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

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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