A tutorial about purchasing a website through flippa.com
First published on September 21, 2014
There is a lot to write about researching to be made before placing a single bid on a website for sale on flippa.com
Flippa.com is the authority website dealing with buying and selling websites and domain names online. While flippa.com is a totally legitimate website, it is hard for them to police and inspect every transaction that takes place online.
They provide information about the necessary "due diligence" to be done before getting involved in a transaction. For more details, check the video https://www.youtube.com/watch?v=K5qkYs1KBF4
Out of the many things to be taken in consideration is the traffic claimed for the website. Website traffic is one of the most important aspects when purchasing a website. Typically, it takes a long time for a website to become known and develop a decent traffic. Any website developer or owner can (and should) install a piece of script from google, known as google analytics. This piece of script monitors all the activity of the website and provides a great deal of detail about the number of visitors, where did the visitors come from, etc.
It is important to keep in mind that a large number of visits to a website comes from automated software on the internet (known as bots, crawlers, spiders, etc). They have the role of monitoring the content, number of pages, changes performed on a website. The crawlers can belong to a multitude of companies or even individuals. They are not harmful to the website, they are in many instances beneficial. The important part is to keep in mind that it can be a large difference between the total number of visits from real human visitors and the automated software. This number is so large, it can be even 10% of traffic from human operators and 90% from automated software. This happens especially for websites with low traffic. So, if a website has a counter installed, that shows the total number of visitors, that number can possibly include all traffic and therefore can be largely irrelevant.
On the other hand, the sophisticated software provided by google is aware of the IP addresses of the large majority of automated software and it disregards this. So, if a seller claims of having hundreds or thousands of unique visitors per day, ask for a verified google analytics account, or request access to the google analytics data.
It is extremely important not to believe the sellers for this information, without checking it by yourself. As you can expect, if a seller has something to hide, it will find all kind of excuses for not giving you access (claiming it is not safe for their account to do so), or any other excuse they may think of.
It is not true their account is not safe by providing access to the google analytics data. Is no more risky than having your own gmail account, together with many other millions of users of email accounts from google.
On the other hand, by providing access to google analytics, it may provide you a valuable insight on how their business operates. If they are indeed willing to sell their website and they have nothing to hide, it would be in their interest to clearly show to the buyers the entire process. It is true that this may give some useful ideas to their competitors. But hey, if you want to sell your car, you may have to let the prospective buyer do a drive test.
Now, the traffic may come from multiple avenues. The most precious kind of traffic is called "organic traffic" and it comes from "organic searches". The organic searches are the type of queries which all of us perform on google.com, bing.com, yahoo.com or any other search engine we prefer. So, for example if we search for "funny jokes" on google, on the first position there will be a website, www.comedyfestival.com.au.
But you can notice this website has a mark next to it (a yellow rectangle containing the text Ad). This is an advertised result and the owner of that website pays google an important amount to have the website listed on the top of the results.
On the other hand, the second result comes from www.jokes.cc.com and this website occupies the enviable top position in the search results. The difference between the two sites is huge. The first website may likely disappear from the search engine results page in the moment they stop paying for advertisement.
The second website occupies the number one position because they convinced google of having the best possible relevant content for our search expression (which is "funny jokes"). In order to reach the top position, the developers spent many years of adding relevant, quality content to their website and they became recognized by a plethora of users and websites all together. This means there is a very large number of websites that provide links to www.jokes.cc.com. These links are natural links, not paid links.
If I appreciate jokes very much and I find great quality content of a website, I will mention that website to friends and everybody else, just to show my appreciation for it. It is the same as with a movie. If you see a movie you enjoyed, you are tempted to discuss it with your friends.
The good part is that once a website reaches a top position for a particular search expression, it is quite likely to hold the top position for a long period of time. So that assures the prospective buyer that things will probably keep working the same way for a certain amount of time.
Keep in mind that a website may appear on top position for a particular search expression. If I search on google for "adult jokes", there is a different website appearing on top position, and that is www.laughfactory.com, while jokes.cc.com does not even appear on the first page of results.
It is very hard to find a website that shows on first position for a valuable search expression. Usually it is good enough in many instances if a website appears on the first page of results.
Now, what is the search expression that brings a website on top position is another very important aspect. If my website shows on first position for the search expression "proven method to earn one cent per year", there may be very few people interested in what your website has to offer. On the other hand, if your website appears on first position for "house loan comparison", then you are probably already a rich person.
There are companies (in Australia, one such company has a website called www.comparethemarket.com.au) that pay tens of dollars per click (!) in order to have their website appear on the first position. So, even if you or I don't have the slightest interest to get a home loan, by the simple fact we click on their link, we caused them to move a significant amount of money into Google's large pockets.
So, if your website is on the enviable first page of results, you can probably get paid thousands of dollars per month from banks or other credit companies to place their add on your website.
What can happen at an auction? The seller may provide altered screenshots of google analytics. They may show real screenshots, but which belongs to a different website, not the one they are selling. They may conveniently hide important information such as the number of visitors. They may claim that they have been advised not to share their google analytics data because it is not safe to do so. They may claim they did not consider important to create a google analytics account.
With Google AdSense, not all websites decided to install adds through Google AdSense. AdSense is a good way to monetize a website when there are no better alternatives. Some website owners don't use AdSense because it causes the visitor to move away from their website and they may lose a more important sale for a small amount earned via Google AdSense. On the other hand, if a website does not sell anything or does not have an affiliate program in place, just lots and lots of visitors, Google AdSense can be a valuable way of earning income.
Now. if you browse the internet, you may have already notice there are plenty of adds in form or banners just about everywhere. Some of us just learnt to disregards these adds all together, especially if they advertise for a product or service we are not interested in. As a result, the click through rate is usually very small. Out of 100 visitors, there may be less than 5 who click on an ad banner.
Depending on the content of the website or page where the banner is placed, google may place particular adds and each add has its own value. Depending on the ad content and the country of the visitor, the adds can bring you only cents, or they can bring you tens of dollars per click. I noticed that depending on the content of the website, some websites have a much higher click-through rate than others. For this reason, if you consider buying a website, it is the best to have direct access to the Google Analytics account for that particular website. The Google Analytics also offers access to see the revenue from Google AdSense, so if the website has Google AdSense, it is very convenient to check the performance.
to be continued