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  1. #1
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    I consider my affiliate acivities to be a business consisting of over 30 websites and growing, and covering a wide variety of product and service offerings. Some sites do exceedingly well, and others bring only a few sales interspersed over time. Sound familiar?

    We often see single websites offered for sale, but I don't think I've ever seen anyone seeking to sell an affiliate based business consisting of an entire group of sites.

    Has anyone had any experience with this or given it any thought?

    Lets assume the business has reached the magic level of $10,000 per month.

    "If I'd known I was going to live this long, I'd have taken better care of myself." Bob Hope

  2. #2
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    If you depend on google traffic I don't think the sites are worth much. One algo change and the profits are history.

    My business is similar to yours by the way.

  3. #3
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    Regardless of your source of traffic I believe a sites sale value to be equal to the profits it will produce in one years time. The sites profits, number of quality backlinks, quality of content and pagerank strength should all match up to give a good indication of a solid business.

  4. #4
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Part of the value calculation should be the ability of those sites to trigger BHO keyword popups. I consider them as bookmarks for the lazy shoppers and those most likely to use stolen credit cards. Helps me focus less on merchant reversals as the BHO captives get to run up a lot of reversals on the stolen cookie.

    Mike & Charlie ...

    If they won't adopt and feed a bird ..flip them one! BBQ some Gator and remember to flush WhenU..

  5. #5
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    Are you suggesting that sites based on free traffic would be worth considerably less than those relying on PPC? In a larger sense, all websites are at risk of an algo change, not just affiliate sites.

    I suppose if Google declared war on sites with affiliate links, it would be disasterous, not only for affiliates, but for a whole slew of merchants who use affiliate programs as a marketing strategy. Personally, I don't think Google will do that.

    "If I'd known I was going to live this long, I'd have taken better care of myself." Bob Hope

  6. #6
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> Regardless of your source of traffic I believe a sites sale value to be equal to the profits it will produce in one years time <HR></BLOCKQUOTE>

    you could have a site makes $3k a month cos its #1 on google for a keyword. if google changes it algo and your site comes up at #101 instead of #1 then the site is worth 10c. how can you value it based on what it will product in one years time

  7. #7
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    Whenever a business changes hands, on or offline, isn't the normal way to value it based on both past performance and projected growth?
    If google changes its algo, value might go down, or now the site has three terms that are number one.
    A comparison, if a coffee shop is sold based on past/future projections and a month later Starbucks opens new locations on either side of it. That's no ones fault, thats business. Bad business more than likely. However, if a caffeine addicts annonymous opens up beside it in a month instead, it's still no ones fault, but it will(likely) be very good for business.
    Basically Algo changes are a fact of life in business, whether land or electronic based.

    Did that make sense?
    Ah forget it, I'm too blah to think so I'm going back to bed

    Game on!!!!

  8. #8
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    marmite I would value it as I said but also factor in the things that indicate a good solid business such as professional design, solid backlinks and pagerank.

  9. #9
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    I agree 100% with marmite .... The offline model of valution dont matter for affiliate sites relying on Free Search Engine Traffic...

    Popdawg , you are right , uncertainities are in all business but in SEO'd sites its just a way of life ( that too in killer competitive fields)

    But if the site has loyal direct typein visitors (importantly buying visitors) thats a whole different story...

    "The Future belongs to those who believe in the beauty of their Dreams."

  10. #10
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    I was talking about fair valuation above...but whatever is the business ... its worth what people are willing to pay , so if someone agrees to value your site based on the past 2 year revenue just go for it


    Its classic Supply/Demand Theory .


    "The Future belongs to those who believe in the beauty of their Dreams."

  11. #11
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    KoGo,

    Definately it all comes down to the offers you've received for it. Kind of like a home if it's in a good neighborhood and valued highly but doesn't sell for the asking price it will have to go for less.

    ((End of post marker))
    Don't reply until you read this far!

  12. #12
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    Google could also change its algorithm and bring more traffic

  13. #13
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    6 months most

    but if all google (or other SE) traffic.. not worth much...

    if 50%+ return visitors .. then $$

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  14. #14
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    I've actually valued businesses.

    Ultimately, a business is worth the value of its future cash flows, discounted to reflect inflation and risks. Period.

    Since trying to calculate an appropriate rate of risk is very difficult, the next step is to look at comparable sales. Recent large transactions in the Internet sector have been based on multiples of 2-5x trailing revenues. Assuming discounts for the higher level of risk in an affiliate site, an appropriate level of valuation is 1-2x 12-month revenues.

    If you're selling a group of site, rather than just one, and there is history, you probably could command towards the higher end of that range.

  15. #15
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    " an appropriate level of valuation is 1-2x 12-month revenue "

    aha. wanna buy some sites?

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  16. #16
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    Sweat is correct. Most offline businesses are sold between 2-5x its projected 12 month gross revenues. It is up the new owner to manage costs (expenses) in order to generate a healthy profit. But in the online world I would value the group of sites (with log file history) at 1-2 times.

    Popdwag is correct in regards to outside influences out of our control. Google's algo is not something we control but neither is the weather, the economy nor how people spend money. It's up to you the business owner to market and run the site AS A BUSINESS. Life is about change and you must adapt to achieve success.

  17. #17
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    I've charged up to $ 15.000 to develop a database-driven ecommerce site.

    Therefore I wouldn't only charge for future earnings but also price in at least part of the many hours of consultancy spent to BUILD the sites.

    Say U$ 5000 base for each site plus the 1 to 2x formula above per year of revenue. IF the site isn't a cookie-cutter approach type of thing, and IF the site has actually taken you over 500 hours to develop(continuous work hours).

    If they're individual quality e-businesses I'd definitely add the development costs to the value, after all TIME is one of the most valuable assets affiliates have to spend, either waiting for Google or for the development itself.

    Right now Google takes 2 to 3 months to make a site do anything productive, so these 3 months must weigh in somehow, even if Google has the freedom to totally drop you that's something the buyer should actually be aware of...just like a tornado can come and destroy your shop, etc.

  18. #18
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    I will sell all my sites if some sucker can gimme 2x my yearly income ... its not that hard to create again the same set of high revenue sites in months if not weeks !!

    Sweat , Offline valuation model never works online that too for SE traffic affiliate sites...

    I am not talking here about branded sites where customers arrive directly by typing the URL ...but affiliate sites which generate purchasing traffic solely by high rankings in SERPS !! ...

    But as i said before the price of the site depends on what the buyer want to pay no matter what valuation we do

    "The Future belongs to those who believe in the beauty of their Dreams."

  19. #19
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    no chit.. As I said.. anyone want to buy some sites?

    2x yearly. lol.

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  20. #20
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    Your site is worth only what someone is willing to pay for it. As far as algo changes if the person buying it is good at SEO they should be ok. I've had sites that i didn't touch be on top, drop and come back up again. Most successful affiliates have the ability to make changes rather quickly and keep up with the game. It's really hard to put a price on an affiliate site but get all you can.

    "Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map."
    --Wayne Calloway

  21. #21
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    In 2001, I sold an affiliate website for 20x annual revenue. Instead of selling it as a business, I sold it as "real estate", i.e. I sold the audience (a fairly well-targeted profession), not the revenue model.

    The value of your site may not just be based on what you can currently earn from it, but what some other business can earn from accessing that audience.

  22. #22
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    Yup, very good point MJCB.

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  23. #23
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    &gt;its not that hard to create again the same set of high revenue sites in months if not weeks !!

    Opening up your enterprise to investigation by perspective buyers will put you at risk of a complete rip off of your business strategy - imo

    Hire someone that you can trust and keep it running. There are stay at home moms that would die for a webmaster job at $1k per month.

    If you wish to know more - you can't. "For security reasons the only ones allowed to see the profiles are affiliate managers."

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