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Thread: Valuing a site's traffic demographics

  1. #1
    Moderator Kay is a Premium Member
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    Valuing a site's traffic demographics

    I've been reading around about how to value a website, and I've not yet seen anything discussing the demographics of the site's visitors in this context. Can someone please send me some new specs or point me in the right direction?

    What prompted this is that I was looking at various stats for some of my sites today and some of the figures revealed that certain niches had more affluent visitors. Well, I guess it's common sense to expect some groups to be more affluent than others. Retired professionals vs students, for example. So, all other things being equal, I was wondering if a site aimed at a more affluent audience would be more valuable than one for less well-off people. It seems kinda obvious. Is that why it doesn't seem to be mentioned very often in valuation discussions.

    In any case, I don't think it's that simple. For starters, where do you get the info on the demographics? Perhaps from places such as Quantcast? Very American-biased and also if some faceless entity asks "How much did you earn last year?", then how likely are people to tell the truth? Therefore I don't think you can rely on stats but instead have to go on a gut feeling.

    Another thing, it depends on what you want your visitors to do, eg click on ads or buy something. If you're monetising via AS rather than trying to sell something, then it doesn't matter whether your visitors are affluent or not.

    Also if you can make $x net profit p/m from a website, does it matter whether the visitors are rich or poor? Would there be more potential in an affluent audience because there could be better opportunities to sell them more? (Oh no, I used the word "potential" on here. LOL)

    When you are valuing a website, perhaps with a view to buying it, how much importance do you place on the value of the target demographic?
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    Top Contributor crabfoot is a Premium Member
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    I seem to remember that Clinton wrote something a while back about this - can't find it, though.

    Before my aff sites were bitten to death I found a couple of niches were worth aiming at moderately affluent people - I was targeting sales of designer goods in the 400 - 1000 price range. Had one month worth mentioning, then that approach went out of the window because the main paying supplier moved from Affiliate Window to another network, notorious for not using cookies and being unable to track sales properly. Since the B&W attack started, I've had only one sale on those sites ...

    Whatever, a limited success at targeting those people for whom a working man's wage is "pocket money".
    Last edited by crabfoot; 30 December 2012 at 8:56 am.

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    The other thing that's worth thinking about is that your demographics will give you some idea on what monetisation methods are likely to be more effective. Obviously if you're getting more affluent visitors then you can potentially (!? oh no, you've got me at it too) get the same net profit from much less traffic.

    Demographics aren't just created from survey samples - there's a heck of a lot of information available if you know where to look. You can use geolocation data to get the area your visitors are in and then get demographics for the area from local government sites for instance. UK stats fom ONS at http://www.statistics.gov.uk/hub/index.html, European stats at http://epp.eurostat.ec.europa.eu/por...eurostat/home/ & the UN have a list of national statistics offices at http://unstats.un.org/unsd/methods/i...sd_natstat.asp.

    Actually, that gives me an idea. I wonder if it's possible to hyperlocalise advertising using geolocation data - some research needed

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    I think the most important thing is the intent to buy. Are people coming to your site to buy stuff, find information or entertain themselves?

    I have a bunch of sites in the info/entertainment area, and I get a lot of traffic (upto 80k visits per day) but revenues are pretty low. People are not interested in buying stuff. Even if you're not selling anything yourself, ads that are clicked on your site must ultimately lead to some kind of money being spent. If people on your site have no intent to buy, that'll mean low CTR and low CPC, which will equal super low CPM. For me $0.50 CPMs means a good month. For the last site I still have adsense on, it pays me $0.08 per click.

    At the greatest extreme, I have one news/info/entertainment/forums site getting ~300k visits & ~900k pageviews per month, most of the visitors are under 20 and it makes about $250/mo after server expenses, which hardly pays for the 5-10 hours I need to work on it. As ad serving tech has become more and more advanced (and more monopolized!), squeezing money out of these sites has become more and more difficult, as advertisers remove ads from badly performing sites quickly and efficiently. If you can't deliver customers, your ads are worthless.

    Another thing is technological advancement of the users. While its easy to integrate ads into an info site, if your site is about hi-tech stuff its unlikely you'll get high CTR because of ad-blindness and adblocks.
    Last edited by Edmunds; 7 January 2013 at 4:55 am.

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    The quality of the demographics is reflected in the earnings of the site. That you attract highly affluent visitors is not necessarily worth a lot if you're attracting them at an early point in the buying cycle and they are not ready to make a purchase. If it's a very high value product - think Cessnas or yachts - they are not going to buy off your site and the relationship you have with those visitors is more important than those visitors' net worth i.e. are they subscribed to your newsletter, do they trust your reviews, do they interact on your site or take part in the community you've built.

    When a buyer feels a site is undermonetised - and depending on how he intends to monetise the site after purchase - he might want to investigate the demographics, but in most cases I would advise that you should consider the quality of the demographics already built into the revenue figures. It's often the case that pie-in-sky sellers try to extract a higher price for their site by trying to convince the buyer to see extra value where there is none.
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

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    I was doing some research on a clickbank site that I was considering buying.

    It had over 50% of the traffic from china.

    The site had conversion tracking setup and 0 sales from china. Most of the sales were from western countries.

    My point is, it is a factor, but something I would look at last.

    Income and the likelehood that income will continue is the main factor of valuation for me.

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