If you’re not excited about investing in websites yet, let me offer you a wakeup call.
Since 2018, Empire Flippers has sold 74 websites for $1M or more, and they’re just getting started.
Website investing is still a relatively new thing compared to the stock market or real estate investing, and offers incredible profit opportunities for the keen eyed investor.
In this guide, I’ll walk you through the whole website investing process, so you can start cashing in on this lucrative market.
What Exactly Is Website Investing?
Investing in websites means acquiring ownership or a stake in an online platform with the expectation of returning a profit.
Unlike traditional investments like stocks or real estate, website investing is unique in that it revolves around an online business. Investors might be involved in the day-to-day operations, or they might rely on a team or a manager to run the website. Investing in websites is great for those looking for a source of passive income.
Here are the main website investing strategies:
1. Buying Websites: Purchase a website, improve its content and traffic, and use its income for additional cash flow.
2. Flipping Websites: Buy a website, make it better quickly, and sell it for a profit.
3. Building Websites: A third, less common way of making money as a website investor is by building from scratch and then cash in the value you’ve built, either by selling sites or collecting revenue.
Which Website Business Model Should You Choose?
The digital landscape offers endless opportunities for people investing in websites. Here’s a breakdown of some of the most common business models used in online business:
- E-commerce: These are online stores that sell products or services. They can range from small niche stores selling handmade crafts to giants like Amazon.
- Affiliate Marketing Blogs: Personal or professional websites that share information, stories, reviews, or tutorials. They typically earn revenue through advertising, sponsored content, or affiliate programs.
- SaaS (Software as a Service): Platforms that offer software solutions to users on a subscription basis. Examples include CRM tools, design software, or project management apps.
- Membership Sites: Platforms that offer premium content or benefits to members who pay a subscription fee.
- Online Courses and Educational Platforms: Websites that offer educational content, courses, or training programs, often for a fee.
- Forums and Community Platforms: Online communities where people discuss specific topics. They can be monetized through ads, premium memberships, or sponsored content.
How To Find Good Investment Websites
Profitable websites are everywhere. You’re looking at one. But instead of just surfing, how do you actually buy websites?
The website investing process always requires research, networking, and a bit of thinking outside the box, but here are some great ways to get started.
Contact a Website Broker Service
Website brokers are specialized platforms or agencies that facilitate the buying and selling of websites. They offer a curated list of websites available for sale, often with detailed analytics, revenue reports, and other essential data.
If this is your first site purchase, a broker might be a good idea.
Some of the top website broker services include:
One of the most popular platforms, Flippa offers a wide range of websites, domains, and apps for sale. It caters to both novice and experienced investors.
Known for its vetting process, Empire Flippers lists only high-quality websites, ensuring that buyers get value for their money.
Specializing in mid-market mergers and acquisitions, FE International offers high-end websites and online businesses for sale.
While it’s primarily a business marketplace, BizBuySell also has a section dedicated to websites and internet businesses.
Use Unofficial Website Investing Platforms Like Facebook
Social media platforms, especially Facebook, have numerous groups where members discuss website investing, and sell websites.
While these platforms can offer some hidden gems for the expert investor who doesn’t mind a bit of risk, the rest of us should exercise caution.
Due diligence is essential as these platforms lack the formal vetting process of official broker services.
Blindly Pitch Website Owners
An unconventional but sometimes effective method to website investing is to approach website owners directly, even if they haven’t listed their site for sale.
If you research websites and come across one that aligns with your investment goals, you can reach out with a proposal to buy.
Sites like Worth Of Web or SitePrice can give insights into potentially undervalued websites.
Other Methods
Networking: Attend industry conferences, webinars, and seminars. Networking with industry peers can lead to investment opportunities that aren’t publicly listed.
Online Forums: Platforms like Indie Hackers, Warrior Forum, or WebHostingTalk often have sections where users discuss or list websites for sale.
Auctions: Some domain registrars and platforms hold auctions for websites and domains. GoDaddy Auctions is a popular choice in this category.
How to Evaluate a Website
So you’ve found a website worth looking into. The next step in the buying process is figuring out what it’s worth.
The value of a website is not just about its current earnings but a combination of factors that give insight into its potential future earnings and growth.
Here are the fundamental three factors to see if a website is a good investment.
- Revenue and Profit: The primary factor in determining a website’s value is its monthly or yearly earnings, and the operating costs to keep it running. This includes revenue from ads, sales, affiliate marketing, and other monetization methods. The operating costs would include ad costs, staff, hosting, warehousing, subscriptions, etc.
- Multiplier: A multiplier is used to evaluate the website’s current sales value based on past revenue. For instance, if a website earns $1,000 per month and uses a multiplier of 20, its value would be $20,000. The multiplier is decided based on the website’s niche, stability of earnings, history, and overall market situation.
- Growth Potential: Lastly, consider how you can increase your investment value. Where is the website underperforming? Are there immediate improvements you can make? If you can’t see growth potential, it may not be the correct website for you.
Tools and Platforms for Website Evaluation
Several tools can assist investors in evaluating a website’s worth and potential:
- Google Analytics: Provides detailed insights into website traffic, user behavior, and acquisition channels.
- SEMrush or Ahrefs: These tools offer comprehensive data on a website’s SEO performance, backlink profile, and competitive landscape.
- Flippa Valuation Tool: Offers a rough estimate of a website’s value based on its earnings and niche.
- SimilarWeb: Gives insights into a website’s traffic sources, audience demographics, and more.
- BuiltWith: Helps in understanding the technologies and platforms a website is built on.
Be Wary of Vanity Metrics: Traffic vs. Engagement
The first thing most buyers will look at is traffic. While traffic provides a quantitative measure of a website’s reach, in isolation it’s just a vanity metric. In other words, it’s something that only looks good on paper.
What you’re really interested in is user engagement: the portion of traffic that actually interacts with the site. These are the users that are worth money.
Paying attention to the voice of the customer through comments, feedback, and on-site interactions helps investors understand whether engagement is genuine or just inflated traffic.
Understanding the relationship between traffic and engagement is crucial to properly evaluating a site.
Analysing Website Traffic
1. Sources of Traffic: Understanding where the traffic comes from is vital. Common sources include:
- Organic Search: Visitors who find the website through search engines, indicating strong SEO.
- Direct: Users who type the website’s URL directly, suggesting strong brand recall.
- Referral: Traffic coming from other websites linking back.
- Social: Visitors arriving from social media platforms, often driven by consistent posting and optimization through a social media management tool.
- Paid: Traffic generated through paid advertising campaigns.
2. Volume and Consistency: A website with consistent and growing traffic is generally seen as more valuable. Spikes or drops in traffic can indicate events or issues that need further investigation.
3. Geographical Distribution: Knowing where the visitors are coming from can help in understanding market penetration and potential areas for expansion.
Analysing User Engagement
1. Average Session Duration: This metric indicates how long, on average, visitors stay on the website. Longer durations suggest that the content is engaging and relevant to the audience.
2. Pages Per Session: It shows the average number of pages a user visits during a single session. A higher number can indicate a well-structured website with compelling content that encourages exploration.
3. Bounce Rate: This represents the percentage of visitors who leave the website after viewing only one page. A high bounce rate might suggest that the landing page isn’t meeting user expectations or that the site has technical issues.
4. Interactions and Conversions: Tracking user interactions, like form submissions, blog comments, or video views, can provide insights into the website’s effectiveness in driving desired actions. Conversion rates, which measure the percentage of visitors who take a specific action, are a direct reflection of the website’s ability to meet its objectives.
5. User Feedback and Comments: Sections where users can leave feedback, reviews, or comments can be goldmines of information. They offer direct insights into what users like or dislike about the website. An AI form generator can help quickly create a feedback form your visitors will actually want to fill out
6. Returning vs. New Users: A healthy mix of new and returning users suggests that the website is not only attracting new visitors but also offers value that keeps users coming back.
Assessing Content Quality and Brand Identity
High-quality content and a strong brand identity are cornerstones of a successful website.
In addition to driving traffic and user engagement, they also foster trust and loyalty among users, enhancing the website’s long-term value and potential.
Content Quality
Content is the primary reason users visit a website. Its quality directly impacts user engagement, retention, and conversion rates.
When assessing content quality, consider the following:
1. Relevance: Does the content address the needs and interests of the target audience? It should provide value, answer questions, or solve problems for the reader.
2. Originality: Unique and original content stands out in the crowded digital landscape. Plagiarized or repetitive content can harm a website’s reputation and SEO.
3. Depth and Detail: Comprehensive content that delves deep into topics is more likely to establish the website as an authority in its niche.
4. Presentation: The layo