Forum Moderators: martinibuster
FOR EXAMPLE (THESE AREN'T TRUE FIGURES)
If you had a site with
10,000 pages (5,000 indexed with google as being unique).
Had 5,000 unique visitors a day.
Had 100 clicks averaging $1 a click = $100 a day
making $36,500 a year.
What would the site be worth?
As I say this is a hypethetical question but it would be nice to hear different views.
For what it is worth I think you'd have buyers around the $50,000 region providing you could see stats.
ricey
I see that you don't believe in the efficiency of markets :)...
Any other definition of "fair" and sellers may never agree a figure with buyers.
There are two schools of thought on the relationship between "fair price" and "market price". The first, to which you are subscribing, is that they are always the same, because the market determines what is a fair price. The second, which I'm advocating, allows for mispricings by the market, sometimes referred to as behavioural finance. Though, one could also argue from a market efficiency viewpoint that this is a new market and hasn't yet reached that point of efficiency. Eg: it might be different in 20 years time when a long term track record of websites has been established.
It's possible for Google to wake up one morning and... dump everybody else.
There are risks associated with any form of investment. When venturing one's capital, the question is one of balance, between perceived risk and likely ROI. Perception plays a big role in determining market price, though I guess we are agreed on that, and perception is probably the main reason for low website valuations at the moment.
it might be different in 20 years time when a long term track record of websites has been established.
and perception is probably the main reason for low website valuations at the moment
You speak as though the risk isn't there. Adsense publishers themselves are a jittery lot. They know how easily the party can end. The risk in buying an Adsense website just doesn't compare with investing that money in a commercial (B&M) property in an up and coming locality.
That brings up an interesting question: Why do investors put money into businesses like restaurants, movies, or retail shops when they could park their money in much safer investments? For that matter, why do publishers start new magazines (or buy and completely revamp old ones) when the odds of success are so slim? And why do they publish mainstream novels mainstream nonfiction books, most of which are business failures that end up on the remainders table?
Maybe it's because investors like to put their money into business sectors that they know (and, in some cases, into business sectors that they're passionate about). For some, that means real estate; for others, it may mean supermarkets, movies, Broadway plays, magazines, hip boutiques, portable toilets, sushi franchises, bookstores, or dairy farms. And for some, it may mean Web sites.
Side note: Even within a sector, different types of businesses will attract different types of investors. A Webmaster World entrepreneur who built his empire on SEO and affiliate sites probably isn't going to venture into editorial sites, and a media company with editorial Web sites probably isn't going to venture into SEO-driven affiliate or MFA sites. Similarly, Expedia probably isn't going to buy a guidebook publisher, and Lonely Planet probably isn't going to buy a travel-agency site. (Both may be "travel sites" in the broadest sense of the term, but they're in wholly different businesses that require completely different skill sets.)
You speak as though the risk isn't there.
No, I'm not suggesting there is no risk. I do think, however, there is insufficient differentiation between the risks associated with different types of websites, which is where the dialogue started.
Why do investors put money into businesses like restaurants, movies
For the same reason as they put money into Adsense sites: To take risk and be compensated for the risk via profits. The more the risk the higher the expected profit. But, you already know all this :)
There are not a lot of threads where you make this many posts, EFV. ;) Subject close to your heart, is it? But, as always, it's great having you around.
21_blue, buyers can differentiate however they wish, it's their money. ;)
21_blue, buyers can differentiate however they wish, it's their money. ;)
Again, that's only one half of the picture. Site owners can differentiate how they wish as well; they are their sites and don't have to sell! ;) I think we are both making valid points, but yours are more directed at buyers and mine at sellers (of bona fide websites) to whom I say:
There are not a lot of threads where you make this many posts, EFV. ;) Subject close to your heart, is it?
Actually, there are; and no, the subject isn't close to my heart. But who knows what my heirs might be thinking. :-)
