How Do Websites Make Money?
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How Do Websites Make Money?

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What's better than owning websites? Owning money-making websites! Flippa's operations manager, Andrew Knibbe, gathered 18 months of data to find out what kinds of sites make the most money.

What's better than owning websites? Owning money-making websites! Flippa's operations manager, Andrew Knibbe, gathered 18 months of data to find out what kinds of sites make the most money.

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  • The red bars show how well each niche performs in terms of monthly revenue, while the blue bars show how each niche performs when you come to selling. For example - we can see that websites in the home Niche tend to earn $100 – red line on the top axis – and they tend to sell for $700 – the blue line read off the bottom axisAs we can see here, websites in the Gaming, Business, Internet Services and Internet Marketing niches tend to outperform the market by way of monthly revenue.You can add Hobbies, Technology, Home and Entertainment niches to this list of high performers if you want to beat the market sale price.It is interesting to note that Internet Marketing sites are good short term revenue earners but they tend to struggle when it comes to selling. I’d put that down to the large number of MMO sites in this nicheAs you can see, websites in the Internet Services niche perform strongly in terms of both capital and revenue yield but its worth bearing in mind they have a higher cost base by their very nature of being mainly a service.Outside of these, Gaming looks to be an attractive niche. Owners of these sites are getting a solid revenue stream each month while at the same time getting strong capital growth when they go to sell. By far the biggest types of sites in this Nitch are game reviews, sites that are games, and gambling sites – and each hold their own.Its worth noting that websites in the Gaming niche were also the only ones to see increases in both capital and revenue in 2012 over 2011. Remember the total market was flat and negative in these.Let’s see how they’re all doing in terms of traffic …
  • This time the blue line shows how much traffic sites in these niches are getting, while the purple line shows how good they are and converting this traffic into revenue.Looking at the Home niche again – the blue line tells us they tend to get about 1,500 uniques (off the bottom axis) but earns over 4 cents per user (off the top axis)As you can see, both Gaming and Entertainment sites, and to a lesser extent Technology, tend to perform strongly in terms of attracting traffic but don’t do a great job of extracting revenue from this traffic.We’ll again ignore Internet Services as an outlier but we can immediately see that websites about Internet Marketing or more general Business sites tend to be above average at attracting traffic, while also beating the market when it comes to monetizing this traffic – the benefit of being in niches that are inherently commercial in nature. Enough theory – lets look how one of these might look in the wild.
  • As you can imagine, there is an extreme longtail of how site owners build out their sites. I mean, how many of you have heard of XXXXX?For those that use the major players we have here, we can see Wordpress clearly dominates – it has actually grown in terms of 2012 share since 2011.Beyond that, in order of transaction volume, we see Joomla, vBulletin, Drupal, Blogger, tumblr and Pligg.Now lets see how these different platforms are working for their owners.
  • So let’s go.We’re seeing the median site revenue yield as being $133 which is down on last year by 12%We’re seeing median monthly uniques as being around 2,000 per month. This is also down on last year but this time by as much as 38%.This suggests that on the whole its getting harder to maintain the traffic and revenues for most sites. On a brighter note, we’re seeing most site owners get better at monetizing what traffic remains as revenue per unique user is now at around 4 cents per month – up 15% on the previous year. So site owners are doing something right.We can also see the median sale price holding steady at just under $500. Again, note that this is a median so half our sales are over this.The sale price holding steady despite the lower revenues means we’ve seen a big upturn in sales multiples with the median now being at 8 times monthly revenue – up by 20%.These are the main stats we’ll be looking at for the next few slides. You’ll see that these results vary a lot as we look at different nitches and monetizations.Does this make you feel better about some of your less awesome sites?Well hopefully this profile gives you some perspective – its been a tough year. I don’t know many site owners who’ve not had some major setbacks from events like Google’s panda updates.Outside of that, we’re seeing most sites sold being build on a standard CMS such as Wordpress, Joomla, or DrupalFinally, we see that most sites have a single monetization method – as in just affiliate marketing, just display ads, or just ecommerce. Which I found surprising.
  • OK – so we’re pretty well at the end of things today.We’ve look at what an average market site profile looks like then saw how this can be beaten depending on the Niche, Site Type and Monetization method that you use.Hopefully you’ve been able to keep up and you have a few good gems to apply to your own sites.Before we jump into questions, let’s recap on a few of the key take-outs …
  • In terms of the average site profile – we’ve seen a general decline in revenue yields and traffic volumes for most websites. This has been offset by site owners being more effective in monetizing the remaining traffic which has meant the median sales prices have not really moved year on year.In looking at Niches, we saw that websites dealing with Finance, Business, Home, Entertainment, Gaming and Family niches tended to outperform the market in terms of both monthly revenue yield as well as final sale price.Then, in looking at which site types were doing well, we could see that review sites are seeing a bit of a second wind happen.Looking at monetization methods, websites relying solely on advertising revenue are seeing massive drops in value with respect to both monthly revenue yield as well as sale price. Fortunately for attendees here, we’re seeing a much rosier picture on the affiliate network front.Finally on platforms, we see the continued growth of wordpressbut my pick for the platform to keep an eye on this year will be Tumblr.If you have no plans for your next site, you could do worse than build a gaming app review site on Tumblr monetized via an affiliate program like Link Share ;-)
  • I hope you’ve all taken a lot out of this session.Before I open it up for questions I’d let you know our contact details – feel free to contact me or any of the other guys at Flippa if you’re interested in anything beyond what we covered today.Thank-you.

How Do Websites Make Money? How Do Websites Make Money? Presentation Transcript

  • How Are Websites Making Money?A look at $30 Million in Website Sales Flippa.com User Meetup – Feb 2013 Andrew Knibbe – Operations Manager, Flippa.com
  • How Are Websites Making Money? • Approach • Average Site Profile • Niches • Site Types/Models • Advertising • Affiliate Programs • Platforms • Questions
  • Approach• Transaction data for all established websites sold in 2011 and 2012• Over 8,000 transactions worth almost $30 Million• Mix of seller provided and directly sourced data• Focus on median performance 2 - 4 - 4 - 4 - 6 - 6 - 6 - 12 - 16 – 40 [mean=10, median=6]• Compared changes between 2011 and 2012
  • How Are Websites Making Money? • Approach • Average Site Profile • Niches • Site Types/Models • Advertising • Affiliate Programs • Platforms • Questions
  • Average Site Profile in 2012The Baseline• Monthly Revenue: $133 12%• Monthly Uniques: 2,097 38%• Monthly Revenue per Unique: $0.04 15%• Sale Price: $493 1%• Sale Multiple: 8 x monthly revenue 21%• Built on a standard CMS• Single Monetization Method
  • How Are Websites Making Money? • Approach • Average Site Profile • Niches • Site Types/Models • Advertising • Affiliate Programs • Platforms • Questions
  • Tier 1 Niches – 70% of Sales Volume Internet Marketing Entertainment Health & Beauty Home Internet Services Technology Hobbies Business Travel Gaming
  • Tier 1 Niches – Call Outs• Gaming and Business sites are good earners• These + Hobbies and Tech tend to beat the market when selling• Gaming/Tech have high traffic but low user yields• Business sites have best revenue yielding traffic• Internet Marketing sites tend to be short-term earners (ie low sale prices)• Gaming site capital/revenue yields GREW in 2012
  • Tier 1 Niches – Capital/Revenue Yield Median Monthly Revenue $- $50 $100 $150 $200 $250 $300 $350 $400 Gaming Travel Business Hobbies Technology Internet Services Home Health & Beauty Median Sales Price Entertainment Median Monthly RevenueInternet Marketing $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Median Sales Price
  • Tier 1 Niches – Traffic Yield Median Visitor Value $0.00 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 $0.14 $0.16 Gaming Travel Business Hobbies TechnologyInternet Services Home Median Monthly UniquesHealth & Beauty Median Visitor Value Entertainment Internet Marketing - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Median Monthly Uniques
  • Tier 1 Niches – wheretogetmovingboxes.com• Home Niche• ShareASale• PageRank 1• $69 Monthly Revenue• 301 Month Uniques• Sold for $747 (24 bids)
  • Tier 2 Niches – 24% of Sales Volume Employment & Education Electronics Finance Social Media Family News Sport Automotive
  • Tier 2 Niches – Call Outs• Family, Social Media and Finance are strong earners: all grew in 2012• Automotive, News, Family and Employment beat the market wrt sell price: all up 20% in 2012• News sites tend to sell for more but need A LOT of traffic to earn revenue• Finance earns 20 cents per unique: double in 2012 on 2011• Sport and Family not massive in raw traffic but getting over 7 cents per unique• Social Media sites had strong financial and traffic performance: fad or trend?
  • Tier 2 Niches – Capital/Revenue Yield Median Monthly Revenue $- $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Automotive Sport News Family Social Media Finance Median Sales Price Electronics Median Monthly RevenueEmployment & Education $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Median Sales Price
  • Tier 2 Niches – Traffic Yield Median Visitor Value $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 Automotive Sport News Family Social Media Finance Electronics Median Monthly UniquesEmployment & Education Median Visitor Value - 2,000 4,000 6,000 8,000 10,000 12,000 Median Monthly Uniques
  • Tier 2 Niches – iKidApps.com• Family Niche• Link Share (Apple)• PageRank 4• $1,300 Monthly Revenue• 19,000 Month Uniques• Sold for $19,100 (35 bids)
  • How Are Websites Making Money? • Approach • Average Site Profile • Niches • Site Types/Models • Advertising • Affiliate Programs • Platforms • Questions
  • Site Type Performance Blog Ecommerce Directory Services Social Forum Marketplace Reviews
  • Site Type – Call Outs• Forums still beat the market - despite strong sell price decline in 2012• Review sites earn roughly as much as a blog - but sell for double!• Review sites saw a massive increase in traffic in 2012• Forums, Directories and Social sites struggle to convert traffic into revenue (Forums down 60% on 2011)
  • Site Types– Capital/Revenue Yield Median Monthly Revenue $- $100 $200 $300 $400 $500 $600 $700 $800 $900 Reviews Median Sales PriceMarketplace Median Monthly Revenue Forum Social Services DirectoryEcommerce Blog $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Median Sales Price
  • Site Types – Traffic Yield Median Visitor Value $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 Reviews Median Monthly Uniques Median Visitor ValueMarketplace Forum Social Services DirectoryEcommerce Blog - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Median Monthly Uniques
  • Site Types – BestHydrationPacks.com• Review Site• Amazon Associates• PageRank 1• $24 Monthly Revenue• 870 Month Uniques• Sold for $210 (19 bids)
  • How Are Websites Making Money? • Approach • Average Site Profile • Niches • Site Types/Models • Advertising • Affiliate Programs • Platforms • Questions
  • Advertising Performance Google Adsense BuySell Ads Infolinks Chitika DoubleClick.Net Openads/OpenX
  • Ad Performance – Call Outs• 20% drop in revenue in 2012• Traffic yield tends to be half of what the market is getting• Plus, all yields dropped in 2012 (despite total market yield being up 15%)• BuySellAds sites sold for good prices based on having more traffic
  • Ad Performance – Capital/Revenue Yield Median Monthly Revenue $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500Openads/OpenXDoubleClick.Net Chitika Infolinks BuySell Ads Median Sales PriceGoogle Adsense Median Monthly Revenue $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Median Sales Price
  • Ad Performance – Traffic Yield Median Visitor Value $0.00 $0.01 $0.02 $0.03 $0.04 $0.05 $0.06 $0.07 $0.08 $0.09 $0.10Openads/OpenXDoubleClick.Net Chitika Infolinks BuySell Ads Median Monthly UniquesGoogle Adsense Median Visitor Value - 20,000 40,000 60,000 80,000 100,000 120,000 Median Monthly Uniques
  • Ad Performance – CrispMe.com• BuySell Ads• PageRank 3• $61 Monthly Revenue• 110,000 Month Uniques• Sold for $9,450 (55 bids)
  • How Are Websites Making Money? • Approach • Average Site Profile • Niches • Site Types/Models • Advertising • Affiliate Programs • Platforms • Questions
  • Affiliate Performance Commission Junction Amazon Associates SkimLinks Link Share CPAlead ShareASale ClickBank Affiliate Buzz
  • Affiliate Performance – Call Outs• Commission Junction and Link Share are yielding especially strong revenues: both up in 2012• … largely due to being 50% better at visitor revenue generation (over 8 cents/unique)• Amazon Associates not a strong performer and flat in 2012
  • Aff. Performance – Capital/Revenue Yield Median Monthly Revenue $- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Affiliate Buzz ClickBank ShareASale CPAlead Link Share SkimLinks Amazon Associates Median Sales PriceCommission Junction Median Monthly Revenue $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 Median Sales Price
  • Affiliate Performance – Traffic Yield Median Visitor Value $0.00 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 $0.14 $0.16 $0.18 $0.20 Affiliate Buzz ClickBank ShareASale CPAlead Link Share SkimLinks Median Monthly Uniques Amazon Associates Median Visitor ValueCommission Junction - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Median Monthly Uniques
  • Affiliate Performance – LoveTheOutdoors.com• Amazon Associates• PageRank 3• $1,200 Monthly Revenue• 118,000 Month Uniques• Sold for $37,100 (32 bids)
  • How Are Websites Making Money? • Approach • Average Site Profile • Niches • Site Types/Models • Advertising • Affiliate Programs • Platforms • Questions
  • Platform Performance WordPress Joomla! vBulletin Drupal Blogger tumblr Pligg
  • Platform Performance – Call Outs• Popular platform = strong sell price• Wordpress up 8% in CMS share in 2012• Joomla still powering well performing sites• Drupal and Blogger are equal wrt median revenue & traffic BUT Drupal doubled in 2012 while Blogger halved• Tumblr went from zero to hero in 2012
  • How Are Websites Making Money? • Approach • Average Site Profile • Niches • Site Types/Models • Advertising • Affiliate Programs • Platforms • Questions
  • Questions – Take-Outs• Website performance down in 2012 compared to 2011• Offset by more effective monetization in 2012• Median sale prices have held steady• Not all Niches were created equal: Finance, Business, Home, Entertainment/Gaming and Family niches tend to outperform the market• Review sites are seeing a performance comeback• Ad revenue is generally in decline• Affiliate revenue is generally growing• Wordpress growth in unstoppable. Keep an eye on Tumblr
  • Questions How Are Websites Making Money?Contact Flippa• Flippa.com/blog• facebook.com/flippamarketplace• @flippa• support@flippa.comContact Andrew• andrew.knibbe@flippa.com• linkedin.com/in/andrewknibbe• @andrewknibbe