$16k earning case study

$16k earning case study

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 If you’re a sucker for nuts-and-bolts posts that include the gory details and insider stuff that goes on behind building and selling a profitable website for a great ROI you’re going to love this post.

I’ve been watching the guys over at NoHatDigital.com make some really interesting moves the last few months. When Greg reached out to offer an in-depth case study on their recent sale with us I just had to take him up on the offer!

Definitely read the post as there’s a ton of value there, but when you’re done go back and check out what these cats are doing with their Internships, Training Courses, and Apprenticeships. It’s like our apprentice program on a larger scale and I LOVE what they’re up to with this.

Their programs offer everything from pay-to-play training courses to paying you to come work for them. They cover new/improved keyword research strategies for 2014, how to add the right kinds of content, and building Private Blog Networks (PBN’s) from scratch.

They’re even bringing a ton of people together down in Mexico to do some amazing things together….definitely worth checking out!

Alright, here’s the post from Greg:

Start a site, rank quickly in Google, and then sell within six months for profit of $1,000 per page of content. Almost sounds a bit pre-2012 in the old “Exact Match Domain/Made For Adsense” days.

This is an account of the start-to-finish process of launching a site, ranking it, making money from the traffic, and then flipping it in 2014.

We’re going to break down some specifics of the site itself, along with the sale process, lessons learned, what the sale means to our business, and hopefully what it will mean to yours!

It all started when we launched our site in late December 2013, along with a batch of three related sites, targeting different aspects of the Automotive niche. We were familiar with the niche, as we had another solid-earning authority site at the time. Our goal was to see if we could rank small 15-25 page niche sites and then flip them for 16-20x at the 6-9 month mark.

We already had a system and process for launching sites that enabled us to create and link build dozens of these sites per month, so the experiment would test if launch-rank-flip was a viable option for the way we built sites at the time.

Our niche site model:

When this batch of automotive sites was launched, we were focused on building niche sites to a fairly set structure (we’ve since shifted our focus to building bigger authority sites). The bulk of our strategy still remains.

Key elements of our niche sites

  • Keyword research following an in-house process must show five “Definite Wins” in the SERP for the main keywords. By Definite Wins, we mean five sites that we believe we could beat following our SERP analysis criteria
  • Predicted earnings of more than $1,000 per month for the main keywords combined
  • Sites are usually in the range of 7,500-20,000 words of content
  • Content all written by native English speakers (high quality)
  • Most have 3-5 main target pages, each targeting multiple keywords. These pages receive the majority of links we build
  • Link building almost exclusively done via Private Blog Network (PBN) links, with some Wikipedia links following a successful strategy we’d developed for securing those links in 2013
  • Based on our keyword research model, the main money pages on the sites will usually need 15-20 PBN links for the main keywords to rank (long tail keywords take far less and tend to rank with only a handful of links, sometimes none)
  • Sites set up with an out-of-the-box theme (no customization)
  • A simple custom header image (only added once a site starts to rank in Google)
  • No social media setup, not even Google+

Basically, our niche sites are very plain and our core strategies are thorough keyword research, excellent on-page SEO, and link building with PBN links. We don’t waste time messing around to make a site look “pretty,” as there’s no point having a pretty site if there’s no traffic to see it!

Building simple sites reduces the time and financial cost of producing them, whilst offering plenty of upsides for buyers looking to improve on a site they purchase.

Although we knew the niche site model above worked for ranking in Google and making money (primarily through Adsense), we were unsure if our sites were going to be attractive for buyers. We needed to identify our Minimum Viable Product. Specifically, we wanted to answer the following questions:

  • Did we need to do any link building outside of PBN links?
  • Would using basic, out-of-the-box themes (simple sites) put off buyers?
  • Was diversifying our traffic sources outside of Google necessary?
  • Were social media accounts necessary, or at least, was social media traffic necessary?
  • Could we flip a site in 6-9 months or would buyers require a longer earnings history?
  • Was 16-20x earnings realistic for a young, simple niche site?

As it turned out, all our questions were answered and we learned A LOT in going through the process of selling a site for the first time.

Let’s dive into the details

  • Niche: Automotive
  • Site launched: 15th December 2013
  • Monetization: Google Adsense (potential for lead gen or direct advertising sales)
  • Total earnings (USD): $4810.46
  • Listed on marketplace: 12th May
  • Sale price agreed: 11th June
  • Transaction completed: 25th June

Rankings and Traffic:

Below: Ranking in Google for the main keyword, a 3600 local monthly searches term. Page 1 around 6 weeks after launch, Position 2 by the 8 week mark, and Position 1 just after three months.

Web traffic stats

Below: Traffic to the site up to the point of transfer.

site traffic

Earnings

The site started earning from Google traffic in early February (earnings in January were from traffic through a link on another site we held at the time). The site was monetized through Google Adsense 100%, though there was (and still is) certainly scope for direct advertising sales and selling leads to companies.

Below: Total earnings to point of transfer.

site total traffic2


Transaction Process

The site went live on the Prime shops marketplace.

A note to those unfamiliar with the Primeshops.co sale process: a basic overview of the site is provided in the marketplace, along with the price of the site. In order to find out the domain and more specific detail, buyers pay a 5% refundable deposit.

I love this aspect of the Primeshops.co model for a number of reasons, but definitely because it protects both the buyer and seller from time-wasters and people that are snooping around for sites they can copy or harm.

In less than four days after the listing went live, we had some interest!

Let’s see how things unfolded! I provided the information along with answering the questions. In the end, the buyer pulled out (see below)

10 days after depositor number one, we had a second (the eventual buyer of the site) . 10 days later, a third depositor showed interest:

 Less than 30 days after the site was listed, we had an offer!

Price Negotiations:

The price discussions' course of events intrigued me because there are many great lessons to be learned from it. My reaction Response from the buyer (some information removed to safeguard the buyer's interests):

Accepting the offer, I replied, "A sale is never over until it's over... After a few days, the customer still hadn't paid, so I decided to inquire about a status. Wonderful to see Joe enter at this time (excellent customer service). A few days before to this, the domain and hosting transfer was in progress. To complete the transfer procedure, there was some back and forth between the buyer, Primeshops.co staff, and myself. The entire transfer was done quickly and effectively by the Primeshops.co personnel; it could not have gone more smoothly. Now for some thought and wisdom gained...

Got Questions About Selling with Us? Click Here to Schedule a Call

Was the sale price fair value for the site?

The phrase "If it's a good bargain for you and a good deal for me, then it's a good deal" is a great one in business. That adage is accurate when selling real estate online. The buyer must have a sufficient amount of upside, and the seller must obtain a reasonable multiple based on the earnings history.

Based on the rolling 30-day average profits over the prior 90 days for our website, the 30-day average earnings were $891.17 when we initially received the $15,000 offer. This made the estimated value $17,823.4. (based on 20x earnings).

I made a counter offer of $17,500 (a tiny reduction from the $17.8k value), which I still think would have been a reasonable price for both parties, because I didn't want to be a jerk and refuse to decrease the price during negotiations. Although I thought we'd settle at $16.5k, the final amount was $16,000.

A decline in earnings during April and into May was keeping the valuation in check, despite the fact that the final 30 days of revenue had been stronger (see below).

90 day earnings for sale2

Should we sell or hold out for more?

We were certain that the site would maintain its June revenue level of $1,000+ per month and that, given the site's increasing trend in ranks, traffic, and revenues, $16k was a great bargain. There was still opportunity for the site to grow at the time and a handful of phrases that had yet to take top Google spots.

However, since the valuation is calculated over a 90-day period, the earnings decline in April was lowering the valuation, which was the problem we were experiencing. We don't know why the decline occurred in April, but it was likely brought on by an unforeseen temporary decline in Google AdWords advertiser activity. In April, CPC and CTR both decreased.

3 ways we could have increased the site value

Wait it out: To ensure that the April earnings decline was excluded from the 90-day valuation period, we may have delayed selling for 45 to 60 days. We didn't wait because this was a test case, after all. Although we didn't actually need the additional funds from the site sale, we were eager to verify our business plan.

There was a penalty to us waiting any longer because we could produce a ton of sites in just 60 days. Even if it sold for 16x instead of 20x, the build-rank-flip model remained to be validated. It just didn't make sense to haggle over the price or wait for the price to go up to save a few thousand dollars.

Add more content: Once more, we decided against doing this since we wanted to see if simple sites could be flipped at a 20x ratio. Nevertheless, we could have added more content as soon as we realized the website was successful, which was as early as mid-February (plenty of time for the added content to bring in new traffic and revenue).

Sites can increase traffic, revenue, and ultimately sale price by adding content. It's very possible that the additional material will pay for itself in additional visitors and earnings it creates before the site sells if it is done well enough in advance (let's say four months). Therefore, the increase in sale price is just pure profit from that content.

Add another traffic source: Advanced keyword research, excellent on-page SEO, and link-building sites with a Private Blog Network have been at the heart of our site-building strategy. The addition of social media to the website would have been a possibility to increase traffic.

An extra traffic source would have helped to allay the buyer's worry that Google traffic would decline soon after purchasing the site (it actually grew as we predicted it would).

Link Building Notes:

For the PBN link builders reading this and wondering how many links we built to the site, the number was 32 PBN links in total.

PBN link breakdown per month:

December: 8
January: 9
February: 1
March: 5
April: 6
May: 2
June: 1

Link distribution:

13 to home page (not targeting a keyword)

10 to the website's home page (the page referenced earlier in the post with the rankings graph)

9 split among the site's other three important pages (which also held rankings high in Google)

We frequently build links in proportions similar to those shown above, with approximately 30–40% going to the home page, 30% to the primary target page on the website, and the remaining links being dispersed throughout other pages. We've discovered that using this tactic raises a lot of pages in the SERPs and boosts the site's overall authority.

4 Reasons to Build Sites in Batches

We always build out new sites in batches and teach the same to our NoHatDigital.com Private Training Course and Internship participants because there are a number of advantages, including:

1. Increased effectiveness. Your productivity can increase if you can collaborate across the four sites on projects that are similar. The identical work will almost probably be completed more quickly the second, third, and fourth times you do it in short succession. Saving time is essential, especially if you are working online part-time.

2. Easier outsourcing or content creation

By having similar sites, you may hire one writer to write for all of them, which will typically save costs and increase efficiency because you'll only be working with one individual. If you're the one creating the content, you might get into the habit of writing about the same topic, which is typically more fruitful.

3. Websites can be linked to one another. From a single PBN article, we frequently link construct two different money sites. By doing this, each link's time and financial expenditures are slashed in half.

4. It lowers the risk.Two sets of two similar sites can make up a batch of four sites. You might even go "all in" with four sites from a comparable niche—or, if the keyword diversity permits it, the same niche—if it's a market you are familiar with.

If you grasp the fundamentals of keyword research, it's quite likely that you'll produce a batch of four websites in which one will perform exceptionally well (like the one we've highlighted here), two will be passable, and one or two will be losers. That's a tremendous amount.

Finally

Our belief that site flipping is a viable business model worth pursuing at scale was confirmed by the experience of selling a site on Prime Shops.

An expert, organized, and well-managed platform has been added to the Prime Shops marketplace to link vendors and customers. Since selling our site, we have incorporated site flip money as a main source of revenue into our business strategy, and we anticipate shortly listing more sites for sale. We'd love to hear your ideas, questions, or remarks in the comments section.

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