RMRB 40: Diversifying Revenue Streams

Jake:
Hey, listeners, welcome back to the Real Money Real Business Podcast. This week I’m going to be taking a look at an Amazon associates affiliate and advertising business that was created in January, 2016 and is making $6,000 every single month in net profit. I was able to sit down with the owner, Kurt, to really figure out what makes this business tick.

Jake:
Kurt, thank you for taking the time with me today. How are you doing?

Kurt:
Doing well. Thank you for having me.

Jake:
Yeah, it’s my pleasure. Really excited to discuss this business with you. There are certain aspects that are really interesting, like you’re a large social following, but before we dive into the question that I have for you, I want to go ahead and run through a little quick summary. Again, the business was built in January of 2016 has a monthly revenue of $7,269, expenses of $1,269 to make for that profit of $6,001 which has generated a seven month average. Included in the sale of this business or the domain and all site content and files, social media accounts, email list, SLPs and content ideas. Kurt, can you tell us a little bit about your background in building and running online businesses?

Kurt:
Yeah. I have been doing this for about five or six years now. I got started back in the day when I simply checked on Google for how to make money with a blog and it just grew from there. So the sort of build and sell model is what I do. I’ve dabbled with Amazon FBA in the past, I’ve done a couple of other things, but I keep coming back to this because I just love the process so much.

Kurt:
So I’m really good at starting sites like this and I like to get them to a certain area and then sell them because I’m not as good of a manager at the higher stages. I love the process of sort of getting everything ready and doing all the keyword research and building the lengths early. So yeah, that’s what I do. I have a couple of other sites as well and I’m always launching at new ones.

Jake:
Yeah, I mean that absolutely makes sense. You say you have more expertise with starting than taking an established business and growing it even further. Have you dabbled in that before? I mean, how do you know for sure that this is the route for you?

Kurt:
Well, I’ve tried pretty much everything. I’ve going to have gone through, like I said, five, six years of doing this and in that time I’ve gone on for just about every shiny object out there. So every time I do something, for example, like I sold an FBA business through you guys in the six figure range and that was great. It just got to a point where I was going, okay, this is not what I like to… day to day I love the grind of the early going.

Kurt:
So yeah this particular site that we’re talking about that’s listed on Empire Flippers has been fantastic, it’s got very good earnings. It’s been up there, so it has been a good experience sort of having something more successful like this. But I just started, like I said, two new sites right now and I love the process so I just like to get back there and do the things that I actually love to do, which has been super important as I’m trying to find out how to optimize not just business but life and enjoyment of the business.

Jake:
Mm-hmm (affirmative)- How do you know when it’s time to sell a site?

Kurt:
That’s a good question. I have tried in the past to standardize it. You don’t start X amount of sites per quarter and then a year from now or two years from now sell X, Y and z. That has worked to some degree. I’ve sold I think five or six other things through you guys and that was usually better when I was focusing on smaller sites because it was 10 articles, a couple of links and then it was easier to rank back in the day Google. But with things like this, I mean this is a big site, I’ve done a fair bit of outreach and that kind of stuff. So it’s just not quite as simple as a system as I wanted it to be.

Kurt:
The trajectory of the site it depends how I feel working on it because again, that’s a big thing. I really enjoyed working on this site so it was easier for me to carry it on a little bit further than usual. And now I’m just hoping to get back into the slightly more standardized thing. Like I was talking about starting two or three and then selling one within a year or two. But I find that typically for me, I enjoy the first 18 to 24 months and this one’s a little bit longer than that, so that’s the sort of the best run down that I can give.

Jake:
So this business has a strong diversification of revenue amongst its different streams here. Can you explain exactly how this business makes money?

Kurt:
We have a number of different affiliate programs that we use from Amazon to another the larger pedophilia programs to more private programs that are for specific individual products that we’ve seen sell well. For example, when you check the Amazon tag, for example, in your associate’s dashboard sometimes we’ll notice that there’s products that are super popular and we will go off and establish relationships with those companies to get higher payouts. So that’s what we’ve done in a couple of cases and because the site is fairly large and gets a decent traffic, we’ve actually had people reach out to us and asked us to join their programs and that’s actually turned into a couple of big wins in terms of earnings as well.

Kurt:
We also have a large advertiser group that we’re connected with, so rather than AdSense, it’s a managed platform. So we just have their Ads on there instead of AdSense and it earns significantly more than any AdSense tests that we have done. So between large affiliate programs, small affiliate programs and advertising that covers just about all of it.

Jake:
When you look back over the last year at the net profit, you notice that last summer of 2018 you made a lot of money and then you had a slight dip here at the start of 2019 can you explain the fluctuation in the numbers here?

Kurt:
For sure. In January of 2018 I started taking this site more seriously. As I mentioned, I had an FBA brand that I sold through you guys and I had a bunch of other sites and just things I was trying. As I started understanding the benefits of doing what I was doing with the site, which is fully white hat, I wanted to dive more in, so I did a big audit and I updated a bunch of the content. I had this giant spreadsheet it took forever. Literally took like three or four months of my time just because I was doing it so intensely. It was all worth it because by the summer, as you can see in the revenues, screenshots and whatnot, we were up to, I’m Canadian so it was almost 20,000 Canadian in revenue, which I think was about 15,000 US.

Kurt:
Now August, September and I think October and December there’s been a variety of Google updates and those are algorithmic updates, not penalties. What happened in September, 26 after passing a bunch of the other ones, we were caught negatively in these September 26 algorithm update and so that’s why you see in September things starting to cool down. As the new year progress, there’s a couple of things that happened as well.

Kurt:
One is that the advertising revenue went down because in the Q1 you see a lot of advertisers pull back their spending because they’ve just blown through a huge budget in Q4 for the holidays. So that’s one small part of it. Obviously as the rankings were slightly lower due to the algorithm update that also affected it. So the good news is in March of 2019 that algorithm updates seems to have been reversed. You’ll see tons of people talking about it in Facebook groups who do SEO. It was like nobody knew what was going on. A bunch of huge sites were completely wiped out. A bunch of other ones were completely through the roof.

Kurt:
What seems to have happened as things seem to have normalized since March. We’re back pretty much at the same page views we were at, revenue is increasing to climb in May as you see in the April numbers there as well. So yeah, things are definitely on the right track. And like I said, it was definitely not a penalty, it was just being caught in one of the three to six months filters. So I have continued to do things, white hat, I have continued to improve content and giving Google what they want. And I think obviously that shows because they have now given me a vote of confidence, at least algorithmically so everything is looking good on that front now.

Jake:
You’ve mentioned a couple times that this is one of the larger businesses that you’ve had and have now come to sell. Is there anything that you’ve learned from this business that you will apply to future sites and businesses that you start?

Kurt:
Absolutely. I think pretty much everything. One of the things is to diversify the revenue and find those programs early. Because as soon as I got into one of the larger affiliate programs, as soon as I was able to apply to one of the larger advertising programs, as soon as I was invited to a couple of these smaller programs, those all went along with that increase in traffic. But if it weren’t for those new programs, I know that the earnings would be nowhere near what they were.

Kurt:
So I’ll definitely be looking into sort of the private and smaller affiliate programs as well as understanding the value of the authority of the site. We’ve now been quoted in places like Reader’s Digest, we’ve appeared on HGTV’s blog, there’s a whole bunch of places where just because we put out such great content and just because we reach out as experts journalists have covered us and the site in some pretty high end publications.

Kurt:
So I will definitely be focusing more on the outreach to journalists and higher end publications like that because I think it does move the needle more than getting the smaller mentions. Those are a couple of things. I will definitely be taken forward as I build new sites.

Jake:
Can you walk me through the time commitment and the process that you go through on a week to week basis for maintaining this business?

Kurt:
Yeah, there’s a couple of ways to answer this. One is I could literally do nothing and it would carry on growing and that’s the hard part answering these questions. I could work 40 hours a week on this if I wanted and I would just be tweaking content, writing new content, just emailing to get links, all that kind of stuff. But I don’t need to do any of that. So depending on what you want to do with it as a buyer, you could do nothing and let it sit, let it grow and let it and let it accumulate revenue and even cut expenses I suppose. But if you wanted to, you could make this a full time gig. It’s totally up to you.

Kurt:
So for me personally, I do a lot of the content myself. I like doing the outreach myself. I’ve got a couple of VAs who do smaller things like research for link building and stuff like that. But I probably on average spend like 10 hours a week tweaking articles, writing a few new ones. Some weeks like I said, I literally do nothing because I’m either out of town, which is actually coming up in the next couple of days. I’m going to go out of town for a week. I can do nothing on it. That’s fine. But then, to counteract that, I’ll go and I’ll write three or four articles in a week and then might take five or 10 15 hours. I would say roughly on average across the entirety, probably 10 hours these days.

Jake:
You mentioned link building and then you also have an employer to VA who helps with that link building. Can you walk me through your link building strategy?

Kurt:
Yeah, I’d definitely give a sort of a broad overview of the strategy and for any buyer who is interested, I can certainly share a little more in depth. For this site, we’ve had great results with guest posting. So what I have done is I will get this VA to go out and basically we do two things. One is she searches on Google just for keywords and places that accept guest posts and she’ll go out and write their story, fill in a Google spreadsheet with all that information with the site and the person’s name and the email. We do a little extra personalization in there, which I think gives great results so that I can certainly share with a buyer as well as she will also look for places where one of our excellent pieces of content might be able to be shared as a resource.

Kurt:
Basically, I’ll get that spreadsheet I will put that spreadsheet into an email, a software that works for this kind of link building and then I’ll just send out emails to all these people asking them if we can post on their site or if they’d like to link to one of our articles. And of course that works best in terms of, like I said, the article linking if the article is actually good and I think the content on this site is particularly good in most cases.

Kurt:
We also do things like use HARO, which is Help A Reporter Out and that’s where some of our larger relationships have come from. We’ve now been able to be put on these private lists of people who are looking for sources for their stories. So we don’t even need to reach out on HARO sometimes anymore, we get people saying, “Hey, I’m writing this article on pets and I wonder if you can say a word or two about it.”

Kurt:
So we’ve got three or four or five different things that we do to get links, but the ones that are sort of month in, month out, are definitely the guest posting and resource links and the HARO things.

Jake:
You also have a social media presence, including a Facebook account with about 30,000 followers and Pinterest with about 2000 followers. Can you explain how crucial those are for the business?

Kurt:
Yeah, I think that to me, nobody knows with Google 100% but to me it shows at least a little bit of extra validation in the eyes of Google. This is coming from my days when I was doing Amazon FBA, we found with Amazon that when you drove external traffic to a listing, it seemed to be that any sales from that would be worth more to the Amazon Algorithm. Because it was like people aren’t just coming and finding it on Amazon, people are hearing it from other people, therefore must be popular.

Kurt:
So I kind of feel the same way about social media with Google. It’s not that it’s going to help you rank, it’s just like that extra buffer that Google goes, “Okay, I see in the analytics, you know you’ve got X amount from Pinterest and Facebook.” It just sort of makes the site more holistic. So in terms of the Pinterest one, I should do more and I think that’s a great way for the next buyer to get some more easy traffic, is basically I’ve got a company who manages our Pinterest account and we make pins once in awhile on throw them up there and then they sort of schedule them out.

Kurt:
And it’s good to sort of get on those group boards because then you’re sharing other people’s and people are sharing your content and you sort of meet people that way and establish more of a broad relationship in the community. In terms of Facebook, I had done some Facebook Ad in order to grow that page. That was super cheap just because people in this niche are absolutely in love with their type of pet. So it was easy to get people to come onto a page dedicated to that.

Kurt:
So what I think the best value with that is, it’s a great bargaining chip when you’re looking for links. So for example, we’ll send out an email and say, “Hey, I would love to write for you and I’d be happy to share it with our 30,000 Facebook fans once it’s live.” And a lot of people will love to have that vote of confidence and that extra boost of traffic and likes, by having it on our Facebook group.

Kurt:
And this again, another thing that you know could be done better for sure. We’re not super active on social media, it’s just nice to have those resources as well. You can run Ads to the likes on your page and the people will have seen you before, therefore, it’s much more likely to convert on anything you’re running Ads to compared to just cold traffic. So yeah, not necessarily in a traffic play for Facebook, but more in a link building and potentially running paid traffic to offers.

Jake:
You also have the email list of about 1000 subscribers, correct?

Kurt:
Yeah, that’s right. This is another thing that I think would be a huge win for someone who knows more than I do. And I’ve always dabbled in email and collecting emails, but I’ve never just got it. Whereas I see other people building lists like instantly, I’ve always struggled with it. So there’s definitely the traffic on the site to get a good size email list if you’ve got the knowledge and how to do that. We’ve got about a thousand people on the list right now and that’s after a cleanup of cold email subscribers. So these people are those who are new or engaged or otherwise have reacted with our content.

Kurt:
This is a decent list here that are all really related to the niche. They have heard from us before they interested in loving their pet basically and it’s a great start to send things out too. And actually one of our latest email campaigns, which you’ll obviously get as a buyer, in one of our automation campaigns was a particular section of this pet care industry and we have got emails back thanking us for just how good an important the content was because it’s on a subject that’s quite difficult and tricky to navigate.

Kurt:
So I mean we definitely… it’s not huge, I mean a thousand people, but it’s so good that some of our people are actually emailing us back to automated campaigns saying thank you for this information. So yeah, that’s definitely a nice little part of the sale as well.

Jake:
So do you feel like you are monetizing this email list as much as possible or do you feel like there’s even more opportunity there?

Kurt:
No, I basically never monetized. The thing that I did was I ran like the course almost and at the very end we suggested people buy a certain product, but that was like the first thing we’d ever done to monetize it really. These people have been given a lot of information, they’ve been given intermittent newsletters if somebody knows how to monetize an email list, definitely let me know and tell me how. This is a great way to do that because we certainly have not hit them over and over with sales.

Jake:
Hey listeners, do you want to find a business that is just right for you, head on over to Empire Flippers and have a look at our marketplace where you can see real businesses making real money just like the one we’re looking at today. In fact, don’t miss out, head over now, share your email address and we’ll send you hot, fresh new listings of successful businesses every week to your inbox. Now back to the interview.

Jake:
In addition to growing the social media and utilizing that more and then also monetizing the email list, what are some of the major opportunities for growth for this business that you would focus on if you were to keep it?

Kurt:
Yeah, I would carry on doing what works basically. So as we mentioned, I would probably increase the amount of pins we’ve got on Pinterest. It’s always healthy, I always get reports saying the account’s in good shape and growing, but they always say if you could just add a few more pins here, a few more pins there. So I would definitely dedicate getting like probably a few hundred pins made up just to get out there in the next couple of months.

Kurt:
Obviously the social media and the email we touched on and the other three things that come to mind are one carrying on the content. I’ve got a list of articles that I’ve been working on as well as ones that could be updated slightly. And so I’ve got a huge list of those that I can send over and some of those have briefs along with them, like what I would be writing about and the keywords I’d be targeting. So obviously new content on a site like this.I have posted some new stuff recently in a couple of our categories and their ranking and getting traffic within days to weeks.

Kurt:
So they’ll get a few hits over the first couple of days, two to four weeks later. For example, a couple of them have now got 50 to a hundred visits per day just on new content based on the authority of the site alone and the low competition. So, that’s definitely what I would keep doing. Obviously there’s basically endless links to get in this niche. You can cross it over to different types of pets, so you can cross it over between seniors and pets, children and pets, pets in the workplace, like there’s so many shoulder niches that you can target to get links for this site that I think it would be super easy just to carry on basically indefinitely. Doing guest posts campaigns or infographic campaigns or resource campaigns or anything like that.

Kurt:
We also have never really done what’s called like skyscraper technique and I’m sure you’ve heard about that. The guys that Authority Hacker are really big into that lately. Never done that on this site. So there’s a lot of link opportunities left. And finally we’ve got a project that we’re about probably a third to a half the way through, that we’re posting reviews of every single type of a certain product and basically compiling a massive database on our site.

Kurt:
Basically we want to be known as the go to place for honest, factual reviews of this certain type of product and we want to cover literally everyone that’s on the market. So I’ve got all that data in a giant spreadsheet and about half the posts are live as individual reviews, but there are still about half to put up there. So that would also drive in more targeted individual review style traffic and that will obviously be included in the sale as well.

Jake:
You know the best thing about a lot of those things that you mentioned is that they could easily be outsourced. So if a new owner, as you were saying earlier, wanted to make this a hands off business, it seems like they could do that and still try to grow the business. Now a question I had based off what you said there, you mentioned the skyscraper method here, can you go ahead and go into a little more detail for someone who’s listening but may not have an idea of what you’re referring to?

Kurt:
So this skyscraper method of link building is popularized by Brian Dean of Backlinko and then sort of improved upon in my opinion by the guys at Authority Hacker. Basically what you do is the goal is to create the best content in a particular space for a particular keyword. And I think we’ve already got the content in like at least 10 verticals to do this already, because like I will toot my own horn and say I’m a pretty good content writer particularly for the big important pieces we’ve got.

Kurt:
Basically you take an excellent piece of content that you know, other sites are already ranking well for that have a lot of links to them and you basically make this content the best out of all those other ones that have links to them. And then you basically use [inaudible 00:21:19] or whatever else tool you use to download the back links of those top ranking sites, the first top hundred even from Google. And what you do is you then send an email to all of those people who are linking to the existing content and you ask them to link to your content as well or instead.

Kurt:
So for example, if I’ve got an article on how to grow trees the fastest and my article is 10,000 words and I’ve got pictures and videos and all that kind of stuff of me doing this and my tree grows way better than anyone else’s.

Kurt:
I can then find all of the top hundred ranking people on Google for how to grow trees fastest and I can then pull all their links and I would send an email out to everyone who links to any other article and say, “Hey look, I know you link to this one it is a good resource, but I just want you to look at this one that I’ve put out. I think it is improvement on the ones that are out there. We cover a little bit more, we’ve got some videos, so I think it would be a really useful resource for your readers if you were to share it as a link in one of your pages.”

Kurt:
So that’s the long and short of it and I think that the content on this particular site is already good enough in many cases to do that. But of course there’s probably literally thousands of different ways to do this for each site.

Jake:
Do you feel like this business has any potential risks that new owners should be aware of?

Kurt:
Basically just Google, like every single other [inaudible 00:22:40] on search traffic. I don’t think that’s a real surprise, but otherwise, I honestly don’t think so. Particularly this niche, it is growing, it is so evergreen. The demographics are changing in this niche. So you’re getting, seniors are typically the ones that we’ve been targeting, but suddenly there is a new generation which is millennials who are almost at the same level now of interest in this particular niche as seniors. So you’re getting this whole new basically group of buyers who love their pet as if it were a child in many cases and are willing to spend on it.

Kurt:
So demographic trend wise, it’s all up and I think like I said, the only risk as with anything online is just whether Google continues to take a liking to it, which it has for most of its existence. But otherwise nothing major, it’s not a technical niche, it’s not relying on software so it’s hard to find anything other than that.

Jake:
Well, it’s funny you mentioned the millennial generation here. As a millennial myself, I can definitely confirm that my generation loves this kind of pet. So definitely no worries for you with this business. So Kurt, you have a lot of experience growing businesses and getting them to this point. Now, if someone were to come to you and say, “Kurt, what would be your number one piece of advice for me getting started to do this as well?” What would you tell them?

Kurt:
To get started right away and just test it for yourself. I went through years of following like 20 different SEO blogs, but until I started doing things myself and started paying attention to the things I was doing and whether that worked or not, you know, it’s hard to actually tell what works. So start one or two projects, try different things as you go and figure out what works.

Kurt:
And in my opinion, I would find two to three trusted, no snake oil, no BS marketers who you trust to follow and just do what they do basically, the info is out there. It’s unbelievable. You have courses for either free or a couple of hundred bucks, where people can go to find exactly how to do this and yet there’s not many people out there who are making these sites and selling them for six figures, whatever.

Kurt:
So it’s out there. You can do it. You just have to actually put the work in. I would have cut down the people I follow a little bit earlier, but otherwise, the biggest thing for me was I just did the work and noticed what happened when I did.

Jake:
Would you commit to a noncompete?

Kurt:
Yes.

Jake:
How much support are you willing to offer a new owner during the transition period?

Kurt:
Well, pretty much as much as you need. I mean at the very least a couple of Skype calls for an hour each, email support for months definitely. If you want to Skype or whatever to get a little bit more in depth, we can do that. I will hand over everything and I’ll give you my plans any notes that I had. So for the first month at least, I’m basically all yours in terms of getting up to speed.

Jake:
Are you open to negotiating on something like an earn-out?

Kurt:
I’m open to negotiating with the right person on anything. There’s a price for everything and if you have an offer that you think I might like it, then I am all ears.

Jake:
Kurt, I really appreciate you taking the time with me today. I’ve loved this conversation with you, but before I let you go, I have one final question. If you’re looking at this business from the perspective of a potential buyer, why would you feel like it is an asset worth buying?

Kurt:
It is by far one of the best content businesses out there. I do this all the time and I take great pride in this particular site because it is just so good. The links we have got, the content we have put out the fact that we are now recognized as experts in this industry, like I said, HDTV and Reader’s Digest blogs have both mentioned us as experts in this particular niche.

Kurt:
It’s so clean, like I said, it’s so white hat. Then it’s got great diversification in the revenue. There’s always new programs coming up. There is basically a blueprint for content that you can just get written or write yourself. There’s opportunities to get links, which I’ll hand over to you. There’s already a researcher in place. There’s a Pinterest team in place yet it’s hands off. It’s super clean and I think it’s one of the best content sites on the market.

Jake:
And it’s in a niche with an ever growing fan base.

Kurt:
Yeah, and evergreen ever growing fan base. It’s pretty incredible how much people will spend on this particular type of pet and how much this pet means to them.

Jake:
Kurt, I really appreciate you taking the time with me today. Thank you so much.

Kurt:
Yeah, you’re welcome. Thank you for taking the time. Jake.