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This post is to share my story about purchasing a website privately and the incredible success I initially thought I had followed by a sizable blow!
I will write this post in chronological order and walk you through the stats as I saw them.
Also I will show you exactly what I did to get an increase in click through rate of 10x resulting in an affiliate click graph looking like this…
Writing this post has helped me think through a few questions I have reflecting back on my decisions to buy the site…
- What should I have done differently?
- Should I have sold the site?
- Did I make a mistake?
- If I had to go back would I still buy the site?
This post is a little longer and is broken down into the following sections…
- Finding and Negotiating the Sale
- How to Transfer a Website
- How I Increased the Sites CTR by 10x in 3 simple steps!
- How the Value of the Site Increased from $4k to $15k in 1 Month!
- The Impact of Penguin on my Purchased Site
- Second Month Earnings
- Good Decision or Bad Decision to Buy the Website?
Aug 20 I Found a Website Copying My Own – Reviewing the search results for my student loan site I notice another site built very similarly to my own. This wasn’t a surprise as I had seen many people build similar sites after I shared the success I had publicly with my site. What made this site unique is the amount of backlinks and traffic reported to the site.
Many aspects of the site were identical to my own including similar monetization methods and site layout. It was clear that this site was copying my own student loan site.
Aug 21 Contact and Call Out (friendly) Website Owner for Copying – I decide to email the owner of the site and make contact in the hopes of getting more data to help me and also to potentially work together to promote each other’s sites.
Aug 21-23 Offer Free Advice – For a few days we were emailing back and forth and I was providing advice on how he could improve the website.
Aug 23 Float the Idea of Purchasing Website – Realizing the site was making almost no money but had traffic which I knew could be mone.
Aug 24-26 Discuss Potential Deal and Set Up for Google + Hangout – For a few days we discuss a potential deal and review statistics for the site.
The site was getting great traffic but just wasn’t making very much money. It was also showing signs of rapid growth on the way.
Aug 27 Google Hangout to Discuss Site and Potential Sale – On Aug 27 we had a meet up and we discussed general internet marketing stuff along with the potential sale of the site.
After reviewing the analytics and comparing my sites earnings per visitor I thought about what a fair price would be and offered it.
Valuing the Site:
The site had made a total of $0 up to this point but I knew he had put a lot of effort into it and wanted to see a fair return for that effort.
Based on the stable traffic ~7,000 visitors over past 30 days(removing the traffic spike) and the earning per visitor of similar traffic I had demonstrated on PayMyStudentLoans.com ($0.10-$0.25/visitor) I calculated the potential earnings from the site to be $700/month
- Potential Monthly Income = $700
- Value of Website (10x of “potential” not demonstrated income) = $7,000 +/- 30%
Aug 29 Agreement Made to Purchase the Website for $4k – After a few more emails back and forth and an agreement to help consult on his next project (which has been a lot of fun and successful) an agreement to purchase the website was made.
At this point I have made an agreement to purchase a website that has made no money and has 30 days of stable traffic based on the projected (not demonstrated) income.
Good decision or bad decision – time would tell!
The website sale went relatively smoothly, here is the 5 part process…
5 Steps to a Successful Website Sale
- Website Transfer
- Name Server Change
- Domain Transfer
Step 1 – Agreement – Aug 29
We used a really really basic agreement that outlined the terms of the sale. Here is a nice clean contract template to use from John Saddington.
Step 2 – Payment – Aug 31
- Once the agreement was completed the seller initiated a payment request from Escrow.com
- After completing a couple simple steps in Escrow.com I printed and took the paperwork to my bank
- At my Bank I wired the money which only took 1.5 days to get through and into Escrow.com
Step 3 – Website Installed On My Server & Ready to Go Live – Aug 31
I thought this step would be more difficult but it was very very easy using the free duplicator plugin. (at least for me – my VA did all the work).
- Seller to install Duplicator Plugin
- Seller to provide Admin Access to website (sometimes people want to wait until payment has cleared)
- VA set up website on my server
Here is the best tutorial that I found on this process and the one my VA used to complete the process…Chad Warner from OptimWise.com “Copy and Migrate WordPress sites with the Duplicator Plugin”.
Part 3 – Change WhoIs Information and NameServers – Aug 31
This is where we made a mistake and didn’t change the WhoIs information before initiating the transfer. It got resolved but took an extra couple of days.
- Seller to change NameServers
- Seller to change WhoIs data before the domain transfer begins
At the end of Aug 31 the website was live on my server and I was able to begin making the planned changes. Although the domain was not in my control and the money was still in Escrow.
Part 4 – Complete Domain Name Transfer & Money Released from Escrow – Sep 7
Because of the mistake we made above and not changing the name we were unable to retrieve the EPP code that was being sent once the domain name transfer started.
- Seller to unlock domain
- Buyer to send transfer request
- Seller to send buyer EPP code
- Buyer to enter EPP code and complete the transfer
If you are using NameCheap here is a quick step by step guide.
From finding the site to owning the site was 18 days which could have been probably 4 days shorter had the domain transfer gone smoothly.
Overall it was a fair/transparent transaction that I think had everyone involved happy.
Since the owner of the website had followed my guide on how to track affiliate clicks with Google Analytics it was easy to measure the success of the changes that I made.
Here was the number of affiliate clicks the website was generating before I made changes…
180Affiliate Link Clicks with 9,296 Visitors (1.94% CTR)
3 Steps to Improve Monetization of a Website by as much as 10x!
Step 1 – Identify high traffic pages
From the analytics it was clear a few of the pages were getting the majority of the traffic.
Step 2 – Review the Pages and Find a Focused Offer
The offer on the high traffic page was not as tightly aligned to the problem people were looking to have solved when they visited the page as I would like.
Ideally, I want to be able to offer an affiliate or CPA offer that is very tightly aligned with the main problem people have that has brought them to the page in the first place.
In order to do this I looked at some of the keywords people were using to find the page, looked at other similar pages around the web, thought about who these people were and the problem they wanted solved and then did some additional keyword research to see what were other popular search terms of the same problem. Once I understood their problem and desired outcome I searched for a CPA offers that answered their problem.
Step 3 – Change Popular Pages to Focus on Promoting More Tightly Focused Offer
This step was easy I did the following things…
- Disabled general ads on the page
- Created a clear call to action to the affiliate offer that addressed the visitors problem
- Made the call to action stand out with a button
The 10x Results!
- Pre Change CTR = 1.94%
- Post Change CTR = 21.6%!
Traffic from Aug 1 – Sep 10
Affiliate Clicks from Aug 1 – Sep 10
Sep 10 Thinking I am Pretty Smart! – After only a few days and a few hours of work I had been able to make simple changes that resulted in a huge increase in affiliate clicks. But would all these clicks turn into money?
Would all those clicks turn into money? Well after a full 30 days of running the site (basically Sep 1 – Sep 30) here are the results. Remember, this site had made a grand total of $0 up to the time when I purchased it on Sep 1…
Traffic First 30 Days = 6,260 Visitors
Traffic stayed steady and had a small decrease which correlated with my main student loan site and Google trends showing a seasonal downturn in search volume at the end of September.
Income First 30 Days= $831
• CPA Offer #1 = $720 in September
• CPA Offer #2 = $111 in September
Value of Website = $15,000!
The sale price of a website with demonstrated income is in the 15x to 20x monthly income range. So with this website generating $831/month (in a slow month) I am confident I would be able to sell it for $12,500 to $17,500.
So right now I am thinking damn what great value I created….
I purchased a website for $4k and after 30 days I have made $831 and have an asset worth around $15,000! Generating over $10k in my businesses net worth in 30 days with one deal!
Starting in October I was thinking about how I could expand my website purchasing business picking up sites that are under monetized and in niches where I know the approximate income/visitor. Everything was going great until the Google Penguin 2.1 Update came out on Oct 4.
October 4th I didn’t dig into my analytics when the first reports came out but on Oct 5th Tung from CloudLivingJourney and a couple other people were very curious if I had seen an impact on my main student loan case study site. I try to never react quickly to any update since there is little benefit to moving quickly and it takes awhile for the data to settle out.
I first checked my main student loan case study site (paymystudentloans.com) and saw that there was no impact beyond the seasonal downturn. Then I went to have a look at my purchased website and oh crap I definitely got hit!
PayMyStudentLoans – No Impact
Purchased Website – Big Impact
The penguin 2.1 Google update hurt the traffic on my purchased website. Taking the traffic from 200 visitors per day to 80 visitors per day – 60% hit!
Why did Penguin hit my purchased website? Penguin is a spam filter which looks at spammy links, purchased links and over optimized anchor text.
I knew when I purchased the website there had been a few links purchased and that was the only difference in SEO strategy (other than the purchased site not using expired domains).
So my thinking (not conclusive) after reviewing the backlinks was 2 fold…
- Purchased links in the sidebar on un-related sites hurt the website
- Not having a stronger foundation of quality natural looking links (relevant expired domains or .edu from research/outreach posts) meant the few purchased domains stood out.
The Bad News – Any update hurts and one that has a very clear direct impact on income is especially painful!
The Good News – My SEO strategy stood up to another Google Update! The only site in my portfolio that got hit was the purchased site. Plus there are ways to recover – remove the bad links and adding in some new links should help this site recover.
My 3 Part Penguin 2.1 Recovery Plan
- Approach 5 webmasters to remove link – Complete
- Disavow Bad Links – In Progress
- Build Authoritative Links – In Progress
- Relevant Expired Domains
- Research/Epic Posts + Outreach
Now that the second month has passed how has the site done? How did the drop in traffic impact earnings?
Well unfortunately the drop in traffic hurt the website (no surprise there).
Traffic Second Month = 2,672 Visitors
Income Second Month = $261
• CPA Offer #1 = $192 in October
• CPA Offer #2 = $69 in October
Value of Website After Penguin Update = $4,500
After the update and assuming my efforts to recover the site fail the value of the website is 15x-20x times $261 = $4,000-$5,000 plus the income earned to date ~$1000.
So overall I have not lost money but I have clearly gone from a huge potential win to just a solid earning site added to my portfolio with a 1-2 year payback period.
- What should I have done differently? Nothing, I think it was a well thought out deal. Potentially controlled my emotions a little better.
- Should I have sold the site? No, to get the 15x to 20x earnings I would need to be able to display 3-6 months of stable earnings.
- Did I make a mistake? I don’t think so.
- If I had to go back would I still buy the site? The answer is a definite yes, in the end I took a risk buying a site with no income for $4k, it looked like it would pay off huge but now looks like it will just be a solid earner. I am in this game for the long run so I don’t mind investing in assets with a 1-2year payback period.
My Key Learning
Are there other sites currently in my portfolio that if I gave the kind of deep analysis I did with the purchased student loan site I would see a 10x increase in click through rate.
The giant earnings increase I had when I purchased the site due to some simple changes had me me thinking about the story of INTELs CEO in the book Good to Great where Andy Grove’s was paraphrased as saying “what would someone (or ourselves) do if the current CEO(himself at the time) was fired? – we should consider doing that”. It was this insight that had them switch from building memory to mirco-processors and go on to make a giant impact.
So the question I am now asking myself and challenge you to ask yourself is –
What changes would I make to my websites if I purchased the site today?