Business Decisions: What would you do with $70k?

[BrianL]

LOL. You and I totally disagree on everything. Except your boobs thread

Those are pretty nice, huh?

Look at the action of Flickr, YouTube, Myspace, Facebook, etc. Comparing current deals is a great way to get a sense of the overall market. Same goes for smaller deals like you see on SP, DP, and other forums with marketplaces. Lots of small sites move for 10-15x monthly earnings all the time. Not the 20+ multiple that's going on here.

I guess my problem with that theory is that the value is so subjective. Sure, maybe people can get that and good for them if they can. I just know from experience that even if I had $70K to blow on a site that was doing $10K a month, I'd have to think hard about it and still might not do it because there are so many other little sites that can be had for less than $1000 and are aged well, etc. In fact, I'm working on redeveloping a site right now that has been online since 2001 and makes about $5 a day right now. It cost me nothing (literally) to take it over and experience in that niche says I should be able to have the site to $5K+ a month within 90 days.

 

[smash]

Smash: Interesting multiplier, but what is it based on? Wheres it from? Seems kind of arbitrary, if you had stats to justify the 3 it would make sense.

The multipliers are a guide established by the type of industry. Pr/Media/Entertainement is what this site would fall under. The number changes for others such as manufacturing, real estate, retail, etc... It's just basically the average range for which a company of that type should sell for. It's called Pratt's stats. http://www.bvmarketdata.com/defaulttextonly.asp?f=PS Intro

 

[avantrosa]

It's nothing like real estate - there are too many factors that could turn a site into something completely worthless vs. real estate will always have some value, if even just the land value because there isn't much new land just laying around. It's also such a subjective market that there is no way that you could compare things side by side. Just because YouTube sold for a crazy amount of money, doesn't mean that a replica of YouTube is worth anywhere near that...even if the traffic were similar.

Ugh... I didn't say all the same rules applied. I said look at what other properties are going for in the same market. Underlying rule, supply & demand.

 

[avantrosa]

Just to clarify that I'm not talking out my ass, the travel sites I work on combine for about $100k a month. The more they grow, the harder it is to keep up the growth compared to when we were at $50k a month. Advertisers pay less and less or cannot fill inventory...it just happens and that's something to keep in mind.

You're comparing apples to oranges.

 

[BrianL]

You're comparing apples to oranges.

How so? And advertiser budget is an advertiser budget. I mentioned travel as an example of one market. I have sites that are smaller scale in finance, entertainment, sports, and several other markets that suffer from the same drop off as they grow. I currently get $2 a click from AdSense on a couple of sites that do very little traffic, but once they grow (speaking from experience) the clicks will drop to approximately $0.50 a click. I see the same thing with some CPM ads that I run...more traffic, fewer people that will pay the CPM rate that I can get.

 

[Andrew]

I think the most important thing when buying a site is you understand the market for that niche. Jumping in "blind" is generally a bad idea unless you are dealing with something very straight forward like generic (non-trademark) type-in traffic.

This isn't like a booming real estate market were you can just drop $200k and sell for $270k a year later. Traffic sources and monetization streams can change quite rapidly, in some cases are not even sustainable.

 

[edgistics]

I run a bunch of media sites and the only way I would throw 70k at another media site is if the type in traffic justifies it....the domain itself has value. It's not difficult to get a media site to generate 2-4k per month...if you have the time and some initial seed capital...and of course, if you know what you're doing.

I'm not opposed to buying existing sites (as I do all the time), but unless you're seasoned in this particular genre of sites, you should buy something on a smaller scale and see if this is right for you.

 

[ffblueocean]

I'm surprised that people have not gratuitously offered to sell their sites for $70k too! I'm sure we all have sites that we could let go for this fee!