Investors, Aggregators, and Content Sites: The Upcoming Gold Rush
Across the board, online business models are rising in value as investable digital assets. Some business models, like Amazon fulfilled by Amazon (FBA), have risen sharply and created a buying spree within the online business mergers and acquisitions (M&A) market.
Now that these investors are focused on the returns from the digital assets they’ve invested in, a growing interest in assets outside of FBA has been created, namely in content-based businesses.
With this increased demand, it’s not surprising that the average value of content sites on our marketplace is up nearly 30% from last year alone.
Why do investors want content sites? Content-based businesses give them leverage, a captive audience, and brand expansion opportunities. These qualities make content sites part of a popular acquisition-growth strategy that more and more online business portfolio owners are employing to grow their portfolios.
As a result, we may be looking at a potential gold rush to capture content-based businesses within the M&A space, which means content site owners have a golden opportunity. We’re going to dig into who wants these sites, why it’s happening, and what content-based business owners can do to make sure their site catches the eye of investors.
However, to help you understand what the market situation currently is for content sites, let’s take a look at how much your content site has grown in value over the last year, likely without you even knowing it.
The Growth of Content Site Assets
Large digital asset portfolio builders, brand aggregators, and high net worth individuals (HNWIs) love content sites because they’re one of the most passive online business models, they’re quick to scale, and they don’t require as much expertise as other business models, like SaaS. It’s these qualities that allow large investors to not just acquire one content site, but to build a portfolio of multiple sites.
This portfolio-building has already been happening, as you can see from the number of sites being sold on our marketplace:
Looking at this data, you might be wondering what a multiple is.
A multiple is a valuation figure we produce, based on a number of factors, to set a dollar amount for a business. This value is multiplied by your monthly net profits to arrive at your sale price. For example, a content site making $20,000 a month in the first six months of 2020 would sell for around 29 times that profit, which would be a sale price of $580,000. However, if the site is still making $20,000 in monthly profit right now, we’d be looking at around 37 times that profit, giving a potential sale price of $740,000.
Yes, acquirers of digital assets have been investing in content sites because of their rate of growth in value, but it’s because of the leveraging qualities that content sites have that other business models don’t that has influenced large acquirers to employ an interesting acquisition-based growth strategy for their portfolios.
Acquiring Assets to Grow Other Assets
Back to Amazon FBA. There’s been huge growth in this segment of the digital asset market, with big-money investors acquiring multiple stores to build mammoth portfolios and take a share of Amazon.
However, with this surge in popularity comes competition in the online commerce market.
As more and more big brands are being acquired, and as new, competing FBA businesses are being created every day, investors sitting with these FBA assets are having to look for scaling opportunities to secure their investment.
To scale these businesses and build strong brands, investors have to grow the individual audience of the brands.
As you might have experienced with your own business, it isn’t the easiest of tasks to build and grow a loyal audience. This is why some of these large FBA owners started to think about whether they could buy an already-established audience.
Enter content sites.
The Media Company Strategy
The content-based business model acts like an online media company, as both are built to promote brands or provide useful information about a niche.
It’s this promotional platform, which is independent of Amazon, that FBA brands are lacking. Most of them do all of their marketing on Amazon and are stuck competing on ad pricing and product rankings within the Amazon marketplace.
Moreover, on Amazon, the FBA brand has an audience they cannot connect with, as Amazon controls the customer data.
When an FBA brand has its own external media site, it gets direct contact with an audience of buyers of the products the brand sells, and they are able to use the customer data for marketing purposes. A media site serves as an ideal promotion platform for existing products and a launch pad for new products, so it offers another avenue for sales.
While an owner of an FBA store could start their own mini media company by creating a content site from scratch, they can, and would much prefer to skip the build-up phase and acquire an already established site.
However, it’s not just FBA aggregators that we’re seeing acquire content sites to grow a brand audience; we’re also seeing large content-based businesses acquiring smaller content sites using the same strategy in a slightly different context.
For example, earlier this year, Hubspot acquired the Hustle and Mailchimp acquired Chatitive.
Why? For the same reason FBA aggregators are: to expand their audience. For example, a large tech news site may cover a wide range of topics, but they notice a smaller tech news site focusing on mobile phones. They see that because the site is so focused, they actually create better content and, as a result, have an audience that trusts them as the information source for mobiles. The larger site then acquires this site with it’s content, but also it’s loyal audience, so they can absorb that audience into their brand.
This acquisition strategy is a move from large content sites to take over their market; while doing so, they can even acquire smaller sites in the same niche to eliminate competition.
This new phase in the digital assets world is still in its early stages, but we’re seeing a lot of activity from big-money investors and brand aggregators acquiring content sites and others strategizing acquisitions as part of their portfolio growth plan. This tells us that we’re looking at a new phase in digital asset investing and online business, as entrepreneurs can build and design content sites specifically for these brand aggregators and sell them for a huge profit.
To clarify, this is mainly happening with content sites valued at the 6-figure and above range. If you want to see what your content site is worth, you can check out our free valuation tool.
If you have a high-quality content site with a high DR, tons of referral domains, huge authority, and unbeatable content, then your site could catch the attention of these huge investors; that is, if you know how to set up your site for this type of acquisition.
What Aggregators are Looking for
Brand aggregators are looking for a passive media company to promote their products so they don’t have to build their own traffic channels from scratch.
Their aim is to gain control of their customer data in a way that they can’t on Amazon, which results in a disconnect between the brand and the customer, as the products are sold and promoted on the Amazon marketplace and Amazon handles the majority of customer service, so the customer never comes in contact with the brand directly.
Having a media company for the brand off of Amazon allows the seller to develop that direct connection with their audience. Because these FBA brands are very big, they can leverage high-authority content sites to expand their brand reach and outplay the competition.
The brand aggregator will be looking at authority metrics like your DR, backlink profile, and the quality of your content. They want a stable content site that is white-hat with plenty of referral domains, as they don’t want to have to worry about Google penalties or big impacts from Google updates. The site needs to have a solid SEO structure that secures the earnings (i.e., the assets’ income).
The quality of the sites’ content also ties into this, as content quality is becoming an increasingly important ranking factor. If you have expert-written content, then you’re more likely to have authority in the niche and content that is harder to outrank.
If the idea of selling your content site to a brand aggregator intrigues you, then fear not if you don’t feel like you fit the bill quite yet. There are things you can do to position your site in the firing line of these big acquirers.
How You Can Start to Position Your Site as a Media Company for a Brand
You want to start thinking of your content site as not just a site that makes money from content, but as a media company.
There are certain elements that media companies have that you can use to start to build and evolve your site:
An Engaged Email List
Email marketing is the most important form of traffic on the internet. It’s the only channel that allows you, as the owner of the email list, to have direct access to the customer data; you can see the customer contact information.
As an advertising channel, email doesn’t leave you as vulnerable to the “rules of the game” as other channels, like Facebook. For example, with Facebook, you could have your account banned and lose 100% of your traffic from that channel instantly. With email, that isn’t the case. Remember, this is a good selling point for your business.
Another benefit of email is that while the amount of competition in email marketing has made emails seem somewhat impersonal, you still have more opportunities to make your marketing more personal through your messaging than you can through other channels, like Facebook and Google, as you’re sending messages directly to the audience member’s inbox instead of on their news feed, where they’re scrolling through without paying attention.
The act of building an email list allows you to create a more personalized audience. While with Facebook advertising you can send retargeted ads to an audience of visitors of your site, an email list is an audience of people who have actively given you their personal information, making it a more effective strategy when building a brand following.
There’s also many marketing opportunities available with your own email list.
When you have a big enough list, you can create segments of your audience. This is ideal for making your marketing more targeted, as you can send tailored content to specific audiences.
There are a few strategies you can employ to build an email list.
It starts with having a simple sign-up form on key places of your website with a couple of sentences outlining what benefits the visitor will get from being on your email list. However, one of the most effective ways to catch email subscribers is to offer a freebie in exchange for the visitors’ email subscription. This can be in the form of a helpful guide or free eBook related to your niche.
A good way to create segmented lists once your email subscriber rate is growing is to create freebies—or lead magnets as they’re commonly called—specific to the topics your content covers. Having these lead magnets increases your chances of collecting emails, and with your segmented lists, you can build more targeted email automation sequences.
To keep your email list engaged, you should be sending emails that give value to your audience regularly, at least once per week or bi-weekly. The more you give, the more your list will open your emails and it will improve the relationship with your audience.
Building this engaged email audience will stand you in good stead in the future when brand aggregators are eyeing up your site.
As we mentioned before, brand aggregators have high standards for content, not just for how it helps secure the business’ earnings, but because your content is ultimately going to represent their brand.
To get the best quality content, start working with experts in the niche you’re in to produce your content. For example, if you have a pet website focused on cats, start working with animal behaviourists to create content that will be helpful for your audience, build your authority, and differentiate yourself in the niche.
You can have experts produce informational content, and you can involve them in product reviews for your money content. Getting reviews from professionals in the space will separate you from your competitors, as you’re providing the best possible content on the topics.
While this may initially be costly, the return on investment you’ll see in your profits from a higher content conversion rate and reader engagement, plus your exit reward when it comes time to sell your business, will be well worth it.
As an added bonus, you save time and effort on editing and providing the research for non-expert writers, as experts already know the niche and what to include in the content.
As for SEO benefits, quality content helps secure your site against Google updates, as content quality is an important ranking factor and helps your brand increase its reputation, as you’re providing a lot more value to your audience.
However, it isn’t just the Google search engine you want to be thinking about when generating traffic for your media company.
Multiple Traffic Channels
Diversifying your traffic channels is a great way to further secure your business’ earnings.
If 90%+ of your traffic comes from Google, all it takes is a Google update for 90% of your business to be impacted; we’ve seen the effects this has on profits for businesses that are largely reliant on Google for traffic.
If you haven’t done so already, you can start to build out new traffic sources by repurposing your best-performing content on other channels like social media. It’s free to do this, and you’ll eventually start to expand your brand presence.
Being omnipresent helps establish your authority, as you are in view of your audience no matter where they like to go online. Plus, you offer more avenues for people to find your website.
An example of a good social channel to target is YouTube (YT), which is itself a search engine and one that is more responsive to content than other channels, such as Facebook. Also, producing videos offers another way for your audience to consume your content; some prefer text-based content while others prefer video content, so appealing to both sides will maximize the engagement and loyalty of your audience. There’s a nice synergy between YT and website text content, as video offers more clarity in content that text cannot offer, as it’s visual, but written content can go into more detail, so some people will watch a video then read an accompanying article for more information.
When building out these new traffic channels, think of it as if you’re already promoting the brand that’s going to acquire your site. Get these channels set up now, so that when the time comes for brand aggregators to assess content sites they can use to promote their FBA brand, they will give their money to you because you’ve already set up brand-building channels for them.
Creative Authority-Building Opportunities
The best way to make your content site a desirable asset for a big-money investor is to build your site for an e-commerce brand. Any creative way you can do this will not only make your site more valuable and desirable to brand aggregators with FBA brands, but you will also increase your affiliate sales.
One creative way to set your site up for an FBA brand is to build a product launch pad on your website.
If you haven’t already, you can set up your content production and even your website for new product launches. Having an email funnel set up or a page on your website specifically for new products will make your site more desirable to FBA brand owners, as they need ways to promote their new products.
Facebook groups are considered by many e-commerce entrepreneurs as the best platform for product launches, so if you can build a large Facebook group, then you have another valuable asset to go with your business and increase its valuation.
If you’re a developer, you might want to get creative with your website and add in an e-commerce element. This will allow an FBA owner to sell products off of Amazon through your site and diversify their earnings through a channel like WooCommerce.
Having this e-commerce element on your site would be a big selling point and would make it more tailor-made for an FBA brand.
Taking on the above tips to get ready for the upcoming content site goldrush will be a really valuable use of your time. While other content site owners are just continuing business as normal, you can be looking ahead and making moves now, just like a savvy investor anticipating a big growth spurt in the market.
The next step, once you have your site structured for an FBA brand, will be to prepare your business for a big-money acquisition.
Planning Your Exit
When it comes time to list your business for sale, there are things you can do in advance to speed up the process of getting your business sold, and, in fact, you will increase your business’ value even more.
The three key areas you need to organize are your analytics, finances, and operations.
With your analytics, you can show potential buyers of your business the history of your site. It’s important for buyers to be able to see accurate traffic figures so they can assess your site as an investment, so make sure you have Google analytics or Clicky set up!
As for your finances, this data also tells buyers the history of your business as an asset. They want to be able to see this clearly, so you need to have your finances organized. A great way to do this is by creating a detailed profit and loss statement (P&L) to track your business’ monthly earnings.
The final area to refurbish is your operations. Brand aggregators want a business that runs like a well-oiled machine. If you’re spending time manually uploading posts yourself, then you should hire a virtual assistant (VA) to take care of that process. To make all of your processes more organized and efficient, you should create standard operating procedures (SOPs) to outline your processes and iron them out to make your business as hands-off as possible.
If you feel you’re already strong in those areas, then you’re ready to learn what it’s going to be like to sell your business in terms of valuations and timelines, what deal structures to expect, and what the overall process is going to be.
To find this out, speak to one of our expert Seller Advisors who have sold hundreds of content sites and have personal connections with these big brand aggregators.