Site Flip - Flipping Web Sites, Web Pages and Domains

Site Flip is the Web's first blog dedicated to the business of flipping websites! Flipping means buying a website, improving it, and finally selling the website for a profit.

Site Flip: Buying and Selling Websites for Profit

Thursday, July 27, 2006

Dumb & Funny Domains People Have Bought

When buying your domain, you need to consider how others see it. Here are 10 groups who didn't and the uproariously funny website URLs they're stuck with.

From the Site Flip perspective, I see commercial possibilities here, given the publicity that can be built up by using this sort of thing, not to mention the free backlinks!

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Tuesday, July 25, 2006

Website Appraisals 101: Revenue Appraisal

Having a good eye for appraising a website is one of the site flipper's essential skills. After appraising a website's content the next most important factor to value is revenue. If you enjoy the read, consider my free newsletter.


In traditional business takeover theory, a business' value is estimated in multiples of monthly revenue. The standard multiple, or range of multiples, varies depending on the type of business. This is basic, and simple enough that it needs no more explanation than that.

This leaves us with certain difficulties, however. Firstly, earning revenue is not synonymous with making profits, and secondly, a site's revenue streams aren't taken into account by a simple assessment of revenue.

Revenue vs Profits

Many websites earn a revenue but don't make a profit because costs exceed revenue. (Recall from business 101 that Profit is Revenue minus Costs. P = R-C) A situation where costs are greater than revenue is commonly known as being in the red, or running a deficit. Depending on the website, such a situation presents either humongous potential or a seductive trap. The following are the key issues in differentiating one from the other.

1- Ease of profitization: We've all heard of monetization, but the key issue is really turning a website into a profit generator. To see if turning a profit would be easy, you need to consider monetization opportunities (affiliate programs/advertisers/other revenue generators in the niche), the traffic's demographics (return users vs new, trust factor, disposable income of visitors) SEO, and whatever else could have an impact.

2- Turnaround time to profits: A website flipper conducting a revenue appraisal will look at how long it will take to turn a deficitary situation around. That means two things. First, time the site flipper will put in working on the site. Second, the time span until the website turns a profit. Usually, when a website reaches a certain critical mass of traffic, it can break even. A site with easier profitization will have a faster turnaround time.

Those are the two main factors I know of. If you know of any others, you're welcome to leave a comment.

The point I'm making is that when a website earns revenue but makes no profit, this isn't necessarily a bad thing. Site flippers with an eye for a bargain will seek out websites in the red. This is because their financial situation is inevitably a huge bargaining chip. If the website can be easily profitized with a quick turnaround, well, a good deal has been found (with regards to revenue appraisal; other factors may not make the site worth purchasing).

Sources of Revenue, or Revenue Streams

With respect to sources of revenue, finding out if a website's revenue streams are diverse and sustainable is the main task of a site flipper.

In terms of being varied, the desirable amount of revenue diversity grows proportionally to a business. For example, a small business with a handful of revenue streams can be contented. Any more might cause logistical difficulties, while any less would put the business in an undesirably risky and dependant position.

By contrast, it makes sense for a big company to have several sources of revenue. One of the greatest failures of modern business saw GM's parts manufacturer Delphi be spun off. It only had GM as a client. When GM ran into financial troubles, the Delphi went under. "The former wholly-owned parts unit of General Motors Corp. (down $0.06 to $28.29, Research) said it has been hit by the downturn in fortunes at the world's largest automaker, as well as by its own internal problems."

With particular respect to the website market, I've seen cases of people placing a premium on non-Adsense revenue streams. I personally have no problem with Adsense, but there is obviously a problem with over-reliance on Google's ad platform as a revenue source.

In terms of being sustainable, revenue streams should preferably come from a source independant of outside factors. For example, a website that has been earning money by selling FIFA World Cup soccer balls will oviously have revenues tail off as interest drops post-Cup.

In appraising a website's value, consideration is given to:
  1. multiples of monthly value,
  2. the ease of profitization,
  3. turnaround time,
  4. revenue diversity, and
  5. revenue sustainability.
I've invented a formula to take these factors into account.


Revenue Appraisal Range = RAR
Monthly RevenuE = MR

The lower multiple in the industry's revenue appraisal range = LM
The higher multiple = HM

Ease of Profitization = EP
Turnaround Speed= TS

Revenue Diversity = RD
Revenue Sustainability = RS

RAR = {LM x MR + [(EP + TS) x MR] + [(RD + RS) x MR]} to {HMx MR + [(EP + TS) x MR] + [(RD + RS) x MR]}

This can be simplified. Combining Revenue vs Profits into one factor (e.g. EP + TS become Revenue vs Profits, or RvP), and combining Sources of Revenue into one factor (e.g. RD + RS become Sources of Revenue, or SouR), we get:

RAR = [MR x (LM + RvP + SouR)] to [MR x (HM + RvP + SouR]. Of course, these factors are weighted and adapted as per their importance.

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Thursday, July 20, 2006

Site Flip Banned Abroad!

In case you didn't know, Site Flip is such a dangerously subversive blog that India and Pakistan have both banned me from their citizens computers. Apparently, the BBC says I'm not the only one. I'm guessing my City SEO blog is also cut off from the Indian subcontinent. If you enjoy the read, consider my free newsletter.

Here's the commentary I posted over at Earner's Forums.

Why are some blogs blocked? According to the BBC:

A federal government notification of July 2003 says it can ban websites in the interest of:

* sovereignty or integrity of India
* security of the state
* friendly relations with foreign states and public order
* preventing incitement to commissioning of any cognisable offences.

What I find funny, generally, is that Google played along with the censorship game in China, and is now feeling the other end of this.
Wouldn't it be grand for and to be blocked abroad? Let the smarty pants know what it's like to be blacklisted.

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Tuesday, July 18, 2006

Earner's Forums: Great Resource on Monetization

Amongst a Site Flipper's core skill set is the ability to monetize a website. Lee Dodd is a forum wunderkind who makes a killing off of websites, and is particularly well regarded as a forum guru. Which is why I sincerely encourage everyone here to go read and join Lee's Earner's forum.

In particular, you should look at the Ask Lee thread in monetization, where he answered my question on how he conducts research :D, amongst others. In fact, it's quickly becoming a popular thread as other gurus join the discussion, and as of this writing, it has been stickied to the top of the forums. Also take a pass at the SEO forums there, of course. If you're smart, like I said above, you'll join Earner's forums.

Consider my free newsletter.

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10 Tips on Website Buying

SEOMoz' Egol has 10 tips to share about buying a website. Egol's tips for website purchases tackle things from a combination legalistic/SEO point of view which is quite interesting. Note: If you enjoy the read, consider my free newsletter.

Some of Egol's main points, which really apply to any important business deal. However, I think it's worth noting that much of the legal stuff is only important for big deals. There's no point spending $200/hr on a lawyer if the domain itself costs $100.

In short: Hire a lawyer, use escrow services, make sure you get the deed/title/legal papers cleanly, and buy the domain for its "sexiness," content, and backlinks.

Get the full 10 tips on buying websites over at SEOMoz.

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Friday, July 14, 2006

College Startup Has Been Sold!

College Startup has been sold. If you enjoy the read, consider my free newsletter.

Site Flipper Ben Bleikamp sold his youth-oriented entrepreneurship and business blog to fellow business blogger David Krug, of The price: $1400. Nice, huh?

My personal opinion on it is that content-wise, David got a bargain. I appraised the content at a minimum $600-700 value. On the other hand, Ben got a good price revenue-wise, as he hadn't generated a steady stream of revenue on College Startup.

Congratulations to David, the auction winner! Stay tuned to see where he takes College Startup.

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Tuesday, July 11, 2006

Interview with Blog Flipper Ben Bleikamp

Ben Bleikamp of College Startup fame is now selling another one of his blogs, College Startup. I sat down with Ben and we had a great chat on flipping websites for a profit. If you enjoy the read, consider my free newsletter.

Ben first came to my attention as a Site Flipper when I read about his sale of The Poker Blog. His method of blog flipping can be summarized as build, write, and generate revenue, then sell for a profit.

Ben and I discussed a variety of things. Amongst others, Ben dicussed his new launching Lovely Blogs project, shared some great insights on what makes a website sticky, and traffic building techniques, and investing in websites by taking out mortgages.

Lovely Blogs is Ben's showcase of nice blog design, which makes sense when you consider that Ben is a succesful blog designer himself. What many people may not know, though, is that Ben is also a marketing genius. "I went from 0 to 100 subscribers since friday evening," Ben told me soon days after launching the project. "In 4 days I've gone from 0 uniques to over 270 a day," he continues. "People love the concept, so far."

This success has surprisingly not involved typical promotion methods. Perhaps it's because of his attention to design, or because they are often ignored, Ben hasn't pursued any blogrolling opportunities with College Startup, and he isn't blogrolling with Lovely Blogs either. Rather, he's pursuing an original backlink strategy.

"I'm not requesting links," Ben tells me. "I hate people that email me like 'hey I linked you, link me back!' So basically I interview a designer, then they are like 'hey check out my interview here,' so the designers are all linking back to me.

The question then is how Ben wants to keep traffic up, after the links from interviewed designers stop sending traffic along. Well, for starters, Ben's website is interactive. There's voting on how pretty a blog is, an integrated blog, and RSS readers obviously mean lots of return traffic as well. More is coming, according to Ben, and based on what he's told me, visitors can expect some great resources.

Finally, Ben and I discussed blog investing. That's a fascinating issue that deserves to be covered on its own, though, so I'll be writing about that tomorrow.

So where is this all heading? I checked back at Lovely Blogs today to find this lovely news: Ben's overwhelmed! There are 500 RSS readers already, and a week after launch, he's logged thousands of uniques! I, for one, have taken note of his traffic-building smarts. Anyone looking at updating a website's design should consider either hiring Ben or some of the designers at Lovely Blogs! Though ... with his marketing smarts, I sincerely doubt he'll need it. Lots of luck to this genius Site Flipper!

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Friday, July 07, 2006

Yahoo Flips Network. Who knew Yahoo Site Flipped?

While researching the history of site flipping, I've found that Yahoo! is a player in the industry. If you enjoy the read, consider my free newsletter.

Of course, everyone knows that Yahoo! bought out in order to use its social bookmarking behavioral stuff in its algorithms. But who knew that Yahoo! had bought out

The hat-tip goes to Darren Rowse for the tip-off that was for sale. The Problogger also mentioned it was a "renovator's" project, and I disagree with him there. At $2500+ dollars of loss, it obviously wasn't a project for the beginning or independant Site Flipper, which is what felt implied there.

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Thursday, July 06, 2006

Website Flipping Tips from Real Estate Investors

I was surfing the Web and I came across a real estate website discussing the opportunities the company was interested in. Many of their buying interests can be translated into tips for website flippers in the Web estate market. If you enjoy the read, consider my free newsletter.

Here are the LargeRealEstate investors's interests:

  • Properties priced below replacement costs: Well located properties that can be acquired at a price below replacement costs where underlying conditions may be affecting rents.
  • Neglected Properties: Properties that may have been undermanaged and that require aggressive asset management and possibly moderate capital expenditures.
  • Properties with rehabilitation potential: Assets in need of physical rehabilitation. Examples would include underperforming properties in good locations that may have not been maintained to remain competitive.
  • Properties with Expansion Opportunities: Properties that can be acquired with an opportunity to add or build out additional density.
  • New Development: We seek to take equity or equity like debt positions in both speculative and pre-leased ground-up development projects.
Translating that into the world of website flipping, website bargains are:

  • Established websites that are priced below what it would cost to rebuild them from scratch: Websites with lots of links and/or part of a good network, priced below replacement costs, and not being monetized to potential.
  • Neglected websites: Frequency of content updates has been faltering, comment spam is accumulating etc. Design is out of date and cannot handle what the website has developed into.
  • Websites with awful design: This can be in terms of layout, graphics, usability, "busy-ness", poor SEO, etc. Good links and networking, but the website itself needs repair. (My note: A problem that can be related to neglect.)
  • Established Websites whose content can be quickly enriched: A website with good bases and richness of content that can easily be expanded. For example, popular music forums can probably add a forum for music video discussions.
  • New website/blog with pre-existing marketing: A website can leverage the owner's other websites for traffic, links, content, etc. A good example would be Darren Rowse's b5media blog network.

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Wednesday, July 05, 2006

College Startup Blog is For Sale!

Site Flipper Ben Bleikamp has posted his College Startup blog for sale! If you enjoy the read, consider my free newsletter.

The flipper behind the Poker Blog sale is now selling his small-business blog, College Startup, through SitePoint. The starting bid is $1000 (solely based on design it seems), and the BIN price is $6500.

According to the content appraisal formula posted yesterday, I suggested to ben on Google Chat that he was undervaluing his site's starting bid by anywhere from $600-$700, and depending on the technical quality of the posts and their utility, by possibly as much as $1000.

I'm personally interested in buying the College Startup blog, if only as a great flipping possibility (especially considering that I think it's undervalued). The thing is, I don't know if I can afford that kind of money. I'd prefer to finance the deal and or find some partner to purchase it with.

In the next day or two I'll evaluate the opportunity, appraise C-S, and post a follow-up as to what my plans, if any are.

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Website Appraisals 101: Content Appraisals

Here's a basic how to guide on website appraisals: what factors to consider and what each is worth. If you enjoy the read, consider my free newsletter.

For anyone interested in flipping websites, the appraisal process is one of the most important to master. It will allow the expert appraiser to find a bargain and get the ill-versed to buy a website for a price hugely above its true value. The most important factor in appraising a website is its content.

Other basic factors to consider in any appraisal are revenue, SEO, traffic and design. I'll cover those in future articles.


Content is the first and foremost asset of a website on today's Internet. Nobody will go to a website with no content, so that a website that lacks content may as well not exist. By content I mean anything that people can interact this, including articles (reading), software (downloading) etc.

Consider the Google search for Home, which returns a front page full of newspapers and other content websites.
Consider why anyone would link to a website that had no content?
Consider whether anyone in the world has willfully linked to an "error 404: page not found," webpage.

Content, as you'll see me emphasize on my SEO blog, is king.

The problem is that it is difficult to value content. In part, this is due to the fact that there exists considerable difference between what different publishers will pay for content. Newspapers (here in Canada, at least) pay $150 for a regular length story and $400 for a feature (1000-2000 words). Online publishers such as SitePoint pay $40-100 per feature length article.

I believe that the key valuation points for content are utility, technical quality, time invested, and the hourly cost of production. Allow me to explain what I mean by each of these four factors.
  • Utility - How helpful/useful is the article? Pillar articles such as guides, how tos, and other feature-type pieces (in the 1000-2000 word range) are usually the most useful. Utility is an assessment of the richness of the information presented.

  • Technical Quality - Assessing the content based on technical standards, how good is it? For example, if the content in question is text, quality can be judged by how interesting the author makes his subject, his clarity, and other measures. Software can be judged by its ease of use, features, etc.

  • Time Invested - How long was the creator working on his content? Research, production (e.g. writing, recording, filming, coding etc.), and editing are naturally a part of this, but training of the author places a premium on any time invested, as it was an expert performing the research and so on. This is measured in hours.

  • Hourly Cost - What could the person reasonably charge for their time? What would it cost per hour to have someone else with the same qualifications produce the same content? High-powered lawyers have been known to charge $500-1000/hour, but you can just as easily have a $100/hour lawyer file a lawsuit for you. Hourly cost is the average of what the person could charge per hour vs what someone else with the same capabilities could charge.
Personally, I would add a factor of plus/minus (+-) 0.7 for utility to another factor of +- 0.6 for technical quality. (I weight utility slightly more heavily because you can wade through a boring text that's information rich, while being fascinated by a useless article, podcast etc. serves no one.)

The sum of Utility and Technical Quality I would multiply by Time Invested. The product of this multiplication would itself be multiplied by the average of the author's hourly cost and the equivalent hourly cost of someone with the same qualifications.

The final mathematical equation looks like this: (+-0.7U +-0.6TQ)(TI)(Avg HC) = Appraisal of a Website's Content, or Content Value.

I know this unit based appraisal system becomes difficult to perform when a website has hundreds or thousands of pages of content (software is actually easier, while music and video are grey zones given differences of personal preference). This problem could be solved using a random sampling method to pick a sample of 10% of the content, and then averaging out the appraisal of that 10%.

Note: These numbers have been picked because I consider that they will give a fair and logical appraisal of a website.

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Monday, July 03, 2006

3 Necessary WebSite Value Lessons from the Poker Blog Sale

Ben Bleikamp of College Startup sold his Poker Blog, and his discussion of the Poker Blog's Sale is required reading on site flipping and website valuation. Here are some lessons I learnt and that anyone who wants to work in the site flipping industry should learn too. If you enjoy the read, consider my free newsletter.

Ben is a web entrepreneur who is in fact one of the inspirations for Site Flip. When he sold the Poker Blog, Ben wrote about the three basic tasks involved in site flipping. While we differ on the terminology, Ben makes the point that you need to "build it," then go about "pricing your website" and finally "selling your website."

Lessons on growing a website's value.

Ben notes three principal valuation factors for a website. I entirely agree upon their importance, though I would include revenue in there (and the Poker Blog's buyer did indeed consider the blog's monthly revenue). The first factor is content. The second factor is PageRank/backlinks, and the third factor is traffic.

Lesson one - In building a website to flip it, work first of all on its greatest asset: content.

Businesswise, content is a website's greatest asset because it can usually be developed with the sole cost of time. At the other end of things, content can be used for all sorts of profitable ends, such as generating traffic, backlinks, interest from advertisers, trust from customers, sales etc... Content includes text, audio, and video, but the real meaning of content is anything interactive. When a website offers downloads, there is an interaction going on. Arcade websites (those offering original games, anyways), have an incredible content value because of the high level of interaction going on.

Ultimately, content is an asset like machinery and real estate. Actually, it's an asset far greater than machinery and real estate, because of its cost-effective nature and great cost-benefit involvement.

Lesson two - Once your site has a fair amount of content, it's time to market it, and SEO is King with regards to marketing.

Developing a Search Engine Optimization (SEO) strategy that gains high search engine rankings is an essential part of this. The fact of the matter is that everyone in the website market nowadays is at least vaguely familiar with the importance of ranking well in search engines. (Namely that the traffic the engines direct will result in sales, advertising revenues, etc.)

The effect is that a dollar premium is accorded to websites that rank well. As Ben writes at College Startup: "[A proper SEO strategy] will also help add value when you're selling it [your website]. People like to see a site with a PR4 [PageRank 4; PageRank is an indicator of the importance Google attributes a site] or higher, it lets them know the site is established and has a nice number of links coming back to it." While it's technically possible to gain PageRank with few backlinks, Ben's point is generally well taken.

The point here is that as opposed to advertising-based marketing, search engine optimization (or search engine marketing as it is sometime called in reference to its broad application) provides lasting value to a website. Backlinks once earned are generally there to stay. With them PageRank is generally there to stay. (PageRank is also a function of content, which again reinforces Lesson 1 above.) For this reason, paying an SEO specialist such as myself to develop your website's SEO strategy is the equivalent of buying an asset.

Lesson Three - Traffic comes third after content and SEO.

When the content and SEO are in place, backlinks and search engines will send traffic your way. There will be no need to "buy traffic," or to buy "expired domains for the traffic," as a few of the less reputable practices on the web suggest.

Traffic on the web is like the saying: if you build it, they will come. Get the content in place, take care of the SEO, and people will be coming to your website in no time.

Note: This is a lesson that I learnt from Ben; he didn't write this explicitly.

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