Buying and selling blogs is a growth area of professional blogging. People have bought and sold websites since the commercial web began but like a lot of things internet, bloggers are coming to this fresh and new. The main difference between the web sales of now and then is before the main assets of a site would have been its domain and search engine rankings. Now there are more opportunities for monetizing a site and RSS feed subscriptions make a site a lot stickier.
What brought me to think about this topic was the news Technosailor has not sold (yet). This is disappointing news, not just for Aaron, but for the whole blog-selling market. It seems to me there is value in his blog others aren’t seeing and perhaps this is a symptom of an immature market.
Let’s take a look at what Aaron writes before I give my thoughts …
The site is not properly monetized. Many were very surprised that the site makes approximately $250 in revenue. Quite a few people make a whole lot more than that for much smaller sites. I recognize that this is an area that needs improvement and I’m taking steps to increase the revenue base.
Buying and selling blogs should be looked at the same as buying or selling any business. When buying any property there are two issues to determine, desirability and value. Value is an obvious one, how much money is being made, how much can you make? There is re-sale value and also direct monthly income.
Desirability is a an odd one. Hard to put a figure on, incredibly hard to agree on. Part of a desirability score though will be based on if you have something similar in your collection already or if you feel the need to have a hole in your portfolio filled. Another aspect would be the appeal to others should you want to re-sell (flip) it.
The older and more established the blog, the more you can probably trust the traffic and income. You can project a base level of revenue, presuming the income isn’t dependant on a factor that leaves with the present owner. Younger blogs are less stable. I wouldn’t trust the valuation of a blog that was brand new and had unusually high traffic through having been dugg. Chances are the next month of traffic will not be anywhere close to the first and many of the inbound links will be poor quality.
There are two reasons to buy a blog. Ongoing value and re-sale value. I would buy for both reasons, just like if I was buying an real estate investment property. You would want a monthly income, an income you can improve. With that improved income, and other value-adds, you will be able to eventually sell for a much higher price than the one you bought at.
There is a popular phrase in investing that goes something like “you profit when you buy, not when you sell”. You are meant to buy properties with value growth potential. You need to see the hidden value. In real estate this would be buying a house that needs decorating. With a business it would mean buying where the business is sound but the operator hasn’t marketed or exploited assets well.
As an investor it is no good buying an investment at the height of its value. You don’t buy something where every improvement that can be done has been. Right now Aaron admits there are monetization strategies that have not been implemented. You will get your best value growth by buying at todays lower price and implementing those tactics yourself rather than buying at a higher price after he has implemented them.
I imagine what most potential buyers are doing is looking at that $250 monthly income and multiplying some figure to arrive at a price. Perhaps a better strategy would be to work out how much you could make by monetizing it yourself. It could be you are missing out on a bargain …