Over the next twelve months I’ll be releasing thirty articles that go deep into the brave new world of investing in websites.
Website investing is an emerging asset class that is now starting to both professionalize and institutionalize through the creation of several funds over the last year.
A website investor is someone who invests in revenue-generating content sites, and scales them to either cashflow or flip as a way to diversify from traditional, established asset classes such as real estate.
Entrepreneur investors (such as those in the Invest Like A Boss Facebook group) are always looking for growth and yield. Corporate executives are looking to either supplement or exit their day job through buying an income.
And those looking to retire, either early with the FIRE community or at the end of a regular career, want income-producing assets in their pension / 401k.
What is a content site?
There is a wide range of digital assets to buy, however with website investing, I’m referring exclusively to SEO driven content sites. On the Flippa marketplace that would filter your search by website types Content: Blog and Content: Review such as in this search string.
Content sites predominantly make money from affiliate commissions and advertising. The most common affiliate program is Amazon Associates and the default ad network is Google Adsense. However the revenue generated per 1000 visits (RPM) from Adsense is low, typically $2-$4, whereas, on more premium ad networks where you have to apply, such as MediaVine, you can achieve anywhere from $5 to $30 RPM. Pure affiliate sites can achieve RPMs from $50 up to over $1000 such as promoting software that has recurring commissions that compound every month.
The website investing industry
The business of buying and selling websites is done on platforms such as Flippa, brokerages such as Empire Flippers who represent the seller, and private buyers and sellers such as in the Niche Website Flippers Facebook group. Other than courses, there’s not a lot of support for website buyers out there which is why I started a paid newsletter for website investors where I vet deals every week.
Is buying a website a good investment?
Empire Flippers did a recent study where they interviewed 30 buyers about their experience after acquisition and found that 46% had increased monthly income and therefore asset value. It’s much easier to double the asset value of a website acquired for $50k as it is for $300k as there is typically more upside left on the table. When acquiring content sites $500k+ it can be hard enough to just maintain search traffic due to the larger number of pages in the google index to keep up to date. And from exclusive interviews I’m having with website investors who are building out on domains rather than buying websites (i.e. investing anywhere from $5k-$50k per site), the consensus seems to be to aim to average 3-5x when repeating over 10-30-50 sites. But no-one I have spoken with yet has been able to prove the ROI and this is something I will be delving deep into throughout this series.
What are the opportunities for investing in websites?
There are many ways to make money from investing in websites. You can buy a site with the intention of adding your skillset and flipping within a year (as I detail in this post) as a way to snowball your capital. You can build a site on a brand new domain and aim for it to break even within a 12-18 months and return capital invested between 18-24 months. Or you can build out on aged domains that already have domain authority from decent backlinks so you can avoid the Google sandbox, start ranking quickly and reduce your time to exit. I have interviewed website investors such as Hektor from Hekkup whose sole strategy is to buy premium auction domains such as from ODYS, invest $5k into each site (90% content 10% links) and look to flip for $30k+ exits.
What are the risks from website investing?
As content sites rely on google organic search traffic (by design, not fault), the risk is that a core Google (algorithmic) update will negatively impact search traffic. I’ve looked up thousands of websites in Ahrefs and have seen many crushed by Google updates, especially the November 8th update last year where some sites lost up to 80% of their traffic and therefore revenue. And it’s often not possible or not worth the level of investment to try and get them back to a former level.
Who should invest in websites?
To invest in websites I think you have three options:
- Be the website operator yourself or hire staff to maintain and grow your assets – this is the most active option where you keep the responsibility for maintaining and growing your assets.
- Partner up with an experienced individual website operator who can prove to you their past success (i.e. successfully sold a significant site).
- Use an experienced operating company such as Onfolio who runs the site hands-off for the investor. Beware any company that guarantees a return as detailed in this post on Authority Website Income.
Previously I have been the operator in option two above, partnering with website investors, but now I focus on option one, helping active website investors to manage their assets through creating playbooks and operational process templates to follow.
In this series on Flippa, over the next twelve months, I will be covering the following topics:
- How to generate upside from buying revenue-generating sites and starter sites
- How to achieve ROI from acquiring and building out on domains
- How to find good content site and domain deals
- How to do due diligence on-site and domain acquisitions
- Should you grow to flip or maintain for yield?
- When should you sell a website
- Should you use a broker to sell your site
If you have any additional topics or questions relating to website investing you would like covered just hit me up via my website richardpatey.com.