EFP 93: Killer Process For Profitable Website Purchases (With Justin Gilchrist)

Justin Cooke

May 8, 2014

How do you know when a website for sale is truly a good purchase? Not just a good purchase, but a good purchase for YOU? The answer is you don’t. You’ll never know for sure and even the pros who have been doing it for years get it wrong sometimes.

But… That doesn’t mean you can’t minimize your risks/losses and maximize potential to get a winner.

Introducing Justin Gilchrist from Centurica

Justin Gilchrist FlipFilterThis week we’ve got Justin Gilchrist from Centurica and FlipFilter to share his tips on making profitable website purchases. Justin is in the buying/selling business, often buys businesses himself. His years of experience and insights have made him an industry leader and tons of people in our niche respect him.

We’re big fans as well and it’s a pleasure to have him on our show. If you’re looking to buy websites then you’re definitely going to want to listen in.

Check Out This Week’s Episode Here:

 Direct Download – Right Click, Save As

Topics Discussed This Week Include:

  • Lesser-known tactics and strategies you can use to find and purchase profitable websites.
  • How to disqualify websites that aren’t the right fit.
  • How long it takes to determine if a website is a winner, loser, or draw.
  • Pulling the trigger on a website purchase.
  • Quick tips for each of the six different types of website buyers.

Mentions:

Help Us Out:

  • “The biggest issue with Flippa is that most sites on there are probably not what you’re looking for.” – Justin Gilchrist – Tweet This!
  • “If a site relies on Google you have to accept the possibility of losing 50-70% of your traffic.” – Justin Gilchrist – Tweet This!
  • “You’ve got to assume that when you split-test things bias and things you can’t account for will creep in.” – Justin Gilchrist – Tweet This!

What sort of things do you look for in a website purchase? What do you avoid? Do you have any questions for Justin Gilchrist? Please let us know on SpeakPipe or comment below!

 


Looking to Buy? Click to View the Marketplace


Speaker 1:                           Welcome to the Empire Flippers podcast. Are you sick and tired of gurus who have plenty of ideas, but are short on substance? Worried that ebook you bought for $17.95 won’t bring you the personal and financial freedom you long for? Hey, you’re not alone. Join thousands of others in their pursuit of niche profits without the bullshit, straight from your hosts, Justin and Joe from Empire Flippers.

Justin Cooke:                     Welcome to episode 93 of the Empire Flippers podcast. I’m your host, Justin Cooke, and I’m here with my business partner extraordinaire, Joe Hot Money Magnotti. What’s going on, buddy?

Joe Magnotti:                    Hot, sweaty, dark, and hopped up [inaudible 00:00:38].

Justin Cooke:                     Dude, it is ridiculous here, man. We’re here in Davao City and the power situation is off the hook. We’ve had two blackouts a day. They’re actually moving it to five hours during the day and two and a half hours in the evening. This is ridiculous. I’m actually moving my ass around Davao based on the power situation. So the power goes out. “Okay, I’m outta here. We’re going to the coffee shop. We’re going wherever.”

Joe Magnotti:                    What did people do before 100 years ago, 150 years ago?

Justin Cooke:                     They didn’t have light, man. I don’t know. They didn’t need their laptops and their iPads and any of that stuff.

Joe Magnotti:                    Their Blue Yeti microphone.

Justin Cooke:                     This is ridiculous, man. It’s ridiculous. They really need to get this fixed. But anyway, moving on. We’ve got a great episode lined up for you this week. We’re going to be looking at finding diamonds in the rough. I sat down with Justin Gilchrist the other day, talked about how to find amazing profitable website purchases. He’s got a great plan for figuring out how to determine which websites are a good fit, not just for most people, but for you specifically. I think you’re really going to dig this one.

                                                Before we do that, buddy, let’s do some updates, news, and info. We got one five-star iTunes review, buddy.

Joe Magnotti:                    Hit me up, man.

Justin Cooke:                     We got Bob Dak from ineedseohelp.com, five stars, “Consistency, week in, week out, the best podcast in the Internet business out there. Joe and Justin’s business sense, honesty, and advice come across the podcast in a very genuine way. It’s like talking to an old friend. They encourage but don’t bs you either. I look forward to Thursday mornings.” Bob, I appreciate it so much, man. Thanks for the review.

Joe Magnotti:                    Yeah, Bob Dak, we talk a lot on email so it’s good to hear you put in a review.

Justin Cooke:                     Next thing, buddy, we’ve got a mastermind coming up this weekend. I gotta tell you, these are really valuable for us. We do this every two months. We’ve been doing this for over a year now. We’ve got a ton of value and made a lot of business decisions based on these masterminds.

Joe Magnotti:                    Yeah. I just wrote my notes for this one. Two masterminds ago, we got the idea to sell the outsourcing company. That didn’t go so well, but at least it was a great idea. I think we’re going to have some good ones for this one as well. So I’m really looking forward to it.

Justin Cooke:                     We’ve got a lot of value in doubling down on what we think are the best things, like the highest and best use of our time. If you’re not in a mastermind, I’d really encourage it. You could try to do masterminds via Skype or on calls, but I really think there’s some value to doing them in person. I think if you’re going to do a mastermind really early on, maybe more often is better. You might be able to stretch that out to once a month, once every two months or every three months if your business is a bit more established.

Joe Magnotti:                    Agreed. There’s something about being in person that just helps so much.

Justin Cooke:                     Our next thing, buddy, we’ve got our buddy, Dan, from Tropical MBA and we’ve got John Meyers in town. John Meyers is the designer that’s helping us reboot and revamp the Empire Flippers brand and the marketplace. So they are going to be in town helping us out and giving us some information for the mastermind, but also going over the design over the next couple weeks.

Joe Magnotti:                    Yeah. I was talking to John about it and I think it would be interesting to have him on the show next week. Maybe we could talk about his process, his design, that kind of thing. I don’t know. Might be an idea for an interview.

Justin Cooke:                     Another thing is, I’ve been testing out a new schedule to boost productivity. I’m sure some of you entrepreneurs out there get this problem where you’re just always trying to climb out of the hole, whether it’s email or it’s support or you feel like especially if you’re doing some creative work or you’re blogging or you’re doing a podcast or whatever. You’re trying to climb out of the hole and then do the creative work. The problem is that you never get out of the hole. So I always find myself trying to catch up and perform maintenance and not actually do the things that grow our business forward.

                                                So I’m declaring bankruptcy on some of the maintenance stuff. I’m done. Wake up in the morning, check a couple emails, eat breakfast, and then I settle in for two-plus hours of really creative output. If I have to sit in front of a screen and just stare at it, I do that. Although I normally find 15, 20 minutes in I really start to put some output out there. And then take hard stop, no more email, nothing else. Take three or four hours and go play. Go goof off, go mess around, whatever I want to do. And then get back to the maintenance stuff for another three or four hours a day. I know you’ve been doing a schedule very similar to this for a while. I’m a believer, man. I’m getting onboard.

Joe Magnotti:                    Yeah. I mean I think, for me, having that end deadline kind of thing is a huge, huge thing. It makes you work faster, harder, and more efficient. You know at this time you’re leaving and you need to be able to work by then. So I’m glad you’re switching the schedule. I think the next thing will make you into a morning bird instead of a late night Indian.

Justin Cooke:                     I don’t know about that morning stuff, dude. I’m definitely a night guy. But I hear your point. I know you love the mornings, but I don’t know, man. Why do you love the mornings so much? You feel like you got some quiet time. You’re fresh.

Joe Magnotti:                    Yeah. It feels so good. I mean you know me. I used to be a night Indian as well. I used to run the whole night department of the former company that we used to be at. But yeah, since moving to the Philippines, getting in shape, and really working on stuff, I’ve realized that being a morning person is great. It’s quiet. It’s easy to get work done. You feel like if you wake up at 7:00, work til 12:00, you get five solid hours in, man. The rest of your day is just gravy.

Justin Cooke:                     Yeah, buddy. You’re selling me. You’re bringing me over, bringing me over to your dark side. I don’t know about that. But all right, man. We’re going to get into the heart of this week’s episode. Before we do that, I just want to mention at the end of the tips and tricks section, Joe thinks he has figured out a way to take a de-indexed site and get it back in the index. You’re going to want to stick around for this one. Enough about that, man. Let’s into the heart of this week’s episode now.

Speaker 1:                           This is the Empire Flippers podcast.

Justin Cooke:                     As I mentioned at the top of the show, I’m really excited to be introducing Justin Gilchrist to the Empire Flippers podcast. He is well-known at centurica.com as a partner there. He also runs flipfilter.com. He is what I would refer to as an industry insider. You have brokers. You have people that are in this space that look to him and his blog over at FlipFilter for guidance and inspiration and interesting bits of information.

                                                When we got started selling sites on Flippa. I think Justin’s blog was one of the first sites that we looked to and got a lot of information from about how to sell sites, how to price sites, all of that stuff. So it’s really a pleasure to have you on, Justin. I appreciate it.

Justin G.:                             Thank you very much.

Justin Cooke:                     We’re going to be talking about finding diamonds in the rough, killer process for profitable website purchases and specifically, some of the lesser-known tactics that you use to determine whether a site is of good value. Now, we’ve talked a lot on the show about scams to look out for or ways that sellers may try to trick you. We’re going to, for the most part in this show, we’re going to go over just assume that the numbers are legitimate, assume that the deal’s legitimate. But that doesn’t necessarily mean it’s a good purchase for you or a good purchase overall. So we’re going to cover all of that in today’s show.

                                                Before we do that, Justin, tell us a little bit about your background in the buying and selling space.

Justin G.:                             Okay. I’m currently the founder of a company called Centurica. We’re a relatively new company formed by three people who have all had substantial experience in online acquisitions. Some of you may already know my two partners. We assist buyers with due diligence and we consult in every part of the process from the LOI right at the start through to completion and transfer parts of the deals. Most of the deals we work on tend to be between, I’d say, 50K and five million in value.

                                                But prior to that, I also built a site called flipfilter.com, which is primarily aimed at the sub-50K marketplace, like auction deals and typically smaller value sales. FlipFilter helps you sort through all the listings currently out there and get you to what you need with the minimum wasted time possible. I’m the kind of guy who just loves experimenting. I love to get out there and see what works. So prior to FlipFilter, I bought and built and sold many different sites. The majority of those sites were e-commerce. But I also really like web apps and I like experimenting with things like conversion rate optimization, which is why e-commerce is the ideal platform.

                                                I’ll say it in a nutshell, that’s pretty much my history to date.

Justin Cooke:                     Awesome, Justin. I’ve been a huge fan of FlipFilter and yours for quite a while now. For anyone who doesn’t know, FlipFilter is kind of like Flippa search on steroids. It lets you sort and sift through … Anyone who’s been to Flippa and tried to dig through, looking for the gold there, it can be a real pain. FlipFilter assists with that. Centurica is a due diligence where they will look at sites and give a grade and look at some of the back link profiles and a bunch of information to help you make a determination on whether that site is a good buy based on a whole host of criteria.

                                                Anyway, man, it’s great to have you on the show. You specifically look for web apps and e-commerce sites. Do you ever deal with AdSense affiliate, Amazon-type sites?

Justin G.:                             Absolutely. The reason why I look at e-commerce more than anything else is once you buy a certain kind of site, there’s mistakes that you tend to make when you own and operate that site. Those mistakes are expensive mistakes to make. So if you then buy another site, it’s, one, you’re not going to make those mistakes again or you’re highly unlikely to make those mistakes again. But, two, you start to build a core expertise and a team around developing and growing that asset. So it just became a lot easier to stay with the kind of assets I knew, which were SAS web apps and e-commerce, as opposed to venturing into other things.

                                                But I have tried, I’d say, pretty much every model. I’m trying to think if there’s one that I haven’t tried. Forums, I’m terrible, absolutely dreadful with forums. I know about them, but I have little experience with them. Other than forums, I’d say, yeah. I’ve tried everything at least once, but I just happen to like and know a lot about e-commerce and to some extent, web apps too.

Justin Cooke:                     All right, Justin. If someone’s looking to potentially buy some online businesses, whether that be e-commerce or SAS, web apps, that kind of thing, there are a number of places they can look. Where are some places you’ve looked and had success or even failed, in your experience?

Justin G.:                             Everywhere. I think the problem is we all go through the same kind of life cycle when we first start looking at a business to buy. I mean the first place you come across is probably Flippa. The first time I came across Flippa I was like, “Oh my gosh. There’s this entire marketplace of people selling exactly what I’m looking for.” It’s funny. I remember when I first discovered Flippa, it was similar to what happens to most single guys when you discover online dating. I went in late on a Friday night and I didn’t leave my house until the following Tuesday, at which point I probably had a huge beard and an Afro and pizza crust hanging off my chin.

Justin Cooke:                     I think I did the same thing. We’re dorks, man. We’re serious dorks. We’re dorking out on Flippa search, for sure.

Justin G.:                             It was just amazing. For me, it was crazy to know about this little thing that I’ve been doing privately for years thinking I was the only person in the world buying and selling sites, was actually a real thing. There was this whole ecosystem where people were trading openly. The biggest issue with Flippa is you soon realize that most of the websites on there are probably not what you’re looking for and that’s after you’ve managed to avoid the scams, the tricks, the traps, and the plain joys of doing business in an open marketplace.

                                                So the issue with a site like Flippa is around 93% of the sites are smaller websites with varied histories. By small, I’m generally referring to size under, I’d say, around 10K. And then you’ve got maybe 7% that are larger, more established businesses, but they have a lot of competing bidders. So the end result is then ridiculous valuation on what is usually a pretty average business. You kind of work out that Flippa is not working for you and then you go outside the box. People at this point usually do one of three things, either you find a broker. It’s usually in the broker’s best interest to get a good price for their client. So whilst you’ll probably buy something worth owning, it’s not going to be a bargain basement price.

                                                Alternatively, you can have a look in the classifieds and you can look for Internet businesses that are being listed directly by the owner. But having done this, I can tell you with some certainty that you’re either going to stumble across the 80% of listings that are actually listed by brokers not owners, in which case, you’re back to the previous scenario. Or you contact the remaining 20% who are owners that want a 20-year valuation or something ridiculous for their business and you realize that’s why they’re not using a broker. It’s because they’re insane and nobody will take them on.

Justin Cooke:                     That seems to happen a lot when people have their baby or when they are stuck on the VC startup space and they’re like, “I should get a crazy valuation too. Look at Instagram. Look at all these other companies that sold for crazy valuations.”

Justin G.:                             I find it funny dealing with … I speak to quite a few people on the, I call them the Silicon Valley sites. Some of them have got really, really good sites. So we’re talking about guys who’ve had sites for 10, 15 years and they really refined and developed these sites and they are good assets. But when you find out how much they want for them, they don’t bat an eyelid asking for eight years or nine years. You tell them that that is not realistic. That’s not what sites are selling for in the “real world.” But the real world to them are places that are going on just these insane valuations. I think there is definitely two worlds between us and them. But fortunately I like to pay in the us world and sell in the them world wherever possible. Doesn’t work that way, but hey, it’d be nice to think.

Justin Cooke:                     We’re talking buying and selling businesses for the rest of us, for the normal, lowly folk that aren’t doing billion-dollar deals. I mean, let me ask you this because I talk to some people that say hey, they found some success in reaching out to sites directly. They do things like look at the Alexa ranking and look at their modernization method and make some determinations based on some third-party data on what they think the site might be worth and then start to at least shoot out some feelers, shoot out some cold emails basically to see if they can get someone interested.

                                                Have you ever tried that approach?

Justin G.:                             I did. I mean I did this back in 2000 and … I think it was the end of 2012, so things might be a little bit different now. But I actually tracked the results that I got from doing it on a big, big scale. The issue with this is it’s not that it doesn’t work, but your expectations need to be seriously realistic. You need to look at it almost like a funnel. So there’s different parts of the funnel that you need to optimize. I mean are you interested in knowing the numbers that I got?

Justin Cooke:                     Yeah. A little bit, man. Let’s hear it. While you’re looking for that, I’ll tell you that I think it’s really interesting because Joe and I have done a lot of funnel systems. We used systematized processes, especially things that are lead gen funnels. So we’re good at, at least personalized but mostly automating the top end of that funnel and then kind of pushing it down the chain until we actually get some gold nuggets at the end. I think there’s a real opportunity there with potentially using VAs that look for sites that meet certain criteria. They meet that criteria. They do the cold email approach, and then eventually when they get interested parties, passing that down to you.

                                                I think if I was sitting there trying to look up sites and shoot out emails, I think it’d be a horrible waste of my time. But I think there could be a team or some kind of process or systematized process that really approached that and maybe even potentially does it for other people. I think if I had that machine built, I’d probably use it internally because I think it’d be pretty valuable. But I think there’s opportunity in our space for that.

Justin G.:                             This is my personal experience. I’m not saying that these are the best results you can get. But this is if you imagine the typical … This I did with the help of a VA as well because I think doing it by yourself, it’d just be soul-destroying. So 75% of, this was with … Off the top, I haven’t got the exact number we started with, but it was just over 500s outbound kind of emails. So 75% we didn’t get a reply from. Either that or our email that we sent to them must have gone to spam, so they never saw it. 10% we got a reply with a thanks, but no thanks. Either I’m not ready to sell or I’m still building the site or I’m not interested.

                                                10% replied positively, but only to find out how much someone would be willing to pay and they’ve got no intention of selling. These guys are the most frustrating because they’re essentially just stringing you along for free valuation just to kind of boost their own ego.

Justin Cooke:                     Well, that’s 50 people. I mean you had to do that with 50 people, emails back and forth.

Justin G.:                             Exactly.

Justin Cooke:                     So I could see how that would be a little much.

Justin G.:                             That’s the soul-destroying part. 3% will sell, but only a valuation that’s way above what you’re prepared to pay, so the $10 billion people. 1.6% will sell at a fair price, and 0.4% will sell below market value. So it’s not impossible to get a good deal doing this, but typically you’re going to need to send around 1000 emails just to get one to two below value deals. It’s not that the deals’ out value don’t matter, but if you’re going to pay market price, why not just go to a broker and save yourself all the hassle.

                                                The whole point in doing this is to find something that’s off-market, below value. But you have to be realistic about what you’re going to get from it because, one, it can be soul-destroying if you just do it this way. That’s also assuming that those one to two below-value deals actually go through to completion, because a lot of sellers, they’ll find someone’s interested in buying their site. Before they do, they’ll just do a little bit of research. They’ll speak to one or two brokers. The brokers will tell them, “Whoa, whoa, whoa. Stop. Do not sell at that price. I will get you double,” whether they can or not. And then the deal falls through.

                                                So it’s a really, really difficult strategy to execute. It’s not impossible, but the two things that you need to do are, one, change your criteria somewhat and, two, look for places where you’ve got a really high concentration of sellers that you can contact. So a really good place is e-commerce for that reason. If you’re going after e-commerce sites, you know that the contact details on the contact page are always present and they’re 99% of the time correct because usually people are waiting to receive emails from customers. You’ve got a better chance with certain kinds of sites if you’ve got maybe a place where those sellers typically hang out.

                                                So if you decide that you want to buy ClickBank sites, hang out in places where people are getting tips and strategy for improving their ClickBank businesses, forum is obviously a great one, make yourself known on there. That can also massively increase your conversions at the bottom of the funnel as well.

Justin Cooke:                     I love that though. You say difficult or more difficult to do. What I hear is opportunity, man. I love the difficult things that most people won’t do. Have you ever done that, Justin, where it’s a Saturday or a Sunday and you’re working on something and you’re like, “Yeah, buddy, this is the kind of stuff that my competition isn’t doing”? They’re not sitting down to do the hard work that’s required to make shit successful.

Justin G.:                             Absolutely.

Justin Cooke:                     I think this funnel, even though 0.4%, I was like, hey, that’s not bad. That’s how horrible I am. I think we could do that. Anyway, we’ll get back to this. I think there’s a real opportunity there for setting up that kind of funnel. I think you’re going to learn over time how to really optimize it. Maybe you can make that 0.4%, 0.8% or something. When people are trying to get valuations, sending them over to a valuation tool that you have that basically puts the onus or the work back on them and then gives them an opportunity to reach out after potentially.

                                                We talked about some of the places you look. We talked about reaching out directly, which I think is really interesting. One of the big things I’ve noticed is cutting out potential deals. You’re not looking for a deal to do. You’re looking at deals and looking for ways to quickly disqualify them. What do your first impressions usually look like? How do you disqualify websites or businesses quickly?

Justin G.:                             I think what people tend not to realize is that due diligence comes in two forms. You’ve got what I call fact-based due diligence, which is based on facts. It’s the kind of things that we do at Centurica. It’s about the domain. It’s about the traffic profiles. It’s about the revenue profile, the age of the websites to some extent. There’s another kind of due diligence that you essentially do yourself and what you realize is that the most experienced buyers, the kind of guys that will do this in their heads literally within 10, 15 seconds , these are the kind of guys … We’re guilty of doing this.

                                                You send them a business to analyze and they haven’t looked at the business itself. They haven’t gone onto the website itself before they’ve made a decision. They’ve just looked at all the numbers and all the data behind it and straightaway, you make a decision. What I tend to do is I look at all the subjective stuff first. The reason why it’s subjective is that it’s my reasons for buying or not buying that site. That might be different to someone else who maybe wants more of a risky purchase or more of a safe purchase. But ultimately, if you imagine, I usually divide it into three categories.

                                                Those categories are the niche, the business model, and the age of the site. You can make a really quick decision, providing you’ve got preset criteria based on your own personal investment strategy whether or not you want to buy that site by looking at those three things. Shall I give you an example as to-

Justin Cooke:                     Yeah, yeah.

Justin G.:                             So for example, if you have a site that it’s a forum. It’s three months old, and it’s in the gaming niche-

Justin Cooke:                     That’s an excellent buy, Justin.

Justin G.:                             I’ve deliberately chose possibly one of the worst examples I could choose. But certainly that’s a worst example for me and that partly proves my point that this is subjective. I’ll actually give you a link. I’ll throw this into a zip file and I’ll put my own personal subjective system in there so other people can look at that and create their own from that.

                                                But if you imagine, forums for me are something that I would never buy because from my opinion, forums they are very difficult to monetize. The people on forums are generally blind to adverts, which makes advertising not impossible but difficult in many circumstances. Getting them to sign up for products is also difficult. So really, with funnels, you’ve got limited options for monetization. The gaming niche, for me, again personally is a niche I wouldn’t go into because, again, you’ve got very little options for monetization. Most video games are sold directly, so you’re not going to sell them video games. You’re probably not going to sell them a console when they can get it cheaper from Best Buys and Targets and so on.

                                                There’s very little other things other than ClickBank gaming guide that you can sell in that market. So you’ve got a lack of advertisers, which usually means a lack of monetization options which usually means, again, less ways you can extract value from each person that’s in there. And the fact that it’s three months old is just a no-go. I think anything under one year is an extremely, extremely big risk. But something that’s three months old, I would just advise you, don’t buy it unless you’re buying it for the reason that you want to save yourself building the same thing.

Justin Cooke:                     Yeah. Don’t buy it based on any revenue it’s earned in those three months, for sure.

Justin G.:                             Exactly. Because it’s probably not going to be the same in another three months and another three months from there.

Justin Cooke:                     Yeah. Maybe a strategic purchase or something where those users in the forum might make sense. But that’s if you have some experience of building out forums. If you’re planning on just trying to buy it and continue on with pursuing, maybe not the best buy, and definitely not the best buy for you. I think that’s an important distinction too is that there may be sites where you go, “This is an interesting buy, but it’s not for me and what my skillsets are. I know myself. I know what I’m good at and this ain’t for me.”

                                                What qualifications of a site might you see that would let you pass to the next step? Your first step is just these three sections and then the criteria of go or no-go on the different parts of each, the niche, the how long it’s been, and the, what is it?

Justin G.:                             The business model.

Justin Cooke:                     The business model.

Justin G.:                             Yeah. How I usually explain to people is it’s kind of like a traffic light system where everything’s either a red, a green, or an amber. The idea is some things are, in my mind, a definite pass. So for example, in terms of the niche like jobs, property, healthcare, they’re always green light because they’re a finance obviously. They’re kind of niches where you’re guaranteed to get a lot of advertisers and those advertisers will pay a lot of money for clicks, leads. You can sell products for a high value.

                                                There are some that I’d put in the amber category which means that it’s not really a no-go, but it’s something that I need to look into the business a little bit more before making a decision. This whole system really works on having discipline. There are so many deals out there to go through. If you don’t have the discipline to eliminate a lot of those that aren’t a good fit quickly because you’re thinking at the back of your mind, “Well, it may be a gaming forum but maybe there is hope in it. Let me take a look into the numbers.” You’ll find yourself just kind of chasing this diamond, this elusive purchase.

                                                I forgot what they call it. Is it the MacGuffin?  That thing they use in films where there’s this one thing that the hero’s always chasing that they’re never going to find.

Justin Cooke:                     I don’t know.

Justin G.:                             You’ll find yourself chasing your MacGuffin or whatever. You possibly can find it. You possibly will find a really good gaming forum at some point. But having that discipline just to think it’s highly unlikely I’m going to find it, so I’m going to disqualify this really quickly based on that, makes it easier just to get through a lot of deals and eventually find the right one or find a good one rather than waste your time with a lot of things that aren’t going to pan out.

Justin Cooke:                     That’s difficult. There are times as a buyer where you’re going through … And we have plenty of experience at this. We’ve looked at hundreds, maybe thousands of sites at this point. But there are still some that I see and I’m like, I want this. I start looking into it and there were a couple of things that are definite green lights for me. And there are some amber ones. Well, I’ll look past that. Some reds, I still want the site. Joe had to pull me back for a purchase recently where I was all about it. Directionally, for our company, it probably wasn’t the best buy.

                                                I think that’s hard for buyers when you fall in love with the site a little bit. It’s like buying a house, where you imagine yourself living there and sitting on the couch and watching TV. Even though there’s some things about that house that you probably shouldn’t buy or that business that you shouldn’t buy, you start to look past that when you start to feel yourself owning that business. I think that’s a problem for new buyers and even some of us that have been doing this for a while.

                                                Once it gets past, you have a couple of green lights, maybe a couple of amber lights. What do you do to dig a little bit deeper? How do you take the next step? What do you look at next?

Justin G.:                             This is kind of when you switch from the subjective due diligence into your fact-based due diligence.

Justin Cooke:                     Real quick. Why do you do the subjective first and not the objective?

Justin G.:                             Because subjective is really quick. You can do the subjective, like I say, once you’re used to doing this, you can do the subjective often within a couple minutes. You can do it without any information as well. You can quickly look at an opportunity, even a brokered opportunity where you don’t know the URL, you can straightaway tell how old it is because most brokers will tell you that. You can tell what niche it’s in, and you can tell what business model it’s primarily running. So with those three bits of information, you can just quickly scan this listing and reject or accept it.

                                                The other way around, it would mean having to sign an NDA in some cases or liaise with the seller, get lots more information before you can then disqualify. So it’s just a lot quicker.

Justin Cooke:                     Perfect. Got it. Okay. So now we’re going to dig a little deeper. We’re going to look at some of the objective information, some of the business data. How do you get started? What’s the next step?

Justin G.:                             Actually you need to get more information from the broker or the seller and you need to get a firm understanding as to how that business operates, what that business does. Again, there is a way if you’re in a hurry, I’d say there are … Are you familiar with the Pareto principle, this whole 80/20?

Justin Cooke:                     Yes. Mm-hmm (affirmative).

Justin G.:                             That applies to due diligence as well, where if you’re in a rush, and I’d never advise … Obviously I’m from a due diligence agency, but I’d never advise skimping on your due diligence. But if you only had time to do a few things, there are four really crucial things that I’d say would eliminate the majority of problem sites. For me, those are usually looking at the referrals, looking at the age, looking at the RPU or the transaction data, and also looking at the geographical distribution of visitors. If you examine those four things, we’ve found this kind of … I was going to say trinity, that’s obviously three.

                                                We’ve found this golden ratio of most sites that are going to fail DD will fail massively on one of those four points.

Justin Cooke:                     I’ve seen when we’re looking at traffic, you’ll see sometimes that a huge majority of the traffic comes from a less monetizable country. In that country, it’ll come from very specific cities. I’m like, hmm, that’s interesting, sketchy. But then I’ve noticed recently that it’s actually better. You’ll see a more even distribution of traffic or even heavily US-based. And then when you start to dig a little deeper, you’ll see that the majority of it’s coming from, let’s say, five different cities. So it’s not evenly distributed throughout the US. So again, problematic stuff.

                                                Tell me a little bit more about the four criteria that you use.

Justin G.:                             I mean like I said, this isn’t a replacement for full due diligence, but if you only had to do four things, these are the four things that I’d probably do. The first thing I’m going to look at, I always try and get access to analytics from early on because once you’ve got access to analytics, that just gives you a lot of the data you need to do at least these four checks.

                                                The first things I’m looking at are, where is the traffic coming from? If there’s one thing that a site, in my mind, fails on more often than not is there’s this massive over-reliance on usually Google for traffic. Again, this is all about risk. It’s all about balancing risk. If a site relies on, say, 80% of its visitors, it gets those visitors from Google, you have to accept … Sorry, when I say Google, I’m talking about Google organic as opposed to Google paid. You have to accept the very real possibility that you would wake up one morning, you’ve suffered a penalty, and you have just lost 50, 60, 70% of your site’s traffic.

                                                I’m generally going to advise against and personally stay away from any site that has a heavy dependence on one particular traffic source. When a site relies heavily on Google organic traffic, it’s usually a deliberate deception or a scam. But where you do get sites that are a scam are sites that rely, for example, 100% on direct. The thing with direct is you actually don’t know what it is. It could be people typing the URL in directly. It could be a site that’s killed the referrer, so it’s traffic coming from a site but the owner’s deliberately hid that. It could be people bookmarking the site. But the problem is not what it is, but the fact that you don’t know what it is.

                                                So if you ever wanted to control that and either scale it up or restore it if you ever lost it, then you’re pretty much screwed because-

Justin Cooke:                     Also that’s odd. If it’s a majority of the traffic that’s coming direct, that’s just not usual. That’s not typical.

Justin G.:                             It is. The only exception to that, I’d say, is where you get direct response products that are sold the old school way. I’ve seen some products where the owner has a mail order business that’s been translated to the Internet. They still do the majority of their advertising offline or they’ll have resellers or distributors that will put the traffic through, but rather than come up as referrals, it’ll actually come up as direct because it’s coming from some sort of internal CMS system and Google’s not tracking it as a referral.

                                                Those are situations where you can get a lot of direct traffic, but again, unless you are 100% sure where that’s traffic’s coming from and why it is coming up as direct, it’s probably best just to avoid it and move on.

Justin Cooke:                     Let me ask, let’s say the site is 60, 70% paid traffic. Obviously that means you need to dig a little deeper. But is that an immediate turnoff for you personally?

Justin G.:                             That’s an immediate turnon. I’m getting really excited at this point, providing that 60, 70% paid traffic is profitable. So this is where the numbers side of it comes into play. But if someone has a majority paid traffic and that traffic is converting profitably, as in they are making more from that traffic than they are spending, to me that says that, one, I have the opportunity of bringing in organic traffic which I know will usually convert better. And two, I can also scale this site up, providing they haven’t hit a limit or they haven’t hit the top of what they can buy in terms of paid traffic.

                                                I can either replicate that campaign on different platforms, so if they’re buying pay-per-click traffic, I can then try Facebook acquisition or I can try the Display Network or I can try-

Justin Cooke:                     Bing.

Justin G.:                             … Bing, yeah. I’ve never got Bing to work as a site.

Justin Cooke:                     I was just talking to someone that said he loves Bing because he sells to, I guess, less technical searchers. He just gets a ton of good traffic from Bing, wasn’t able to make it profitable to AdWords, but crushing it with Bing. Crazy.

Justin G.:                             Well, I’ve got an e-commerce site that sells to the baby boomer market. So I’d say they’re also less technical searchers. I don’t know if it’s just that the campaign is set up wrong for Bing, but the campaign is near identical to the Google Analytics campaign, however the Bing campaign just barely converts at all while the AdWords campaign converts five figures a month. It’s just the difference is massive.

Justin Cooke:                     It’s maddening too. Wow.

Justin G.:                             Yeah. It’s hard to figure out.

Justin Cooke:                     How come it’s not working the same on both? What’s going on here?

Justin G.:                             Yeah. It’s the same keywords. It’s theoretically the same people. I don’t know. Anyway, I don’t know what is happening.

Justin Cooke:                     Let’s say we’re a go on traffic. I’m loving the traffic, looks fantastic. What’s my next check?

Justin G.:                             If you’re happy with the traffic and you’re happy that the referrals are mixed or something you can control, I mean, age is the other one I look at. Age is a weird kind of check that is both subjective and fact-based. It’s fact-based in the respect that anything under 12 months, in my opinion, I put a massive red flag on. Anything under three years, I would approach with caution. Unless you’re buying to save yourself time in building an identical site or the business behind the site doesn’t matter, then ignore that at your peril.

                                                When you buy an established site, a fair amount of your cash goes towards buying history. The history’s important for two reasons. One, if the site generates revenue then an older site is usually more of a guarantee that the revenue is stable. So for example, if you’ve got an AdSense site that’s been seeing 3K a month in AdSense payouts for the last year, that’s far more likely to have a sustainable way of doing that than one that’s only four months old and has only recently hit that peak in revenue.

                                                In fact, if you’ve got a four months old AdSense site generating 3K a month in revenue, my opinion is it’s 90% likely to be a short-lived opportunity, and it’s one that’s either going to die or eventually or be banned completely for doing something that Google doesn’t like.

Justin Cooke:                     Waiting for a Google update or something like that.

Justin G.:                             Exactly. Very rare will you get it. It’s too good to be true. Very rare when you get a site that can accumulate unless they’re doing a lot of referral traffic from maybe a really good link they’ve got somewhere. It’s highly unlikely, especially if it’s organic, that they can generate enough visits in four months’ time to make that amount stack up.

Justin Cooke:                     Going back really quick to the traffic, one thing I think is interesting too is that if it is organic traffic, I think it’s even more risky if you’re relying on less key phrases. Whereas if it’s split over hundreds or thousands of keywords that are bringing in that traffic, you’re a bit better off because your ranking, you may not even get hit or penalized and there may be no actual problem with the site. But just over natural progression, your number three ranking for this major keyword drops to number eight and you lose a ton of that traffic. And maybe that organic was driving 70% of your search traffic.

                                                So I think that’s even more risky than someone that’s getting, let’s say, 50% of their organic traffic coming from 100 different keywords that are fairly randomized or in the niche, but not all the exact same keyword. Another thing too is that I’d say I think it’s interesting too. Let’s say you’re looking at an organic site, but you have a bunch of paid traffic sites right now. Even though that site in particular isn’t diversified, you have to look at both, I think, the site itself and your portfolio as a whole. So if you have other sites that are mostly paid traffic, maybe diversifying away from just the paid traffic is an opportunity.

                                                Or let’s say that you have mostly social traffic on one of your other sites and you want to gain organic traffic with that site or pick up a site that has organic traffic. You can diversify a portfolio and not just the site itself. Does that make sense? Do you agree with that?

Justin G.:                             It makes sense. I do. I think it’s kind of going into the previous point but on a macro level. It’s the same with referrals as well. You can look at a business that has 80% referral traffic and think, actually that’s really risky. However, if those referrals are comprised of getting traffic from hundreds and hundreds of different sites within that, then that’s actually okay. But it’s when you’ve got over dependence on any particular source. That source could be a keyword or it could be a referral, but it’s looking at the breakdown and asking yourself the question, how likely is this to disappear overnight? If it did, would I be protected or would the traffic that this site’s receiving be protected?

Justin Cooke:                     Also, I think there’s a benefit if you’re number five, let’s say, for a particularly good keyword. Let’s say it’s fairly diversified organically, a bunch of different keywords. But I prefer one that’s at number five that I have an opportunity to move to number three or number two than one that’s already at number one. So if it has a good portion of that traffic is coming from number one, I know some buyers are like, “It’s ranking number one. That’s fantastic.” I’m not so sure from a buying perspective if I love number one. It can only go down for me.

Justin G.:                             You can only go down, exactly.

Justin Cooke:                     You can add to their content and try to get ranked for other keywords, but in that spot, you’ve reached the pinnacle. That’s it. That’s good as you’re getting on that keyword.

                                                Let’s get back into age. I mean obviously, the older the site is, the better. I can’t think of any exception to that. Can you think of a site that’s older that’s not as good? I guess if a site is particularly old, and we’re talking like early 2000’s graphics and stuff, there may be some-

Justin G.:                             GeoCities and Angelfire.

Justin Cooke:                     Yeah. There may be some work or some cash that’s going to go into sprucing up the site a bit. Aside of that, but that’s not really an age problem, that’s an update problem. Can you think of any reason where an older site isn’t the best?

Justin G.:                             Off the top of my head, no. One thing which I’m sorry to digress. One thing that I’ve found which is really fascinating, I did a study of I think it was 80 or 90 sites and split … In fact, it was more than that. I can’t remember now. It was over a year ago. I split the sites between sites that sold way above what I’d consider an average multiple, so the top 25 percentile, and sites that sold way below the bottom 25 percentile, and looked at what the ones in the top group had in common and what the ones in the bottom group had in common. One of the things that was most common amongst the sites that sold for the higher multiples were the fact that they were aged sites.

                                                The older a site was, the more people would be prepared to pay for that site. But what didn’t work was just getting an aged domain, like a 2001 GeoCities site and then sticking a brand-new business on top of it. The business itself had to be aged. I think buyers are smart enough to realize that they are paying for that history. I genuinely can’t think of any situation where having that history isn’t a bonus.

Justin Cooke:                     That’s interesting. I mean for people that are buying sites now, buying and, let’s say they have a team and they just gently build sites out over time, two, three, five years down the road as long as they’re keeping relatively current and keeping it running, just that length of time is going to get you an improved valuation because the business has been up and running that long. I think it’s interesting. I can hear the buy and holders listening to this podcast going, “Yes, absolutely. You guys are crazy for selling these sites off.”

                                                Sorry. What’s the next thing after age? What do you look at?

Justin G.:                             I look at the transaction data. This is assuming that you’ve got enough data to make a decision. I generally tend to buy … If you’ve got three or four transactions and the site’s not making that much, it’s really hard to make a decision because a lot of people assume that maybe because a site has a lot of traffic, that that traffic will convert but that’s not always the case. Sometimes an owner’s put AdSense on and you think it’s making money with AdSense, there must be a million and one things I can do to make more money theoretically. But some niches are just good for AdSense and it’s not because the AdSense advertisers in that niche are making the site money. It’s just that the site’s got so much traffic.

                                                By the law of averages, it’s making money from re-targeted ads, but actually could be one of those niches we spoke about earlier where there’s just too few advertisers. So I always look at the transaction data and I make sure that there are enough transactions to make a decision as to this site can convert and it converts roughly at this price. I also look at the RPU, the revenue per user. So if the revenue per user in comparison to other sites in that niche is way higher, either it means that they’re doing something magical and they’re managing to extract a hell of a lot of value from every person or, which is more likely, there’s something wrong. Either they’ve calculated it wrong, they’ve reported it wrong, or it’s just a scam.

                                                A good example is the kind of sites where they’re receiving maybe 500 visits a month, but they’re claiming $6000 or $7000 a month from those four or 500 visits. Apart from the fact it’s really risky because just losing 200 visits a month would lose you three grand a month, it’s also highly, highly unlikely.

Justin Cooke:                     I think the RPU’s a great way to look at. You had a great post on that a while back. We were talking about that in terms of AdSense, AdSense being one of the lower forms of monetization. One thing that stuck out from that report was that some of the AdSense/Amazon sites actually performed worse than AdSense straight up. I thought that was pretty interesting.

Justin G.:                             Yeah. That was crazy. I think it was single focus, right?

Justin Cooke:                     Because it’s confusing maybe? Because it’s not focused.

Justin G.:                             I think it’s really difficult to optimize a site without one single goal. The problem with AdSense, AdSense is like that really demanding man or woman in your life that if it’s not about me, then it’s not about anything else. AdSense needs your sole attention. AdSense does not like to share a page with other adverts. I don’t know why that’s the case, but whenever you look at AdSense heat map it’s pretty much gotta be all AdSense to make that optimal. When you’ve got an Amazon ad in there or an ad for another product in there taking up one of those prime slots, I’ve no idea why it doesn’t perform as well, but it just tends not to work that well.

Justin Cooke:                     How risky do you think it is to change monetization? I was talking to a couple of our sellers recently and they’re Amazon affiliate sites. They sell higher ticket products. I said, “Look. Why haven’t you guys gone to some of these people directly and tried to set up an affiliate deal? Why aren’t you drop shipping these products and testing that out?” Their answer to me, which was legit, was like, “Look, it’s working. I don’t want to mess with it. It has good earnings. I don’t want to mess with it and potentially screw that up.” They said, “It’s opportunity for the buyer.”

                                                I was thinking to myself, “It is opportunity for the buyer, but you could be leaving serious money on the table without playing or tweaking with it.” Do you think that changing monetization is a really aggressive move? Or do you think that’s just standard operating procedure for a site that you’re building out?

Justin G.:                             From a buyer’s point of view, I find and this is from a due diligence person’s point of view as well, I find it to be quite common that sellers will … You ask them the question why they haven’t done something, you get a lot of times when sellers aren’t being completely honest. What they actually mean is, “We tried that and either, A) we couldn’t get it to work, or, B) it just didn’t work. So a lot of times, yeah, you’re looking at monetization and you’re thinking, “Why are they just using AdSense?” It’s possibly because they tried something else along the lines and it just didn’t work out.

                                                But I think you’ve got two kinds of changes. You’ve got front end changes and back end changes. The back end changes are the ones that you can happily try all day long because the customer never sees those. For example, if you’re buying a product and you’re selling a lot of product X through Amazon, finding a drop shipper that you can sell direct with is, to some extent, a back end change because the customer doesn’t see a difference. I mean arguably it’s not because the Amazon experience, the checkout experience on Amazon is what converts that customer more so than the product, I’d say, because they’re really good at adding details and they’re well-optimized.

Justin Cooke:                     That was their thing too is they were like, “Look, Amazon just runs CRO like crazy, so I might as well send to someone who I know is going to convert rather than some random drop shipper who knows I’m an affiliate for these guys, who knows how well their pages convert, if they even work.” So they figure Amazon is the safer bet. But yeah, I think there are some people that say, “No, that’s opportunity,” but they’ve actually tested it and it didn’t work. But I think there are others that they really just didn’t because they didn’t want to mess up their earnings. They didn’t want to-

Justin G.:                             Absolutely.

Justin Cooke:                     It’s a risk.

Justin G.:                             I think every buyer has … I have some of that fear as well, myself. It’s from getting your fingers burnt in the past. I can tell you countless times where I’ve made the mistake of assuming. The one thing that I always do now, no matter how certain I am, you could give me the worst site in the world and I’m a relatively competent designer. So I’ll redesign something and I will just assume that page works well, but I will still split test it before I make that page live. What I’ll usually do is if you get a site and often it’s the case you buy a site, it’s really dated. There’s a lot of things you want to change.

                                                There’s no point in split testing a button change or a headline change. There’s just so many things. What I tend to do is I’ll put all of my assumptions into one redesigned landing page or alternate page to send customers, run a split test, and on the assumption that alternate page converts better, then work backwards. Start thinking, what if I put the old headline in and split test that but on the new page? I think there is a lot of opportunity, and obviously opportunity for us as buyers is finding these kind of sites where the owner’s either being scared or lazy to make that change. But the key thing to that is just making sure you control the environment when you make it. So that means just doing a split test for at least two weeks or as long as you’ve got enough data to make a good decision. And then look at that retrospectively.

                                                Go back and think, what other things can I change within the winning variation and keep testing that way rather than just assume that you know better and plunk a new monetization on there, then work out after the fact that it’s not worked.

Justin Cooke:                     I see a lot of talk about, should I have a green button or a blue button? You want to put all this split testing into those particular elements. We looked at that when we were creating Intel Theme, which is our AdSense, kind of rotates through different layouts and stuff. We looked at that and we’re like, “But that just seems so detailed. Why not give a completely different look?” A completely different look. It’s not going to narrow it down very specifically to what worked or what didn’t, but it’s enough. I think grandiose changes when you’re split testing are probably the better approach.

                                                You can always narrow it down later, but if you’re talking about really narrowing changes when it comes to CRO, I mean you have to have a crazy amount of traffic to the page to know whether that’s actually going to make a difference because how many are actually viewing that button? How many does it actually matter to it? It takes a lot of traffic to make up-

Justin G.:                             There’s a lot of bias. I mean there’s a really good book at the moment called Lean Analytics by, I think it’s Alexander Croll. He really explains the whole analytics thing. You’re meant to break analytics down into … or you’re meant to break analyzing data down into segments, cohorts, and multi-variant testing. I won’t go too deep into it. But you’ve got to assume that also sometimes when you test things that there’s going to be bias that creeps in that you’re just not going to be able to control with such a small amount of data.

                                                Small is anything really under 50,000 visits a month. Unless you’re running that test for so long, but then when you run a test for a long time, it could be that your visitor profile has changed or there’s a million and one other things that can happen in your test that you can’t account for. You don’t account for.

Justin Cooke:                     That’s right.

Justin G.:                             So split testing can be dangerous if you misinterpret the results. You can change a button and assume that the button has had everything to do with your increase in conversion, but actually it’s-

Justin Cooke:                     It could be improved keyword for a totally different keyword that you weren’t ranking for before, so your audience is different and the people going to the page are different.

Justin G.:                             Exactly. Exactly.

Justin Cooke:                     Yeah, man. It can be-

Justin G.:                             It’s dangerous. It’s dangerous.

Justin Cooke:                     Let’s say that my RPUs are within normal ranges for, let’s say, an Amazon site just for example. My traffic was good. It’s aged appropriately and my RPUs are within an acceptable range. They’re not too high or maybe they’re actually a bit low to provide some opportunity for me. I’m ready to move forward. What’s the fourth thing?

Justin G.:                             The fourth thing I usually look at is geographical distribution. This is one that the previous three are kind of common sense things where if you’d asked me, what am I looking for? Those are the things on the list. But this one is just one from sheer experience. If I had to lump all of these scams we’ve seen doing due diligence into one pod, I’d say that one of the things that they have in common greatly is the geographical distribution of their visitors.

                                                It gives you an indication for several reasons. One, you don’t want to buy a site where the majority of visitors come from a country where you neither speak the language nor understand the culture. This is a matter of preference rather than a rule. You often find really amazing opportunities in non-English-speaking regions, for example. But unless you know their language well enough to understand both the meaning and the culture of the people behind it, then you’re probably going to run into issues. There’s an example where quite a few of the big e-commerce companies went into India recently and just assumed that they could replicate the success that they had in Europe and the US.

                                                But what they didn’t realize was that people in India generally like to pay cash. So that’s why you’ve got business models like Flipkart now doing really, really well out there because they understood the culture and they understood how people like to do business there. That gave them the advantage. So a big mistake I see buyers often make is they’ll buy a site that receives a lot of traffic from Latin America, for example, and they assume it’s just a language thing. As long as they can get around the language thing or they can find Portuguese or Spanish writers, then they’ll be okay. But that is rarely the case.

                                                There’s often cultural nuances that you need to be aware of. So personally, that’s one of the reasons why I’ll stay away from countries that may be geographically skewed towards somewhere that I don’t operate in-

Justin Cooke:                     It’s so funny because if you try to come to the Philippines, for example, and you try to set up something where they have to pay via credit card, good luck. No one has credit cards here. Everyone pays with cash, Western Union, bank deposit or there’s a new thing where they pay with load, like phone load. I’ll load my phone and then transfer the money to you. Let’s say it’s $5 or whatever. That’ll act as my payment because I’ve transferred the load to you.

                                                Yeah. If you try to come in here and set it up with credit card payments, yeah, good luck with that. So there are definitely cultural differences that are outside of language barriers, no question.

Justin G.:                             That’s crazy though, right? Because if I saw a site that had a lot of transactions from Western Union … I don’t know if it’s the same in the US, but Western Union in the UK is like the scammer’s bank of choice. If you have-

Justin Cooke:                     Yeah. That’s 419 scams, man.

Justin G.:                             Yeah, exactly.

Justin Cooke:                     Nigerian prince stories going on.

Justin G.:                             If you had a Coutts Bank or a really high-end, private bank but for scammers, the kind of bank where they’d go in and they’d get a private room to sit down. The receptionist brings them a cup of tea. That would be the way I see Western Union.

Justin Cooke:                     The black money thing. Have you seen that where they take the stuff to wipe it off. “Look, it’s clean now. Pay me $50,000. I’ll give you a ton of this stuff.”

Justin G.:                             It’s a spray. You get to on a Upay. There’s probably a site selling black money spray. You don’t know.

Justin Cooke:                     A blackmoneyspray.net. I’m buying it.

Justin G.:                             Put it on Flipper.

Justin Cooke:                     Okay. So the geographic. If it’s outside, obviously if I’m selling 49ers T-shirts and the majority of my traffic is coming from Pakistan, for example, that’d be kind of odd. Why are people looking up an American football team in Pakistan, 80% of my traffic. That would be weird. Give me some other less clear, common examples of something being sketchy.

Justin G.:                             Sure. I mean, don’t get me wrong, sometimes the whole traffic from countries you don’t recognize that it can be harmless. What I’ve found in some cases, it’s just a naïve owner attempting to buy traffic from a really cheap traffic source because I mean even the sort of $20 per 10,000 visitor people now use UK and US proxies. So even if your traffic’s being spoofed it will still look like it’s coming from the UK or the US in most cases. But sometimes owners are just naïve or they use those social exchanges. You know the ones where you go on and you click a link and that person clicks a link for you. Or you like their site, they’ll like your site.

                                                Sometimes it’s just people who don’t know what they’re doing, trying to grow traffic but doing it the wrong way. It doesn’t mean the site’s bad. It just means it’s got this layer of badness that you’re going to need to discount.

Justin Cooke:                     It also depends a little on the monetization too. If I’m getting a bunch of sketchy traffic to an AdSense site, that’s a much bigger alarm bell than an e-commerce site where, let’s say, I’m sourcing the goods myself. If the guy’s done some weird banner advertising and some of it was in countries that … The seller may have got ripped off on an advertising deal. That doesn’t necessarily make the site bad. As long as you can truly verify their earnings on that e-commerce site, if the traffic’s a little off, I don’t care.

                                                Whereas an AdSense site, that’s going to be much more important to me in terms of where the traffic’s coming from.

Justin G.:                             That’s an important caveat to add is you’ll usually find something that’s a little bit off and you ask the seller. Take the seller’s explanation, but always be able to explain things yourself. Everything that doesn’t make sense to you when you’re doing due diligence, you need to be able to explain that yourself. That goes for the numbers as well. So say for example, a seller will send you the numbers for the year. You need to look at that and think, “If I was to destroy these numbers, can I recreate this balance sheet taking what I know to be a fact, like their revenue and what their costs should be? Will it still make sense?”

                                                It has to make sense to you not based on what you’re told, but based on your own, one, experience or the experience of the person doing your due diligence for you.

Justin Cooke:                     I love when we find things from sellers that they didn’t disclose and then they come back and then they’re trying to cover it up. That’s a clear sign to us that it’s not someone that we should be doing business with. Even if, not an innocent mistake, but something where they clearly knew about this and then, “Oh yeah. No, I did have this.” Because what else are they lying about? I think it’s so weird, but the seller and the seller’s reputation and them, we take a really hard look at the seller. That saves us a whole bunch of time, Justin.

                                                We can cut out so many sites that we’re like, “Nope. This is not the seller we want to work with. Nope. This guy’s no good.” For our process or whatever for just our internal due diligence on whether we list a site or not, that’s been amazingly helpful. You’d think the site would be more important, but I don’t know. The seller’s up there too.

                                                So okay, we’ve dug a little bit deeper on these sites. We’ve gone through some due diligence. I had a quick question for you. I was talking. He was a guest on our show, Billy Murphy, over at Forever Jobless. He’s made a killing on buying too good to be true deals. He’s bought sites at 3X net profit or 4X net profit and been able to turn them around. While I love that and I do think there are some deals out there, it just, to me, it’s hard for me to recommend that because I think nine times out of 10, maybe 98 times out of 100, you’re more likely to get scammed that way. It’s much less likely that that’s a legitimate deal for you. What are your thoughts on that?

Justin G.:                             Just to save any kind of confusion for anyone listening, when you just referred to two or 3X, I’m assuming you’re talking about monthly.

Justin Cooke:                     Sorry, monthly. Yes. Yeah, yeah. Monthly.

Justin G.:                             When I refer to Xs-

Justin Cooke:                     It’s making $1000 a month and I can buy it at $3000 to $4000. $1000 a month net profit.

Justin G.:                             When I have previously referred to 2X, I’m talking about annual which would be 24X monthly. I read Billy’s blog. It’s a really good blog. I get where he’s coming from. You can potentially make money buying too good to be true deals. But here’s my issue with that. One, it would be wholly irresponsible for me to tell people to look for too good to be true deals because I think there are likely to be a higher percentage of scams within the too good to be true category than there are in the not too good to be true, in the boring category, boring but predictable.

                                                I think part of the issue with looking for too good to be true deals is you can get burnout looking for the … There’s that MacGuffin thing again. I learn a word and I just can’t stop using it. You get burnout looking for this kind of elusive deal that doesn’t necessarily exist in great quantities, so you have to look over 500 deals before you find this too good to be true deal that you focused on in order just to get started. And then you’ve gotta do that due diligence. I don’t personally think it’s the best strategy unless you absolutely know what you’re doing and you can spot a scam very, very well. It’s not one that I’d adopt.

                                                I think in terms of too good to be true, the one thing that I’d always say to people is think about maybe three, four years ago. Something we spoke about, we had a buyer who was paying consistently. He was paying two times annual net for any site you brought his way. This was two years ago. At the time, that was a really good strategy because two times annual net was a really good valuation for a web business. Everybody was kind of going through hurdles to sell to him because they knew that amount was guaranteed and that was a relatively high amount. Now, that same guy I assume is struggling to buy sites because ultimately the valuation bar had moved up and now you can easily get a lot more than two times annual net for a really good, more established site.

                                                But back then, this guy had the foresight to just pay a little bit above market value because he knew where things were moving. I think if you get so caught up in valuations and multiples that you’re always trying to underpay, you’ll be like that guy that refused to pay $1000 for books.com or houses.com back in 1999 because he thought $1000 for a domain was ridiculous. If you know where things are going to go or you have an indication that things are moving upwards, don’t be afraid to pay a fair price because it’s only a fair price now.

Justin Cooke:                     Yeah. You also have to think about the shelf theory, the shelf dilemma where you’re constantly searching for the unicorn or the unicorn tears that you’re never going to find-

Justin G.:                             Say MacGuffin. You want to say MacGuffin.

Justin Cooke:                     The MacGuffin. You’re sticking to the MacGuffin.

Justin G.:                             I don’t even know if I’m using that word correctly. It’s like anything. I’m going to look up that and find out that’s some weird form of meeting partners in bars or something like that.

Justin Cooke:                     You asked me MacGuffin. I was like is this some American British thing, man, or am I supposed to know what a MacGuffin … I have no idea what this is.

Justin G.:                             Oh my gosh. You totally MacGuffined him.

Justin Cooke:                     Okay. But they’re spending all this time searching for this amazing unicorn deal and they’re not taking that time into account. So now they’ve spent three months, they’re spending 20 hours a week looking for this amazing deal. How much of their time did they spent, if they’d have got, hell, a bad deal? If they’d have bought a bad deal and actually built that site out over the last two or three months, they would have made more money because then now they’re just full loss. They haven’t even bought anything and they spent all this time looking.

                                                I think the search time when it comes to finding your type of site, it’s something you need to pay attention to. I think that’s why we were talking earlier at the top of the show, a funnel to kind of find those deals. I know that’s what you were originally doing kind of a FlipFilter to help you dig through the crap and find the gems. But I think maybe even with a reach-out strategy there may be some potential there. But yeah. I mean I love Billy Murphy’s blog, Forever Jobless. He’s got some really good information there. He obviously knows his stuff when it comes to e-commerce. But the too good to be true buying deals kind of scares me a little bit.

                                                Talking about buyers pulling the trigger, we’ve seen some buyers that go so far down the due diligence path that it seems like they talk themselves out of a deal. It was a good buy. We’ve seen this, where it’s a good buy for them. It meets what they’re looking for and they seem to kind of … They were hot on it and then they start backing out. These aren’t people that are just wasting our time or just whatever, time wasters. We had a podcast on that recently, people wasting your time. They weren’t wasting our time. They were legitimately interested, but they talked past their own deal. Have you seen that?

Justin G.:                             Yeah. I had this conversation with my business partner yesterday. Sometimes you get a situation where you have to accept that you don’t know all the facts and you have to accept that there is absolutely nothing which is guaranteed. What we do at Centurica is we try and take away as much of the risk for a buyer as possible, but we still tell people, “Look, there’s no way you’re going to guarantee that this site is going to work for you long-term.” You can remove a massive amount of risk by doing good due diligence up front and then the chances of it not working out for you are going to be slim.

                                                But it’s still a chance. There’s still a chance that things aren’t going to work out. I think some buyers go into things with unrealistic expectations that they want the seller or they want the broker to convince them that absolutely everything is going to be okay before they pull the trigger.

Justin Cooke:                     I want a guarantee.

Justin G.:                             Exactly.

Justin Cooke:                     I want a guarantee this is going to work for me. You’re just never going to get that. You’re just never going to get that. Business isn’t that way at all, period, ever. It just never works.

Justin G.:                             I blame the Internet marketers.

Justin Cooke:                     Guaranteed or double your money back.

Justin G.:                             I want a silver bullet, a guarantee, and a Western Union money transfer.

Justin Cooke:                     So if I do this, you guarantee I’m going to make a bazillion dollars the next 10 years. Yes, man, yes, a bazillion dollars. Good luck with that.

Justin G.:                             Again, it’s the whole being realistic thing. We’re looking at something where you get a really good … You can get an interim rate of return with this kind of investment and that far surpasses what you’ll get for property. It surpasses what you get from the stock market. But there’s a catch, and that catch is there is more risk with this, not a massive amount of risk if you know how to mitigate that and not a massive amount of risk if you know how to control it on the front end with your due diligence. But you have to accept that there is going to be some risk.

                                                At some point, you’re going to have to take all of the unknowns and think, “Can I move ahead knowing that these things are possible unknowns?” And also if they are unknowns, are there things that I can do to reduce the impact of these over time? So if you find a site and maybe that site has 63% dependence on organic traffic and you think that there’s an unknown that I can lose a lot of these converting visitors over time, then it’s not necessarily that you won’t buy the site, but just know that the very first thing you do when you acquire that site is going to be to diversify that traffic stream.

                                                So you’re going to look at ways of bringing affiliate traffic or referral traffic. It’s just working around what you have and accepting that nothing is ever going to be perfect.

Justin Cooke:                     I think what’s interesting with buying sites is the rate of return can be absolutely fantastic. I mean, the financial geeks in us get all fired up when you start thinking about this. Compared to other investment channels, I mean there is just a massive amount of return. I talked to Drew Sanocki a while back and he was talking about how they’ve kind of moved down in the private equity space and they’re looking at 500,000, 800,000, $1.5 million deals instead of the typical 10 million-plus they would look for.

                                                I think there’s a ton of opportunity in that space. It’s amazing. I think we’re going to see this industry change significantly in the next 10 years, Justin. You and I have talked about this privately. There’s going to be massive growth and changes and potentially regulation, but a lot of new people entering the space that I think will be interesting to see what happens.

                                                Let’s talk about this, Justin. After you’ve bought the site, how long does it typically take for you to determine success, whether it was a win or a failure. I know that’s going to vary a bit depending on the site. But how quickly can you see whether or not this is a good or bad purchase for you?

Justin G.:                             For me personally, I’d say it’s difficult to know that until you’ve recouped. The day I recoup my investment, then it’s … Well, it’s still not a success because I’ve put in all the work to do that. So it’d have to be profitable. I always set a goal for a site prior to acquiring that site. I think what’s the kind of timeframe where I’m looking to recoup my investment from cashflow alone, which is something I always do with a web purchase. Can you imagine doing that with a house?

                                                You buy a house and you think I’m going to recoup the amount I paid for this house purely off rental income. It’s crazy to think-

Justin Cooke:                     It’s crazy.

Justin G.:                             … this is what you can do with. I also look at maybe a two-year, two and a half year timeline and I’ll think to myself, this is the maximum amount of time I want to wait to recoup the amount that I’ve put in. So my goal then is to accelerate that by making just tiny changes. I never really go for the big gambles with sites. I never completely overhaul something to begin with. I might try a new landing page or I might try a new site design or I might try a new method of monetization. But these are all sort of little just tiny gambles, seeing how they pay off, and just incrementally trying to get that payback period down shorter and shorter and shorter, so it’s a success.

                                                But for me, a success has been able to reduce the amount of time it takes to get payback based on what the site is earning when I first acquired it. So if I bought it at 22 times monthly, then I’m looking at payback in 18 times monthly, for example, as a success.

Justin Cooke:                     So you’re looking to chop that down. If you can get it back quicker than you purchased it for, that’s a win.

Justin G.:                             Correct. I think people often get overwhelmed when they buy a site because there’s so many potential things they can do and they just get analysis paralysis where there’s so many options, they just can’t move because they don’t know what to change first. Just if you can’t change anything, just change the smallest thing. Just make sure you’re tracking it. The best advice I can give to people is make sure your transfer process is water-tight. By that, it means having a plan for when you acquire that site. The most important thing to put in place without a doubt is to make sure your analytics are working properly.

                                                This is coming from a guy that has balls that are up so many times in the past where I’ve thought the analytics were working properly because the previous owner put them in. But actually, well, the tracking’s wrong or it’s not checking for conversions from Facebook marketing correctly. Spend the time. Make sure that all of your data is reporting correctly. Make sure you’ve checked it yourself. Don’t rely on what was previously put in place because then when you do put things into play, you can tell whether or not they’re working properly. That’s the most important thing.

Justin Cooke:                     I heard this weird case where a guy had analytics coded twice in the site or something like that. He put it in twice. His balance rate was close to zero. He was like, “This is fantastic. No one’s balancing on my site.” Yeah.

Justin G.:                             You should be okay with new … if you’re using Google Analytics. Everyone rags on Google Analytics, but it’s one of those software packages-

Justin Cooke:                     It works.

Justin G.:                             … like Photoshop that if you know how to use it, or Excel even. Most people only use it a fraction of what it can do. If you use it properly, especially with the new universal analytics that will prevent things like double analytics codes. If you use it properly, you can get amazing results from it. Rather than spend money on things like mixed panel locust metrics, which are better products, you can still get the same end result. You’ve just gotta put in the time investment. You can’t just expect to put in the codes and it works like Google tells you it will.

                                                You do need to work out how to use analytics and often how to do things slightly outside of the box. But it’s a great piece of software.

Justin Cooke:                     We used to require Google Analytics from our sellers because it was very helpful for us in obviously determining the frauds. But also we understand the system. It’s relatively easy for us to use. It’s easy for us to explain and show our potential buyers. There was a problem where some people are just so anti-Google. They’re like, “I’m not putting anything Google on my site.” So we were like, okay. An alternative for us, Clicky. I think Clicky is useful. It’s helpful. It doesn’t always match Google Analytics. Some of the numbers are a little bit off. But I can dig into Clicky well enough to where we feel comfortable with the site that has Clicky installed.

                                                Justin, let’s do this really quick. We’re going to go into kind of a lightning round really quick. We’ve done a previous podcast. We talked about the six different types of website buyers, basically kind of an avatar or a profile for the type of buyers there are. We sent it out on our emails. I’ll just go through them really quick. You have Newbie Norms. You have Do-It-Yourself David who loves to get in there and tinker with the site. You have Portfolio Paul who’s looking at it more from an investment strategy.

                                                Strategic Sally is looking for strategic acquisitions that have some synergistic approach with their own business. You have Lifestyle Larry. Someone looking to quit the job, own a couple sites, and move to Bali and sip the fruity drinks on the beach. And then you have Flipper Fred who just loves flipping sites. He’s buying sites, selling them, loves that arbitrage between finding cheaper sites and selling them for more. Let’s go through each one of these profiles really quick. I want you to tell me based on the three initial looks what you think each might look for in terms of go signs or no-go signs for the types of sites they’re looking for.

                                                First one would be, let’s say Newbie Norms. What are some go signs for Newbie Norms or some no-go signs, you think?

Justin G.:                             I’ll say your go signs are definitely sites which are already relatively stable and give you the best chance of success. If you don’t know what you’re doing, don’t take a gamble. So you’re looking for things that are definitely green light niches, so property, healthcare, finance. These are niches that are incredibly competitive, but also incredibly or relatively easy to make money because of the amount of advertising, because of the size of the market. You’re also looking for aged and very established sites because you just don’t want that risk. You don’t want that risk that something could dramatically change because a site’s only just come out the sandbox.

Justin Cooke:                     Okay. What about a Do-It-Yourself David, a guy that wants to get in, wants to tinker, wants to play, wants to mess with it and see what he can do to improve the site?

Justin G.:                             I think your DIY guys, they’ve got an opportunity in buying slightly younger sites. Never under 12 months, in my opinion, but your one year to two years. They’ve got at that point where they can make the biggest impact by making the changes that they can probably do. So assuming they’ve got coding skills or design skills, then this is a time where they can really make that impact. But they can also look at things in the amber region in terms of monetization. So for sites monetized through subscriptions, for example, there’s a lot they can do within that to develop and to improve that versus someone who wouldn’t necessarily have the skills to make those changes and tweaks.

Justin Cooke:                     What about a Portfolio Paul?

Justin G.:                             Portfolio Paul, again, to some extent similar to the Newbie Norms. If you’ve got a portfolio, you’re looking to some extent to diversify that portfolio. But you’re also looking for a certain amount of certainty because you’ve probably got targets. You’ve probably got a benchmark that your other sites are meeting and you want to make sure that you can maintain that. So you’re looking at the safe industries, the safe niches. But you’re also looking at more established sites because effectively, unless you’re looking to spread the risk, you want something that will maintain and be in keeping with the rest of your portfolio.

Justin Cooke:                     Strategic Sally?

Justin G.:                             Strategic Sally, go for the good niches but with poor monetization. Go for a good niche where you’ve got a good market, a growing market, a market with a lot of advertisers in. But maybe something that hasn’t been monetized correctly. Maybe something that the previous owner hasn’t tried many of the things that you know you can get to work or possibly just something that’s complement or is complementary to what she already has.

Justin Cooke:                     I love that. Let’s say I have an e-commerce store. Let’s say I sell cat furniture and I end up picking up a cat blog, someone who loves their cat and they have other readers who are sharing that and they monetize via AdSense or something. What a great opportunity for a Strategic Sally there.

                                                Let’s talk about Lifestyle Larry.

Justin G.:                             Anything where you can get tax write-offs to complement your lifestyle. So if you like traveling, get yourself a travel blog, and then all of these holidays you take … Well, you have to do that. That was to review the hotel at the other end. Is that legal? I don’t know. Maybe I shouldn’t be giving that advice. If you can get away with it, get away with it. Buy a business that complements your lifestyle where you are interested in the subject matter, but that can also give you those little benefits, like legitimate and legal tax deductions that support what you do day to day anyway.

Justin Cooke:                     Nice, Justin. All right. The last one, Flipper Fred.

Justin G.:                             The funny thing about flipping is what most flippers don’t realize, the Holy Grail for a flipper is actually doing nothing. So you will get more money … What people don’t realize is the market is often comprised of people just like us, people looking for an opportunity, people who are entrepreneurial in nature. They outnumber the people who are Newbie Norms and people just getting into this. So if you find a site that’s not that good and you just do a bit of a whitewash. You clean it up, but don’t do too much, and then put it back onto the market, you are more likely to make more money in a shorter timeframe than somebody that tries to do too much, changes everything about it, and gets to the peak of its potential.

Justin Cooke:                     I like the idea of repositioning too. We’ve talked about this before. But there are all kinds of products and even SAS products where it came out and it was targeting a particular market, a very low dollar amount. They buy it up, re-target their target market to a more affluential group, whatever, and they’re able to sell it five times more on the monthly fee than it would be targeting the bloggers, for example. I think that’s pretty interesting for that. It’s just re-targeting or reframing your value proposition to a new target audience that can better afford. Even a smaller target audience, more niche, but they see the value much more clearly and you can represent that value proposition much better.

                                                You recently, you put us through the wringer, Justin. You put us through the wringer. Actually, you were fantastic. I think your email was something like, “Look, I close deals quickly. I’m not going to waste a bunch of your time.” Which what a great way to approach. Look, I am not a time waster. I just have a couple questions. Let’s get this out of the way. That was fantastic. So I’ll applaud you on that, sir.

Justin G.:                             Thank you.

Justin Cooke:                     You did tell us a big fat no. So let’s talk about this a little bit. The RaveAid site you were looking at we have for sale right now on the marketplace. You took a look at it, but you considered it a punt. Why was it a punt for you?

Justin G.:                             It’s not that the amount under 50K’s a small amount, but I can afford to lose anything under 50K without it really ruining my year. One, if it’s worst case scenario, if the site didn’t pan out and I spent 40K on it, I’d be pissed, but it wouldn’t be the end of the world. But it’s also a punt from the perspective that it’s one of those where I may not have all the facts to make a decision. This is the product is far outside of what I would usually buy, and it’s quite a unique product. I don’t know any other site that offers this where I can get comparables. I don’t even know if there’s-

Justin Cooke:                     You’re not a raver, Justin? What’s going on there? You’re not hitting up the raves.

Justin G.:                             I’m a little bit too … I’m 31.

Justin Cooke:                     You’re getting old, man.

Justin G.:                             I know. I’ve got a one-year-old kid. You don’t get to rave when you can’t lie in when you’ve got a hangover because there’s a little one running around screaming and you’ve got to get out of bed.

Justin Cooke:                     So it’s outside your comfort zone in terms of products you’ve dealt with before and what you’re used to. You couldn’t get all the facts together. It’s a smaller site, so even if you were able to improve it, there’s a question as to how much time you’d have to put in and whether it’d be worth a value to you to put that time in for what you’d get out of it.

Justin G.:                             I mean the primary reason, the two reasons why I was interested in it, I like the products. I get hangover. I get it. I get it as in I understand it. It’s one of those things that’s a nightmare. But I’m a very scientific person. So I think, this is hangover. This is because I’m dehydrated. I’m lacking these minerals. How cool would it be if I could just take those before and after to reduce the impact of it? So as a product, I think it’s amazing. I’m not sure how wide a market, how many other people share that versus the people who just cope with it or the people who wouldn’t even appreciate that there’s a way you can solve the problem. Hence, why it was a bit of a punt.

                                                But I really like the product. But also it’s a single product supplement e-commerce business, which is something I already own. I already have the infrastructure to run. I could run it through my own fulfillment center. I could use my own team to do customer support. So in terms of running that business, it would be, if anything, half an hour extra of my personal time a week if that, whatever revenue can be gained.

Justin Cooke:                     All right. The site wasn’t for you on this go-round. Who do you think the site is for? Who would be able to buy this and have a better shot at, you think, putting time in it and working this site out?

Justin G.:                             I think, for one, it needs to be someone who understands the product. Single produce e-commerce businesses are probably one of the easiest kind of businesses you can run, so you don’t necessarily need to understand the supplement business or you don’t need to understand e-commerce in general because you’re not dealing with a large skew of products. But I think this would work really well for somebody who understands paid traffic because that, in my opinion, was one of the places it was lacking. There’s no real controlled user acquisition with this, so it does get traffic, but that traffic comes mostly from referrals and I think a little bit from organic, which is good.

                                                It’s highly converting and it’s obviously costing the owner nothing. But in the event that was to disappear or in the event you wanted to scale that up, which would be my intention with this, you don’t necessarily know whether a paid campaign is going to work because it’s the kind of keyword where I don’t think people will be looking for a cure for hangover and be expecting to pay for one. The kind of people looking for a hangover cure are the kind of people just looking for a free resource to eat a lemon before they go to bed.

Justin Cooke:                     That’s interesting. Yeah. There’s a bit of education that’d have to go with the product as well. I’m looking to cure my hangover. It’s not like, oh yeah, let me pay money for a pill. It’s more like, yeah, I totally get that. That makes sense. Huh. Interesting.

Justin G.:                             When I take over an e-commerce business, I usually set up a paid campaign based on three … I have three different kind of campaigns. The one campaign is people directly looking for that product, which in this case wouldn’t apply because I don’t think RaveAid is a big enough name for people to be looking for RaveAid and if they do, they’re just going to probably go to the organic resort because it’s the only site that exists.

                                                The second one would be people with the problem who don’t know the solution exists, so people looking for hangover cures. The third one would be people just of a similar demographic and I’d usually run this on a Display Network. So I’ll be targeting people who are 18 to 24 that like electronica or dance music.

Justin Cooke:                     That’s interesting. So basically if you’re looking at purchasing an e-commerce site, why not any site but that you plan on sending some paid traffic to. Why not test out some of those advertisements and see if you can get some conversions up front before you even purchase? That’s a really slick idea, Justin.

Justin G.:                             I think the issue is the third group, which is the demographic targeting is the group where you’ll get the most traffic because you can expand that campaign onto Facebook and onto social platforms as well. It’s also the-

Justin Cooke:                     I see that being, for that particular site, being a pretty big opportunity. Having a site about raves that really targets the rave community, that is offering up the product as well. Or even buying up Facebook pages that are in the rave scene or targeting the demo, might be some opportunity there too.

Justin G.:                             I mean there is a huge opportunity. People underestimate Facebook advertising and what it’s become because I think a lot of people have made their decisions based on what Facebook advertising used to be. But now, even if you’re doing B2B, Facebook advertising actually can convert for you and it can give you a wider reach than even the Google Display Network can in some situations. So it’s a great opportunity to have, but you’ve just gotta appreciate that whilst that third group of demographic-related is the widest, it’s also the one that’s not going to convert as well as the first or the second group.

                                                So if you find the business where the first group … If the first group’s there, then I’ll usually buy it straightaway. If the second group’s there, then I’ll consider it. But if it’s only the third group, then it’s going to be difficult.

Justin Cooke:                     We tried Facebook advertising a few years ago and I didn’t really like it. I kind of avoided it for a few years. And then just recently last year, year and a half or so I’ve known some people that are making some good money. I know one guy, a buddy of mine, just sells T-shirts via Teespring or whatever, via Facebook and has been doing really well, low five figures a month selling T-shirts to a huge audience on Facebook.

Justin G.:                             That’s awesome.

Justin Cooke:                     I know another guy that just recently got started a few months ago and made, I think, close to $50,000 net in March selling T-shirts, an insane amount of money. He ended up getting his Facebook account shut down and then he had to get it put back on. It was this whole mess. But he just crushed it.

Justin G.:                             If you thought Google were bad for being this kind of dictatorship, then you have not dealt with Facebook. Facebook are absolutely the worst. With Google, at least they’ll tell you your ad’s disapproved before you start running the campaign. Facebook tends to wait until you start getting results, and then shut you down. Literally, mid-campaign they’ll disapprove an ad. They’ll just pull an ad because they don’t like it or it violates one of their terms and conditions. So yeah. I think if you’re doing any kind of paid acquisition, know the rules inside out. Keep your account health as good as you can do.

Justin Cooke:                     Yeah, for sure. Well, Justin, let me just first off thank you so much for being on the show, man. I really appreciate it. You’ve dropped a ton of insights. I’m sure our listeners are going to get some value. If anyone hasn’t checked it out, make sure to check out flipfilter.com. I think your blog’s flipfilter.com/blog. I’ve gotten a ton of interesting insights. You really should blog there more though, man. I love your stuff.

Justin G.:                             Thank you.

Justin Cooke:                     But it’s a little in-between. I love your data-driven posts though. Then of course, if you’re looking for due diligence help, you can check out centurica.com, where you can buy up due diligence packages. It varies depending on the level of site that you’re looking for.

                                                Where else do you hang out, man? Do you do the Twitter? You do the tweets?

Justin G.:                             I do. Just to add, what I’d do is I’ll put up a reference of things. Everything that I’m talking about here, I’ll put up a resource pack for this podcast. I’ll do it at centurica.com/empire. If people go there, they can just download a zip file and I’ll have things like sample due diligence reports in there. I’ll have information on how to build your own due diligence system if you prefer to do it yourself, and also a list of tools and resources that you can use to help you with due diligence along the way.

Justin Cooke:                     Awesome, Justin. Thank you so much for being on the show, man.

Justin G.:                             No worries at all. It’s was an absolute pleasure. Thanks, Justin.

Justin Cooke:                     Next up are tips, tricks, and plans for the future.

Speaker 1:                           You’re listening to the Empire Flippers podcast with Justin and Joe.

Justin Cooke:                     All right. It was a fantastic interview with Justin. Really glad he agreed to be on the show. But you teased us a bit at the front, man. You were telling us you got a way to fix a de-indexed site. Now, to be clear, it’s not a guarantee or anything. But you’ve actually fixed a site that we had de-indexed. You went through the process and it is up and running. So tell me about it.

Joe Magnotti:                    Yeah. I’m not too sure about the ROI here too. I probably have to work out the man hours. I have kind of an idea. Maybe we were talking about before the show, if you have a site that’s making $400 to $500 a month, this kind of process would be worth it.

Justin Cooke:                     Or more. Four to 500 bucks or more, this is probably worth going through. If not, if it’s 150 bucks a month, probably not worth the hassle.

Joe Magnotti:                    Yeah. It’s probably going to take you a few months too, I mean not constantly working on it obviously. But it’s going to take a few months of revisions and adding content and stuff like that.

Justin Cooke:                     All right. So what’s the deal, man?

Joe Magnotti:                    The process is buy two expired domains with a clean back link profile. You want to redirect those domains to your de-indexed domain. Add your site to Google Webmaster Tools. See if there’s any errors. Correct those errors. Get a Moz report from open site explorer. Have all the links. Disavow all your links. Migrate the site to a new server. Change the IP address. Then upload a whole bunch of new content.

Justin Cooke:                     You said 50% of the content you have?

Joe Magnotti:                    I say at least 50%. And then you’ve gotta add at least a post a week for the next three months. So you’re showing a significant amount of additional content plus you’re adding new content on a regular basis. Then submit a reconsideration request via Webmaster Tools. And in one to two months more, you’ll hopefully be re-indexed.

Justin Cooke:                     Maybe. Hopefully. What a mess. I mean at least that’s definitely worth trying if you’ve got a $1500 a month site that went to crap. I mean this is probably worth going through the process. But what a painful process they make it. It’s ridiculous.

Joe Magnotti:                    It is. There’s other processes out there. People want you to change the domain and republish all the content in the new domain. Obviously that has its merits too, but this is a little more simple, I think. It adds more content. It allows you to get Google involved in Webmaster Tools and really see what you’re doing wrong. So if there’s any errors in there, they’ll tell you what to correct.

                                                I suggest it for sites that are making enough money. If you have some VAs that have the ability to do this kind of stuff, it definitely could be worth your while.

Justin Cooke:                     Cool, buddy. Well, if any of our audience actually does do this process and they do get their site fixed from a de-indexing, do let us know. We’d love to hear back from you.

                                                All right. That’s it for episode 93 of the Empire Flippers Podcast. Thanks for sticking with us. Make sure to check us out on Twitter @empireflippers and we’ll see you next week.

Joe Magnotti:                    Bye bye, everybody.

Speaker 1:                           You’ve been listening to the Empire Flippers podcast with Justin and Joe. Be sure to hit up empireflippers.com for more. That’s empireflippers.com. Thanks for listening.

 


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Discussion
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  1. greg says:

    ^I second that. How come the resource link that justin gave out isn’t working anymore? Would love to check out those resources

  2. Robert Botha says:

    Great episode. What happened to the link with Justin’s personal website evalution criteria? Would love to get my hands on that.

  3. Andrew Hiddleston says:

    great interview guys – i laughed out loud at the “black money” WU part. funny as hell but so true.

  4. Ace Chapman says:

    Great Interview. Always a pleasure hearing Justin G.!

  5. Rainy says:

    is an adsense niche site still profitable for newcommers ?

    • Justin Cooke says:

      Yes, Rainy.

      In fact, I’d say it’s still probably the best way to build/buy your way into profitable websites online. The learning curve isn’t quite as steep and you can adjust/change the monetization to higher, more lucrative forms if the site’s traffic takes off.

      • Rainy says:

        nice following you guys for a while now and have read the guide a few time , have tried to build a adsense empire a few times with little to no success. but now i know consistency is key.i’m searching for a few way’s to build residual income and adsense niche website will be one of them.

        • Justin Cooke says:

          A quick update for the guide – ignore any linkbuilding recommendations + be a little less aggressive with your exact match titles, exact match anchors for internal linkbuilding, etc. We’re not SEO experts, though – check out Moz and guys like Viperchill and PointBlankSEO for current tactics/updates.

  6. Hey Guys – Great show! I like the longer interview…It’s good to mix it up once in a while.

    So, I like the tips on dealing with a de-indexed site. It sound like it may take a while…with quite a bit of effort.

    Would it be faster and easier to just pull the content and publish on a brand new domain? Or even an expired domain?

    Perhaps I’m missing something here…

    Cheers!

    • Doug it would be faster to repost on a new domain, but if there’s and impact to your brand, that might not be an option. For basic contents sites this isn’t an issue though. The experiment was just to see if I could do, if pressed. So it can be done.

      • Hi Joe – Thanks for the reply.

        I got it. So if you have a restaurant, local business, or an outsourcing company, for example, you may have to keep the same name/brand. Thus, you have to keep the branded domain… That makes complete sense.

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