Flip This Web site: How to make money others are missing

houserepairs.jpgHave you seen A&E's TV show Flip This House? The idea is to buy old houses for affordable prices, remodel them, and sell them for a nice profit. In another post I recommended buying established web sites as an excellent link-building tactic. I actually mentioned that this is a practice for big leaguers because web sites with worthy traffic and links are usually expensively out of reach for most bloggers. But I neglected to mention a strategy that can be used by anyone, not only those with big budgets: find a web site with a lot of traffic, but with terrible monetization efforts.  

Sites that are already making money sell for 4 to 7 figures, but usually those sites have savvy entrepreneurs behind them that succeed in monetizing every single visitor that lands in their clutches. On the other hand, there are many sites that receive several thousand visitors per day, but make less than 3 digits a month. Why? While they have succeeded in gaining the eyeballs, they don't have a clue as to how to turn those into dollars. They don't have a monetization strategy, or else they have a very poor one.  

As the owner is not making much, he or she will usually be very happy to sell the web site for a very affordable price. And just like Flip This House, all we have to do is remodel the web site and improve its value. But instead of selling it off, we are going to keep it as a solid source of traffic, links and money. My previous post about split testing should provide you an excellent start toward dramatically improving the site’s monetization. But let me tell you about some other considerations.

How can we find these web sites? 

One answer familiar to those in the web site buying and selling industry is looking for bargains at popular auction sites like SitePoint or eBay. You can find really good deals if you know what to look for: sites with good traffic, but with very low monthly revenues.  

The most important thing to consider before buying is the site's traffic stats. You need to analyze this to see how defensible the traffic is. Do not buy a site whose traffic comes primarily from pay-per-click (PPC). You don't want a popular site that suddenly becomes unpopular when you hit pause on the PPC campaign. Some of my best signals of defensible traffic, listed in order of importance, are: 

  1. A high percentage of direct traffic. A great number of visitors know the site and type the URL directly.
  2. A reasonable number of visitors come from search engine navigational searches. Some visitors don't remember the URL, but remember the site name or related brands and type them into the search box.
  3. A good number of visitors coming from related sites (editorial links, blogrolls, etc.).
  4. A sizeable mailing list, customer list, or RSS subscribers. In case all else fails, at least you have a loyal audience.
  5. A decent affiliate network.
  6. Consistent and growing search engine referral traffic from multiple search engines (not just Google).

Andy Hagans  has a 10 point quiz to check how defensible is a website that you might want to check it out too.

Now, let me share an alternative strategy to finding good web site buys: search the back links of popular free traffic counter websites like Sitemeter, Webstat and Gostats. Why? First of all, you get to see the real deal before making any offer. You can tell the value of the web site and determine how defensible the traffic is. You can also look at how the site monetizes the current traffic. One way to measure the potential and current value of the traffic is to use Google Adwords’ traffic estimator to find out how much advertisers are currently bidding for similar traffic.  

Another possibility is that, in rare cases, a savvy entrepreneur would want to display his or her stats publicly for everybody to see. There are many competitive reasons for keeping them private. So, if you find a good site with poor monetization using this method, the odds that you will strike a good deal are in your favor. Again, make sure you look for the signals I described above before you make an offer. Also, think about what you are going to do to improve the monetization of the site, how you will turn more of that traffic into money. I'm not a big fan of Google’s Adsense, as I recall doing far better with affiliate programs when I tested it. (And it seems that I am not the only one unimpressed.) 

Consider the time and money you will need to spend on the site to make it more profitable. In any case, make an offer that you are sure you can recoup in at most 10 months. It’s wise to consider the cost of paying others cash or a percentage of revenues to help maintain the site during that time. Just as you are unlikely to remodel a house all on your own, you may want to consider hiring some contractors to help you spruce up the site’s aesthetics, web copy, and backend software. 

This will free up your time for more interesting projects…and maybe even another purchase! 

9 replies
  1. Rex
    Rex says:

    "search the back links of popular free traffic counter websites like Sitemeter, Webstat and Gostats"

    I first read this to mean: do a Yahoo "linkdomain:" search on the "sitemeter.com" URL. But that gave me 5,694,346 links to look through.

    Then, it occurred to me that what you are suggesting is to use the analytics function of those sites applied to the ones you are investigating. Right?

    In terms of looking for buy candidates here is one more idea: forums. People looking for monetization help with their high traffic sites.

    I recall that the SBI (Site Build It) forums had a number of people who had built sites with considerable traffic that were making little or no money.

  2. Mutiny Design
    Mutiny Design says:

    I like your idea of checking the backlinks of traffic counter websites to find potential buys – very inovative. A similar idea I have had to find old domains is to scrape the web and look for sites that have not had their homepage modifies in over a year. This would out sites built on server-side scripting out of the window – it would be mainly for finding forgotten sites that have good backlinks. With those sort of purchases you could rest assured that the links are not going to disappear.

    Thankfully, most of these sites that are available to purchase or are ripe for picking are very shoddy and so they often don't want to much. I was surprised to see some quite good domains for sales at Sitepoint for less than $2,000. Unfortunatly most of the really good sites have short memorable domain names, so the values goes up for something you might not really care about.

  3. rasty
    rasty says:

    Great blog . I really liked it. I have also created a lens in same niche. This is my first time , hope u guys like it.Here's a brief intro We've all probably heard before how real estate holds one of the surest keys to financial independence and wealth. These days however, it's not just about agents selling houses and real estate properties. Now, we also have the flippers. Flipping houses is one of the best ways to enter the real estate scene.more detail visit here [edited for spam]

  4. MB Web Design
    MB Web Design says:

    That's one of the most amusing comment-responses I've seen in a long time.

    Back on topic – as a designer I see a big opportunity in redesigning established sites. As users get increasingly web savvy, good content and linkage doesn't cut the mustard, it needs to look professional as well. I'm keeping my eye on a number of such opportunities but sadly they usually end up selling for more than I'm prepared to invest.

  5. Hamlet Batista
    Hamlet Batista says:

    rasty – I left your comment because it is an interesting form of spam. In order to be more effective don't just read the title, read the full post. This blog is not about house flipping 😉

  6. Hamlet Batista
    Hamlet Batista says:

    A similar idea I have had to find old domains is to scrape the web and look for sites that have not had their homepage modifies in over a year.

    Excellent idea. Thanks for the comment.

  7. Hamlet Batista
    Hamlet Batista says:

    MB – Thanks for your comment. :-) There are some really clever comment spammers out there.

    I’m keeping my eye on a number of such opportunities but sadly they usually end up selling for more than I’m prepared to invest.

    If they can get your money back in say 6-10 months, why not borrow money, pay it with the income and after 6 months the site is yours?

  8. MB Web Design
    MB Web Design says:

    That's definitely something to think about, perhaps I'm being a little *too* discriminating with my decisions. Having said that, I've only regretted passing on one such opportunity but that was nothing to do with design – the site was bought and a few weeks later there was a Pagerank update – the site jumped from 2 to 6 and of course, within days the page was chock-full of paid advertisers.


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