David Fiske A subtle blend of affiliate marketing and web development

Today's seminar is a reflection of the article How to Build an Affiliate Site You Can Sell for $1M by Andy.

It's probably a good idea to read the above article first to get the gist of what I'm explaining here.
 
Andy starts with a look at Digital Point for websites up for sale. There's a mixed bag over there. Some sites aren't worth anything and others come with strange stipulations. Take this one for instance. The seller is offering a forum but no domain name. If A4U was up for sale without the domain name, how many people will start using thisismyaffiliatemarketingforum.co.uk as opposed to a4uforum.co.uk?

The overall gist of the Digital Point search is to see what is selling and for how much. Sites seem to go on there for as little as $10 rising up to hundreds and occasionally thousands of dollars. The majority sell for anything below 1 years profit. But if you pour your heart and sole into something, you'll probably want a lot more.

Andy then explains some golden rules of selling websites:

1. Ensure revenue comes from multiple sources (affiliate programs, adsense, membership sales, etc)
2. Ensure traffic comes from multiple sources (search engines, directories, relevant websites, etc.)
3. Ensure there is more value than just the revenue (a quantity of newsletter subscribers, a quantity of RSS subscribers, brand recognition, etc.)

The key to selling a website for a million dollars is creating a website that generates $12,000 profit per month and satisfies all the above rules. That way you can multiply the annual profit by a factor of 7 because it is a good rounded site.

So to sell a website for £500,000, you need a monthly profit of £6,000 (annual profit of £72,000) and supposing it satisfies the rule above, you can multiply that by 7 (£504,000). Oh, and that's only if there's a buyer. If no one wants your website, you'll struggle to sell it for a lot!

So what should the website do and more specifically, which niche should you go after? Andy reckons it's a good idea to go after a niche with a lot of traffic, which means competing against thousands if not millions of other websites. His example is mortgages which is a very saturated market but would be very lucrative if you could break into it.

Assuming £100 payout for each qualifying lead you can produce, if you can generate 60 leads a month with no costs, you could generate the £6,000 monthly income required for the above sum. That's just 2 leads a day! That would give you a total of 730 leads in a year, which could also be 730 email addresses to promote other financial products to, such as loans or savings accounts. So, you could have 730 repeat customers each year, plus you recruit 730 new customers each and every year. Anyone can see the value of that kind of business. But let's scale it up. Imagine 10 leads a day @ £100 per lead. That's £1,000 a day which is £365,000 in a year. If the 7 times multiple holds, you could theoretically ask for £2.5 million for your site! Nice!

Conversely, going after a niche could be as risky as trying to break into the mortgage market.

Let's use the example of solar panels. If there is only one merchant who stocks solar panel equipment and you get 10 sales a day at an average commission of £20, you make £200 a day. Whoopie! But when you try to sell your site, you'll struggle because you are only making money from one source. You need multiple sources of revenue as per the rules above. Oh, and slapping AdSense on the site probably won't do that much! In fact, it may hurt your sales as people may buy via your AdSense links instead of your affiliate links.

Andy's check is:

1. Log onto an affiliate network site like Tradedoubler, OMG, Webgains, Paid on Results or Affiliate Future
2. Bring up a list of all merchants in your required niche
3. If there are more than 5 results, the market is good to use

Andy concludes explaining that just because someone offers you money for your site, you may not want to sell.

But this article requires a few more pointers:

• Run a couple of websites - if one site falls over and dies, you still have the other. I personally would concentrate on three, perhaps four websites, with one of those commanding most of my time.
• Try to be ingenious. Be different. What could you do to make a price comparison different or reviews website different?
• Remember to focus on the long term. You sell a site today for £100. But what happens if it a) collapsed just after the sale (never mind, you got the £100) or b) goes on to be sold for £5 billion to the likes of Google or Yahoo (d'oh!)
• Find something you enjoy or you enjoy playing with. Mortgages are boring but if you enjoy coding the calculators for your site, rock on!
• Build a site for you and your friends/family. If they like it, they'll help promote it. If they can't get to grips with it, why the devil not? What can you do to satisfy them, then scale this up to get more visitors.
• Optimise and test.

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