How I Almost Lost $100,000 On A Website Deal
As a savvy investor, I’m constantly looking for website investment opportunities, and in late 2020 I thought I had found my next investment.
Since mid 2020 I had been looking to buy a content website, monetized through affiliate offerings and ads, for a specific outdoor product that many homes have, or eventually install. My max budget was $150,000, but was hoping to find something right around the $100,000 price point.
After not seeing the type of website that I was looking for on Empire Flippers, I decided to cold outreach website owners within this content space. In short order I had a tentative deal to purchase a website for $119,100 (30x multiple) that was earning around $4,000 per month in profit from 476,000 yearly users.
During my in-depth due diligence process I found that the website used a PBN which ultimately steered me away from the purchase.
Exactly 3 days after I decided not to purchase the website, the site was hammered by the December 3rd Google algorithm and lost 90%-95% of its traffic overnight.
Had I not followed my very own website buying checklist, I would be very bummed right now!
Here’s What You’ll Learn:
- The Specific Website Details
- How I Found The Website
- What My Plan Was For The Site
- Ultimately Why I Didn’t Buy It
- Where The Site Stands Today After The Update
Specific Website Details
- Price: $119,100 (30x multiple @ $4,000 per month profit)
- Platform: WordPress
- DR: 52
- Niche: A specific outdoor product for homes, product has seasonality and peaks in May/June
- Number of Articles: ≈ 65
- Creation Date: Mid 2018
- Users in 2019: 149,878
- Users in 2020: 475,937
- Profit in 2019: $11,275
- Profit in 2020 (through October): $51,830
- Monetization: Amazon Associates
- Traffic: All organic search traffic
Disclaimer: I had a very good understanding about the industry that this website revolved around, and understood the seasonality that came with this industry. As you will see in the attached screenshots, the website had tremendous growth in 2020 because of COVID. Stemming from my information within this industry, indicators were showing 2021 to be another terrific year. In normal circumstances I would not purchase a business with this much rapid growth and with this much seasonality. I also had a previously relationship with a drop shipper which was going to be important for my plan.
How I Found The Website
After not having much luck finding the type of site I wanted on the Empire Flippers marketplace, I decided to see if I could find an “off market” opportunity like I did when I bought Money Nomad. My process was fairly simple using just Google, Ahrefs, and ICANN.
First, I knew exactly which content niche I wanted to enter, so after a quick Google search for my broad topic, I had a list of potential websites to contact. I entered each URL into Ahrefs to get an idea of their traffic, domain rating, and page traffic distribution.
Having some sort of an idea about search traffic volume is an important factor to help narrow down the search. I know a website that gets 10,000 monthly visitors would be too small for what I wanted, but I also knew a website getting 300,000 monthly visitors would probably be out of my price range.
I also knew I didn’t want to spend six figures on a website that had a low domain rating, so I looking for sites with a 40+ DR.
The “Competing Domains” feature within Ahrefs is a powerful way to quickly find additional websites within a niche that could end up being purchase opportunities.
Most of the websites I found that met my criteria had no contact forms or email addresses listed (yes I used Hunter), so I had to get creative. After performing a search within the ICANN Lookup tool, you’ll be given a list of info about the domain you just searched.
While most domains have domain privacy enabled, the registrar RDAP data will often times contain a “spoofed” admin email address. Obviously this email address is a jumble of words and letters, but when emailed it delivers directly to the admins email address on file for the domain.
This process allowed me to open communication with the owner and start the general purchase conversation.
Do you own a content website, FBA business, SaaS company, ad website, or some similar online business?
Now might be a great time for you to get top dollar for your digital asset.
My Plan After Buying A Six Figure Content Website
The website that I found was only monetized through the Amazon Associates program, which I considered to be a huge opportunity for me. I knew that there were other affiliate offerings in this space that paid a much higher commission percentage, so my plan was to switch some high ticket products to different affiliate offerings.
Additionally, the website had zero ad revenue. I was planning to add display ads on day one, starting with Google AdSense and then experiment with other ad networks. Unfortunately I don’t have my specific notes anymore, but I think I estimated that display ads would add around $10,000 in yearly profit for the site, depending on traffic volume.
Finally, I was going to add an e-commerce drop shipping store to the website.
After some rough calculations, I figured this website generated Amazon around $700,000 in revenue in 2020 for niche specific products, not including the other purchases that were made for products outside of the niche.
My thinking was that I could potentially redirect 10% of the Amazon sales into my own e-commerce section of the website, thus adding an additional $70,000 in revenue to the website. I had already spoken to a drop shipper that would fulfill for the website at a reasonable rate.
I thought that by adding an e-commerce side to the website, my valuation would increase from multiple revenue streams and I could compete with other e-commerce sites in the space as they didn’t have content as part of their organic search traffic strategy.
Ultimately I didn’t get the chance to do this, however it’s still something I think about often and that has a lot of potential in my mind.
Why I Chose Not To Buy This Website
Part of my due diligence process, when buying a website, is to look through the backlink profile using Ahrefs. One reason why I wanted this site was because of its strong DR in relation to the other sites in this space.
As I dug deeper I started to get a hunch that a PBN was being used to generate referring domains.
My suspicion was confirmed by the seller as he built a PBN for the site, with 60-70 domains pointing towards it.
Anyone who has downloaded my website buying checklist will know that I do not purchase websites that use black hat link building methods. I think it’s unwise to invest in a digital asset that is clearly breaking Google’s rules..to me, the risk is not worth the reward.
I’d rather build a site slowly and legitimately to reap the long term benefits of organic search traffic. The content was also subpar and clearly outsourced, which I considered a plus as I know the space well and could have made the content more accurate and robust.
I have a feeling that the poor content quality, not the PBN, was the cause for the tremendous traffic and value drop that the site experienced.
What Has Happened To The Website Post Update
The website lost nearly all of its traffic over the course of a few days post update. Pre COVID, the site received around 300-500 users per day, after COVID and during the summer the site received several thousand users per day, and in the off season for this niche the site received 500-600 users per day.
Now, the website receives only 40-50 users per day. While it is the offseason, the traffic should not be this low and there is a clear drop starting on December 3rd.
I no longer have access to the earning data, I have to assume earnings are down the same percentage as traffic. The site went from being worth $120,000 to having a $12,000 valuation in the matter of a few days.
I’m glad that I did not deviate from my investing criteria and did not let impulse buying have an effect on my decision making. In any large purchase that you make in life, if you feel like something doesn’t feel right, take a step back and reevaluate.
Very few times will you kick yourself for walking away, but continuing with the purchase of something that you are not fully confident in could lead to disastrous results.
Great article. Did you have a method or tool to help discover the PBN?
There is no tool, it’s really just a manual process of looking through referring domains and analyzing the content on those sites. You can then use Ahrefs to see if some of the sites you’re suspicious about could be linking to one another.
Understood…thank you! Sounds like there might be an opportunity to build a tool that could help uncover PBNs 🙂
Thanks for sharing. I saw something similar with a site I was initially pursuing last year. Something told me not to buy it, and when the next update came it lost 70%+ of it’s traffic.
Loved the article.
What I really want to know is do you find mixing E-commerce with Affiliate Programs to be a valuable idea?
I have an e-commerce store and have been considering adding Affiliate Links from non-competing companies to expand.
Loved to know your thoughts
Thanks James! Well I have not personally mixed e-comm with affiliate, however I think it could be very valuable. I spoke to some people that have, and they have seen good success with it.
Why not give it a try? Really nothing to lose. You’ll never know unless you try!
Maybe I missed this but I’m assuming you had access to their Google Analytics to see traffic? Did they forget to turn off your access after you decided to pass or were you still considering during the time when their traffic dropped significantly?
Correct, I had GA access. And they didn’t remove it after I said I would pass, so I could see what happened.