Site Flipping University

There has been a lot of controversy lately about whether recent blog sales (mine included) were overvalued. I couldn’t disagree more with this assessment, so I’ll show you a few points to back up my opinion today. It’s no secret that make money online blogs have sold for quite a bit on the open marketplace lately. However, I tend to think just the opposite… for long term investors, make money online blogs may actually be UNDERVALUED. Here’s a few reasons to scoop one up RIGHT NOW!

1. Traffic

It’s no secret that traffic is one of the many factors of valuation when it comes to buying blogs. For my examples here, I’m going to use the sale of Blogging Fingers as an example. Blogging Fingers had 10,689 visitors the month before the sale (September 2007). Let’s do some simple math to see how much 10,689 visitors is worth. Here, you have to take into consideration that Blogging Fingers was in the ever-popular “make money online” niche. So let’s take a couple of popular keywords and average them out to get a per-visitor cost. These are the four keywords that most major make money online blogs use consistently in their writing, even if by accident, and their estimated CPC using Google’s keyword tool

• make money online - $3.05
• seo - $4.08
• internet marketing - $6.09
• blogging - $2.63

The average of the four keywords above is $3.96. We’re going to use these 4 keywords as an example of how expensive it is to build traffic, and how a blog with 10,689 visitors is worth it’s weight in gold. So now, let’s look at the traffic numbers again.

10,689 Visitors @ $3.96 Per Visitor (per month) = $42,328.44

So, that means that EVERY month you’d have to have a $42k budget just to generate that kind of traffic in this extremely popular niche. You also have to take into consideration that as long as the new owner keeps putting out good content, that traffic number is going to grow on it’s own over a long enough time frame. Organic traffic is the key, and I’m sure that a very small percentage of that was organic. However, all traffic counts, but it’s not worth as much as organic. Impressive? Wait… that’s just the beginning.

2. Subscribers

To many investors, subscribers are worth even more than traffic. RSS subscribers are nice, but for even more valuable subscribers, you need an email list. List subscribers are said to be worth about $34 EACH over the course of their life on your list, of course this depends on how well you monetize them, and what offers you are pitching to them. That’s a pretty impressive number, and it’s no wonder many companies pay $10+ just for an email address. Don’t believe me? Check out any of the major CPA (cost per action) networks and look up “lead campaigns”. Companies are paying anywhere from 50 cents to $10+ JUST for an email address. You aren’t selling anything… they just know how valuable that email address is.

So, let’s take a quick look at RSS subscribers before we dive into the even more valuable newsletter readers. Using Mark from 45n5’s wonderful post as an example, let’s dive in and check out the overall value of RSS subscribers. Mark figures that the average RSS subscriber is worth around $18, so let’s take a look at Blogging Fingers and their RSS subscriber numbers.

200 Rss Subscribers x $18 = $3,600

Impressive huh?

Now, let’s take a look at that same number, and assume that they are newsletter subscribers instead. And by the way, if you aren’t building an email list… you are just letting money slip through your fingertips. Go get an Aweber account, and start building a list for gods sake.

200 NEWSLETTER Subscribers x $34 = $6,800

Now that’s just insane. 200 names with an email address is worth $6,800 to some companies? Well, with the higher conversion rates, and the ability to pitch the same product multiple times, it’s no wonder. Email subscribers are a more captive audience because unlike blog readers, it’s hard to forget about you when they get a newsletter from you once a week. It’s no secret that people in this niche spend money, but unlike a blog post, a newsletter will eventually get to them when they are in a “buying” mood.

3. Revenue

Revenue should be an afterthought when going to buy a blog. And the reason I say this, is because that none of us are alike. If you make $500 a month with your blog, and I bought it… there’s no guarantee that I could make $500 a month with it. You also have to take into consideration the “adjustment period”. This is often a building time for the new blog owner because they will lose a few readers, and have to regain them somehow, all while making sure to build quality content, get affiliate links switched over, and make sure to update the about, contact, paypal info… and talk to the advertisers so that they renew… whew. Owning a pre-owned blog can be hard work at first.

All of these problems are temporary though, so for a long-term investor, they won’t blink an eye after having a few months of declining traffic and revenue. The experienced investor knows that this comes with the territory. For the first 2-6 months… you are essentially in “rebuilding” mode. After that you can focus on long-term growth.

So, long story short… don’t place too much emphasis on revenue. It’s not a reliable number.

So if we look at Blogging Fingers, which sold for $6,000, and use these variables. We’ll see that maybe make money online blogs aren’t as over-priced as some think. If we add the traffic, and the subscribers… we get a number of $45,928.44. Now, am I saying that I’d spend 45k on Blogging Fingers? Not a chance. But, it goes to show you that there is a lot more value in these blogs than you think.

Let’s take a quick look at the average life of an internet marketer.

The first step is finding or developing a product to sell. So let’s say Joe Cool the internet marketer, decides to sell a product that he made about blogging. It’s an uber-cool course that he’s going to sell for $97 and he needs to build a landing page, and start a PPC campaign. Instead of doing this, he runs across Blogging Fingers for the bargain price of $6,000. Let’s take a look at what would be more cost-effective for him to sell his product.

If he uses PPC like Google Adwords, he’ll be spending approximately (based on the projections above) $42,328.44 for 10,689 targeted pageviews.

Time to break that down even further for the internet marketers in the group. The average conversion rate of a landing page is anywhere from 1-3%. So if we take the average (2) conversion rate, and apply it to our 10,689 pageviews, we get about 214 that WILL buy, based on historical data. So we’re selling our product at $97 and we have approximately 214 buyers, which translates into $20,758.

You can see the value by now I’m sure. Instead of paying over 40k to attract 20k we now spent 6k to attract 20k. What can I say… the make money online niche is expensive!