I know on the Chinese calendar 2011 was the year of the Rabbit, but in the online world it was definitely the year of the PANDA!
As most of you are aware, Google unleashed several updates to its algorithm in 2011 to clean up the search results and make them more relevant for the users. As a result, there were thousands, if not millions, of sites that got affected by this for better or for worse. For all the webmasters who make a living online, it was a fun ride to say the least.
As someone who sells sites for a living, I was contacted by hundreds of webmasters who were looking to sell their sites. Pretty much all of the conversations with these webmasters had the same outcome. They would ask me what their site was worth and I first asked them what they made from it the prior year (2010). I would get all sorts of responses for that question, but my follow up question: “Did you get hit by Google’s Panda update?” got me the same response almost every time. “Yes, it did, and my revenues and traffic have decreased ever since”.
It seems like when most webmasters got the rug pulled from underneath them, they were quick to give me a call to try and sell their sites. The biggest problem with doing that is it was almost impossible to put a proper price tag on the website. You certainly could not price it on what it was doing prior to Google’s update even though webmasters wanted it to be priced that way. However, it did not make sense to price them on post Panda earnings either as many people knew there was another update on the way that may reduce earnings and traffic even more. As you can imagine, that’s a less then ideal scenario for a seller or a purchaser.
It was a tough time in 2011 for webmasters who experienced this, but there was light at the end of the tunnel. Most webmasters got smart, learned from their mistakes, and are now slowly seeing the fruits of their labor. Some sites just did not stand a chance after Google’s updates, but quite a fair number of them are seeing their traffic go back up by doing the right things.
At our Web brokerage firm, WeSellYourSite.com, we evaluate sites on a daily basis. We probably look at 50-100 sites per week and determine if they make a good investment or a bad one. Google’s update made things a little challenging for us in that regard, but it was nothing we could not handle. We simply passed on the sites affected by Panda and focused on the quality sites in sellable niches.
Some of the most popular/sellable niches last year and moving forward include:
- Group Buying
- Couponing Sites
- Free Sample Sites
- E-Cig Affiliate Sites
- Forums (covering all sorts of topics)
- Drop-Shipping Businesses (E-commerce sites that hold no inventory and ship direct from the suppliers)
- Viral marketed entertainment sites
- Affiliate driven content focused properties
Many sites in these niches were bought and sold in 2011, but all of the sites, regardless of the niche, had a few things in common:
- They all had proper bookkeeping.
If you are operating a website and thinking of selling down the road, be sure to keep track of all of your revenue and expenses from the first day your business starts operating. Use any reputable accounting software (we use Quickbooks and Freshbooks) and just make sure that all revenue generated is provable via bank statements, merchant statements and/or tax returns . Separate earnings and expenses by specific website properties and do not mash them into one.
- They all had a history of generating income.
All of the sites that were sold were able to show at least 12 months of income. As well, the income was either steady or growing rather than decreasing month over month.
- They all did not get hit by Google’s Panda Update.
Website buyers/investors were simply scared and turned off if they saw a site that lost its revenue and traffic due to Panda. They were scared that it will happen again and could not stomach making such a risky investment.
- They were all priced between 2 and 3.5 times net profits over and above $50,000.
This is the range where deals happen. Website Sellers who want more than this often really do not want to sell but would sell if they got a price that the market is not willing to bear.
If you want to sell, DO THESE THINGS!! Regardless of the type of site you are operating, please keep these points in mind when considering a sale and valuation.
All this being said, these are the types of quality sites that website brokers like us sell on a regular basis. There are certainly other sites that get sold that do not fit these criteria and can be found on any number of website selling marketplaces online.
The websites selling marketplace is still in its infancy. Even though webmasters have been buying and selling sites for several years, there is still a much higher demand for quality sites in the marketplace yet the supply remains low.
Whether you are just starting out or already established, make sure to keep in mind what we have mentioned here as you will be well on your way to getting the best value for your site when you are ready to exit.
This post was guest blogged by Justin D. Hartzman.