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How much is an AdSense website worth?
linuxguy




msg:1337891
 7:48 pm on Jun 30, 2005 (gmt 0)

How could you calculate how much is a website worth based on the potential of ppc advert and aff programs? Some one is interested in one of my websites, I only make about $20 dollars a day out of adsense on it. Its got a bit over 1000 pages of spam free travel related original content, with only a few high quality incoming links.

Perhaps I could cash the next 3 years at this level on one sale? That will make me $18000 today which I could use to improve my other websites and create more. The thing is that Im sure the site will increase its earnings as is becoming very popular on its area, so Im not sure on what to do! How much to ask, to sell or not to sell?

 

Erku




msg:1337981
 6:30 pm on Jul 5, 2005 (gmt 0)

With 1000 quality content and growing.
with $20 a day (this will definitely grow)

I would not sell this site for even 300000, because in 4-5 years it will get there.

rogerd




msg:1337982
 6:49 pm on Jul 5, 2005 (gmt 0)

It's kind of funny - nobody would say, "I have a business, what should I sell it for?", but people often ask a similar question about a website. There's no magic formula, unfortunately, since the real answer is heavily influenced by the specifics of the situation.

In the general business world, the discounted value of future earnings is often the key part of valuing an acquisition, and so it should be on the web. Unfortunately, as many have pointed out, the predictability of these future earnings may be quite low, resulting in them being discounted at a much higher rate. Perhaps the worst case (looking specifically at a site where the major source of revenue is Adsense) is a website that derives nearly all of its traffic from search engines; there's a significant risk of algo changes, link loss, penalties, etc. that could cause its income stream to falter. If that same site generated the vast majority of its traffic from repeat visitors and stable links, the income predictability would be somewhat greater. Of course, the very "black box" nature of Adsense itself offers a modest risk factor - a unilateral program change by Google could dramatically change the expected income.

In this kind of environment, other site characteristics come into play - superb quality content may have intrinsic value or at least provide the confidence that if something happens with Adsense there will still be advertising sales opportunities.

As far as high-multiple sales that have been referred to, in just about every case there's motivation beyond the current income stream. For example, if I have a high-traffic, thousand page content site that is making great money, folding in your thousand page content site may enable me to ramp up earnings overnight (greatly exceeding your projected earnings). Or, perhaps I've got five thousand pages of good content that I can plug into your Adsense site, and I'm confident that I can pay a high earnings multiple for your site and make it back very quickly.

The general problem with assigning a "normal" business multiple to the earnings of Adsense-only sites is that there's little goodwill associated with the business - by and large, such things as customer loyalty, brand name, vendor relationships, management expertise, etc. just don't exist.

So... if you want to sell a site, find a buyer for whom the site will have value beyond its current earning stream. Otherwise, you'll probably get offers that make it more attractive to hang in and collect your monthly checks.

Zygoot




msg:1337983
 6:52 pm on Jul 5, 2005 (gmt 0)

I would not sell this site for even 300000, because in 4-5 years it will get there.

Nobody will ever give you $300,000 for a website that only makes 20 bucks a day. If one would offer me $300,000 for a $20/day website I would sell it immediately.

I think most $20/day won't be able to make $300,000 within 5 years time. A search engine update, aging content and lots of other factors can seriously decrease income.

So it's way better to cash in now for a huge amount of money that can be invested in new websites. (If one would offer you so much, but that will never happen)

Jane_Doe




msg:1337984
 7:14 pm on Jul 5, 2005 (gmt 0)

But yes, there is definitely a small sector of buyers who'll be willing to calculate potential future profits even without the benefit of three years worth of audited accounts.

There is a certain popular utility type site that was sold on a popular auction site not too long ago that I don't think had any earnings record. The site was one page that would be very easy to duplicate, however I don't think the bookmarked traffic or the 70k backlinks would be very easy to duplicate.

If I remember correctly there were multiple bids for that site and the end price was several hundred thousand dollars. Perhaps that is an extreme example, but I think it does show that many buyers do look at other factors beyond current earnings.

blaze




msg:1337985
 7:49 pm on Jul 5, 2005 (gmt 0)

The question you need to ask is not, how much is my website worth but how can I market my website to sell it?

Because only once you are marketing your website to buyers properly will you get a sense of its market value.

Debating it forever in these forums simply will not do the trick.

Because maybe you're not making any money, but some buyer out there knows how to make 100$ / day on it immediately.

So, to him, it could be worth 36K and the only reason he cares how much you're making is because it'll help him know how to grind you down.

In the end though, he'll pay because it'll make him money.

Or maybe you're making a very highly suspect $100 day on spammy techniques. Well, someone savvy will realise that is probably worth 5K or less.

In the end, it's all about getting as many buyers interested an making offers without tipping your hand too much.

fearlessrick




msg:1337986
 8:00 pm on Jul 5, 2005 (gmt 0)

Without reading the rest of this thread (this was on page 2), this statement makes little to no sense:

I have a $40/day site that I'd gladly part with for $10,000 (250 days of income)

Why? Because I could borrow 10K at a BAD rate (9%) over a short term - 3 years - and pay this back at $318/month, while taking in $1200 a month. Unless this particular site takes a lot of work, I would buy sites like this all day, all night.

If you're really serious and can prove those numbers, sticky me.

Freedom




msg:1337987
 8:02 pm on Jul 5, 2005 (gmt 0)

These dang threads get started once a week here at WebmasterWorld and all have about the same unrealistic posts from pie in the sky believers who think they should be paid $150 for every hour they worked on their site.

The best solution to these threads is to start a commercial exchange forum for website sales. I think it's been discussed before.

This topic (how much is my site worth) is getting about as old as the most common:

1. I was kicked out of Google, why!?

2. Google is corrupt and cheated me because they sandboxed my site I launched 3 months ago which has 10,000 back links and 50,000 pages of high quality, unique content. (Unique my #$%, it's crap content you stole from somewhere else and/or forum and product pages).

3. What are the highest paying keywords?

4. I were kicked off of the Adsense! Nofair I got cot but the other have n't ad sowry me engrish not so goods. Do what can I?

5. Scraper sites stink.

"How much is my site worth?" threads are always posted by those with no experience or basis in reality with buying/selling sites. They are lost and high on drugs thinking that because Orbis sold for $2.1 billion, the same valuation criteria should apply to their Mexican Donkey Porn Hotel Vacation booking website (which also has AS ads).

IMHO, they should go try to sell their site on some other forum instead of trying to sneak it in on WebmasterWorld. They really don't care about learning the market value on their website because you can tell by their hysterical follow up posts when they find out it's only 6 to 12 months earnings value in the real world.

They don't want to hear that because they were just fishing to sell it here anyway. If you read the start of many of these type threads, you see it sounds more like a sales pitch then it does a website/valuation question.

Website valuation and purchasing/selling strategy is a legitimate topic for discussion. But 9 out 10 times, that's not what these threads are about. It's a fishing expedition.

Spammers is what they are.

blaze




msg:1337988
 8:08 pm on Jul 5, 2005 (gmt 0)

I disagree that the expectations are unreasonable.

I wholey agree that a lot of these are just fishing expeditions.

While it is probable that a website valuation is 10 months, it is possible that it is worth less and it is possible that it is worth more.

Heck, if you could seek out and well heeled buyer who would be a perfect fit for your content, they may not even care what your revenue figures are.

Sight unseen, yes, 10 months is a reasonable number. But nobody buys anything sight unseen, so the truth will be much more complex.

kevinpate




msg:1337989
 8:11 pm on Jul 5, 2005 (gmt 0)

> Mexican Donkey Porn Hotel Vacation booking website

And to think, it truly was just a few short years ago when folks were suitably impressed if a hotel had chocolates placed on the pillows as part of the nightly turndown service. :)

Anonymous1




msg:1337990
 8:20 pm on Jul 5, 2005 (gmt 0)

This is my first post under an alias.

I am aware of a site, which makes quality of life changing amounts of money (six figures) with AdSense annually. It has other great income sources as well. The site has high quality content, great traffic and stickiness that anybody would be proud of. It is in an industry which has unlimited potential for content building, the sky is the limit. Content building is not cheap though, as a high degree of knowledge and education is required.

To sell this site for 1 to 5 X annual income, would mean a lot of money, however I do not believe the site could be replaced for 5X. Established traffic, branding, stickiness, site ethics, and reputation are part of the equation. There are roughly 5,000 pages of original content, maybe another 15,000 of forums, directories, and other misc complimentary content. If I value each content page at $50 (which would be cheap for the skill level required) that would mean those pages are worth 250,000 (replacement value). Even if one values the rest of the site at zero, one would still have to ask compensation for the branding and stickiness.

If I could by a business for 100K with 250K in assets yes, this is a no brainer.

If I could buy a business for 500K with 250K assets, and 100k income (almost pure profit) yes, almost a no brainer.

janethuggard




msg:1337991
 8:25 pm on Jul 5, 2005 (gmt 0)

I have sold many websites. The buyer will always quote the 12 months rule to me, then try to beat me down to 10 months. If I really want to sell the site, I take the 10 months.

But, I put it up for sale for 2 years income, so when I come down, I get more than I wanted for it anyway. For example the site I put up for $30k, I really wanted $15k for. The seller beat me down to $18k, and then tried to rub it in after the deal was long done, in a cocky moment. I let him know that I only wanted $15k, he gave me $3k more, and I was the one who really won in the deal. Ticked him off he paid $3 more than he needed to, because I am a 'good whiner'.

However...

Having said that, it depends on the site, and how much you have grown your traffic. Case in point. I have one site that has a 50% increase in traffic every month, including June. The revenue from adsense has also increased 50%, each month over the prior month. Doing the math, if the site, hypothetically, earned me $1000 a month in June, it would earn the following in the next 12 months, based on the past twelve months.

July $1500
August $2250
Sept $3375
Oct $5062

Now, if I sell it today for 10 months worth of income, that is only $10,000. As you can see above, I would earn $12,187 in July through October. Why would I sell it today for $10,000?

Answer: I wouldn't

If I do the math on the two year old site, that has been doubling the income through all seasons, high and low, for well beyond a year, due to steady growth, the site is worth more to me in continuing income, than it would be if I sold it.

There is really only one way to do this, and I have done it. If you want to sell the site, then wait two years. Today, begin developing the replacement site. That way you get the longevity in the search engines, and get the site making money full bore. Then, sell the old site, at a handsome bounty, doing a bit of profit taking for your hard work.

You do not sell the old site today, and then begin to build another one. Otherwise, you will have a monthly income crash, and the money you got for the site, will just get whittled away in daily expenses. How will you replace that monthly income? You won't.

Don't sell a site without thinking things through long term.

oddsod




msg:1337992
 8:34 pm on Jul 5, 2005 (gmt 0)

If I remember correctly there were multiple bids for that site and the end price was several hundred thousand dollars.

If you're talking about the IP site - the buyers paid too much and they're discovering that now ;)

notredamekid




msg:1337993
 8:46 pm on Jul 5, 2005 (gmt 0)

They paid waaaaaaaaaay too much :-)

Jane_Doe




msg:1337994
 9:13 pm on Jul 5, 2005 (gmt 0)

If you're talking about the IP site - the buyers paid too much and they're discovering that now

I'm not saying I personally would have paid the same amount for the site. My point was that it is not a true statement that all buyers only look at earnings history or how easily the content of a site could be recreated.

kevinpate




msg:1337995
 9:29 pm on Jul 5, 2005 (gmt 0)

yep, and if PT Barum was alive today, he'd likely be of the opinion that there's a new sucker born every nanosecond, and he'd not be too far from wrong in many, many instances.

Langers




msg:1337996
 9:33 pm on Jul 5, 2005 (gmt 0)

Websites of this caliber are 9 out of 10 times bought for 1 years income or less.

I tend to agree with you. Unfortunately.

oddsod




msg:1337997
 10:45 pm on Jul 5, 2005 (gmt 0)

>> They paid waaaaaaaaaay too much :-)

Something silly - like 50 x what the seller wanted (50 x BIN price)!

You don't get buyers like that everyday. If I could find one I'd sell ALL my sites :)

But, yeah, people do see deals like that and get excited... which is funny.

wyweb




msg:1337998
 10:53 pm on Jul 5, 2005 (gmt 0)

You don't get buyers like that everyday. If I could find one I'd sell ALL my sites :)

LOL... me too.

And then I'd go down to the Keys and hook up with Jimmy Buffet and his bevy of south Florida babes and we'd sing and dance all night long and draw funny faces in the sand.

Can you sing..."...wasted away again at Margaritaville... looking for that looossst shaker of salt..."?

I sure as heck can.

frox




msg:1337999
 11:33 pm on Jul 5, 2005 (gmt 0)

incrediBILL:

That's all?

.... virgin ....

I thought you were one of the grandpas of the web like me with a 7 yo site

My oldest site has this tag
created: 19960515

Swebbie




msg:1338000
 1:49 am on Jul 6, 2005 (gmt 0)

Again, the reason to sell a site for its potential revenue in a short time-frame (a few months) isn't that hard to grasp. Some of us know we can turn a lump sum into more sites that much quicker that will earn us what we're losing by selling one site in the same time-frame (or faster). Just because YOUR situation makes this notion seem stupid doesn't mean it's true for everyone.

Someone mentioned borrowing the money from a lender instead of selling and paying it back over time. Sure, that's feasible too - same principle. But, again, that's not an option open to all. Unless you have some collateral or a long relationship with a bank, that's a lot easier said than done.

MovingOnUp




msg:1338001
 12:54 pm on Jul 6, 2005 (gmt 0)

For a site with AdSense and the only or primary source of income, I would be hesitant to pay more than 6x monthly income.

If the site has unique content, growing traffic, returning visitors, is continually getting unsolicited links, and has potential to expand beyond AdSense, up to 24x monthly income might be appropriate.

SlyOldDog




msg:1338002
 3:12 pm on Jul 6, 2005 (gmt 0)

Anyone got any stats on how long the average site stays well ranked before it gets hit with the fly swatter?

People here are talking about the income as if it's a near certainty. I have had many sites in google over the last 4 years but only half of them are there now.

I remember thinking about buying sites back in 2002 because I thought they would be there for ever. Those are distant memories and so are the sites I wanted to buy.

I am happy when my site is there every morning. To pay 10 months + for a site seems risky in my eyes. Unless you do it in bulk and you know the odds.

Undead Hunter




msg:1338003
 4:09 pm on Jul 6, 2005 (gmt 0)

Swebbie:

If you have a long term relationship with your bank and a good credit card history, you should be able to get a line of credit from your bank. They're giving them away where they can. It's given us tremendous freedom and flexibility.

It's better than a loan because you can just pay the minimum interest every month. You can also pay back as much as you want, big chunks when you get it.

Undead Hunter




msg:1338004
 4:16 pm on Jul 6, 2005 (gmt 0)

Erku:

And also, don't be too sure your $20 a day site will get to $1,000 a day in 4-5 years. As you add more content you can hit a point where you dilute the earnings per click. You'd think if 1,000 articles = $20, then 50,000 = $1,000 a day... but its not a straight line. 50,000 articles could bring clicks that pay $0.01, vs. whatever your first 1,000 are paying now.

Not to mention that if it took you a year to add 1,000 articles you could only add 5,000 in 5 years, unless you hire some of it out...

Not saying it can't be done, but just be aware its not that simple.

Edge




msg:1338005
 6:48 pm on Jul 6, 2005 (gmt 0)

Adsense is very much a new source of revenue. It will be interesting to revisit this thread and subject in a couple of years. I suspect that a site with a long history of earnings from Adsense should value higher in the future.

SlyOldDog




msg:1338006
 8:25 pm on Jul 6, 2005 (gmt 0)

What happens when the word gets out on the street what a crock of #*$! the AdWords Content network is?

I disabled it on all my accounts and I am sure in time all savvy advertisers will too. That means long term decline for AdSense revenues.

Freedom




msg:1338007
 8:46 pm on Jul 6, 2005 (gmt 0)

Oh yes, since you disabled it, I'm sure the Adsense content network is doomed.

Your ego is writing checks your ass can't cash.

nuevojefe




msg:1338008
 10:17 pm on Jul 6, 2005 (gmt 0)

and I am sure in time all savvy advertisers will too.

I don't think SOD implied his shut off was going to be the end-all for AdSense.

linuxguy




msg:1338009
 12:04 am on Jul 7, 2005 (gmt 0)

PM me if anyone is interested in taking a look to my site. Please include your sites info, I'll take a look to your whois before exchanging messages. Not paranoic but just following some advice from this thread.

Red_Eagle




msg:1338010
 4:06 am on Jul 7, 2005 (gmt 0)

Honestly, I read to about page 5 of this thread and ran out of time.

Can a site using Google Adsense as its only ads be worth more than a years earnings? Absolutely.

Here is what I want to know before buying.

--The traffic sources -- Google, MSN, Yahoo, Links, direct type-ins, ads. Every single one is extremely important to valuations. A site getting 90% of its traffic from MSN is worth about a months revenue as far as I am concerned. ***A domain that gets 90% of its traffic may be worth 5+ years of revenue*** (assuming its not a trend.)

--Traffic stability -- Did this site pop up in the search engines last month? Has it maintained rankings for year?

--Opt-in E-mail lists -- Has the site owner run an opt-in e-mail list? If he's done it right this can double the site value.

--SE traffic -- Is 90% of the traffic coming from one keyword? Say, mortgage? If so, this makes the sale super risky.

--Is there are forum with lots of users?

--Advertisers -- Is the site's topics both profitable and competative? If its following a trend with one or two companies advertising, that ads lots of risk.

This is a situation that *can not* be simplified. You can't say no Google Adsense site is only worth a years revenue. You can say a SE Spam site using Adsense is worth a months revenue (or less.)

Domain investors will spend 5+ years revenue for good domain names. Some of the domain parking services even use Adsense.

Want to sell me an Adsense site that meets all of my qualifications for a "good" investment -- you bet I'm willing to pay more than a years earnings, perhaps a lot more.

joeduck




msg:1338011
 4:36 am on Jul 7, 2005 (gmt 0)

excellent points red_eagle

In conventional business revenue *stability* is easier to assess than for a website. Traffic will vary and is often affected by PPC spending and activity from other sites that may go away after the sale, so you need to balance any revenue projections against this.

This 164 message thread spans 6 pages: < < 164 ( 1 2 3 [4] 5 6 > >
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