lead gen or direct advertising sales)
- Total earnings (USD): $4810.46
- Listed on marketplace: 12th May
- Sale price agreed: 11th June
- Transaction completed: 25th June
Rankings and Traffic:
Below: Ranking in Google for the main keyword, a 3600 local monthly searches term. Page 1 around 6 weeks after launch, Position 2 by the 8 week mark, and Position 1 just after three months.
Below: Traffic to the site up to the point of transfer.
The site started earning from Google traffic in early February (earnings in January were from traffic through a link on another site we held at the time). The site was monetized through Google Adsense 100%, though there was (and still is) certainly scope for direct advertising sales and selling leads to companies.
Below: Total earnings to point of transfer.
The site went live on the Empire Flippers marketplace on May 12.
A note to those unfamiliar with the Empire Flippers sale process: a basic overview of the site is provided in the marketplace, along with the price of the site. In order to find out the domain and more specific detail, buyers pay a 5% refundable deposit.
I love this aspect of the Empire Flippers model for a number of reasons, but definitely because it protects both the buyer and seller from time-wasters and people that are snooping around for sites they can copy or harm.
In less than four days after the listing went live, we had some interest!
Let’s see how things unfolded!
I provided the information along with answering the questions. In the end, the buyer pulled out (see below)
10 days after depositor number one, we had a second (the eventual buyer of the site)
10 days later, a third depositor showed interest:
Less than 30 days after the site was listed, we had an offer!
I found it interesting how the negotiations on price unfolded, because there are some fantastic lessons to be learned.
Buyer’s response (some detail omitted to protect the buyers interest):
My response to accept the offer:
A sale is never over until it’s over… The buyer had not made payment after a few days, so I decide to ask for an update.
Great to see Joe come in at this point (excellent customer service).
A few days before this point, the domain and hosting transfer was taking place, which involved some back and forth between the buyer, Empire Flippers staff, and myself to go through the transfer process. The Empire Flippers staff handled the entire transfer very promptly and efficiently—It could not have been a smoother process.
Now for some reflection and lessons learned…
Was the sale price fair value for the site?
There’s a fantastic saying in business that goes like this: “If it’s a good deal for you, and a good deal for me, then it’s a good deal.”
When it comes to selling online property, that saying holds true.
There needs to be enough upside for the buyer, whilst the seller needs to receive a fair multiple on the earnings history.
For our site, based on the rolling 30-day average earnings from the previous 90 days, the 30-day average earnings were $891.17 at the time we received the first offer of $15,000. This put the valuation at $17,823.4 (based on 20x earnings).
I didn’t want to be an ass during negotiations and refuse to lower the price, so my counter offer was $17,500 (a slight discount on the $17.8k value) and what I still believe would have been a fair price for both parties. I felt we’d end up at $16.5k, but in the end it was $16k.
Although the last 30 days of revenue had been stronger, the valuation was being held back by a dip in earnings during April and into May (see below).
Should we sell or hold out for more?
We knew that the site would continue to earn at the June revenue level of $1,000+ per month and that $16k was a great price for the site based on the upward movement in rankings, traffic, and earnings. At the time, there were a number of keywords still yet to claim top positions in Google and room for the site to be built out further.
The issue we were facing, however, was that the valuation is determined over a 90-day period, so the earnings dip in April was bringing down the valuation. We’re not sure why the dip took place in April, but it was probably due to an inexplicable temporary drop in Google AdWords advertiser activity. CPC and CTR were both down in April.
3 ways we could have increased the site value
Wait it out: We could have held off on selling for 45-60 days so that the April earnings dip fell out of the 90-day valuation period. The reason we didn’t wait is because this was a test case. We weren’t in need of the extra money from the site sale itself, but we were in a hurry to validate our business model.
We could churn out a ton of sites in a 60-day period, so there was an opportunity cost to us waiting any longer. We needed to validate the build-rank-flip model with a successful sale, even if it was at 16x instead of 20x. Negotiating hard on price, or waiting for the price to rise for the sake of a few extra thousand, just didn’t make sense for our circumstances.
Add more content: Again, we didn’t do this because we wanted to find out if basic sites could be flipped at around 20x. However, we could have certainly piled on more content as soon as we knew the site was a winner, which was as early as mid February (plenty of time for the added content to bring in new traffic and revenue).
Adding content to sites is a great way to boost traffic, earnings, and ultimately the sale price. If it is done well enough in advance (say four months), it’s highly likely that the additional content added will be paid for in additional traffic and earnings it generates before the site sells. The boost to sale price is therefore pure profit on that content.
Add another traffic source: The core of our site building strategy has focused on advanced keyword research, high-quality on-page SEO, and link building sites with a Private Blog Network. Social media would have been an option to add to the site to bring more traffic.
The buyer alluded to a concern that traffic from Google would drop off a short time after buying the site (it actually increased as we thought it would), so adding an additional traffic source would have helped to offset that concern.
Link Building Notes:
For the PBN link builders reading this and wondering how many links we built to the site, the number was 32 PBN links in total.
PBN link breakdown per month:
13 to home page (not targeting a keyword)
10 to the main page on the site (the page referenced earlier in the post with the rankings graph)
9 distributed between three other key pages on the site (which also held rankings high in Google)
We commonly link build in similar percentages to the above, with around 30-40% going to the homepage, 30% to the main target page on the site, and the remainder being spread throughout other pages. We’ve found that this strategy helps bring a number of pages up in the SERPs and increase the overall authority of the site.
4 Reasons to Build Sites in Batches
We always build out new sites in batches and teach the same to our NoHatDigital.com Private Training Course and Internship participants because there are a number of advantages, including:
1. Improved efficiency. Being able to work on common tasks across the four sites together can improve your efficiency. You will almost certainly perform the same task quicker when doing it a second, third, and fourth time in quick succession. Saving time is crucial, particularly when you are working part-time online.
2. Easier content creation or outsourcing. Having related sites allows you to outsource any content creation to one writer, which will usually drive the cost down and again improve efficiency as you’re dealing with only one person. If you’re producing the content yourself, you can get in the groove of writing content from within the same niche, which is usually more productive.
3. Sites can be link-built together. We commonly link build two different money sites from one PBN article. This cuts the financial and time costs of each link in half.
4. It reduces risk. A batch of four sites can be two sets of two related sites. Or, if it’s a niche you are familiar with, you can go “all in” with four sites from a related niche—or even the same niche if the keyword diversity allows for it.
In any batch of four sites that you build, provided that you know the basics of keyword research, it’s highly likely that you’ll get one star performer (like the one we have featured here), 1-2 okay sites, and 1-2 losers. That’s a heck of a lot better than pouring four sites’ worth of effort into one giant site, only to realize six months down the track that you’re riding a loser.
Going through the process of selling a site on Empire Flippers validated our perception that site flipping as a business model is viable and worth pursuing at scale.
The Empire Flippers marketplace has added a professional, systemized, and well-managed platform to connect sellers with buyers. Since selling our site, we have included site flip income in our company operating model as a core revenue stream, and we look forward to offering more sites for sale soon!
Please let us know any thoughts, questions or comments below—we’d love to hear from you!