Links and Search Engine Rankings – Fact or Fair“E-tail”

[Avid]

Link popularity or the strength of ones back links can be an important element in the evolution of any online business and a central indicator of its long term search engine traction. Thus, it can also be a chief point of concern for any potential buyer looking to make online acquisitions. I cannot stress enough the research required by new buyers of web stores or online platforms in reviewing the strength, relevancy and sustainability of these links. Perhaps the most important question that can be posed after establishing that the link basis for a site is robust and expansive, is will those links still be there after a site is transitioned to a new owner? For those of you new to the ecommerce world, the best proxy for acquiring links that I can utilize is the metaphor of links being likened to individual “votes” for your website. The greater the relevancy of the site providing these votes and the more focused the anchor text around them the more algorithmic “torque” or benefit a site will derive. Let me first note, that buying links from other sources, represents a violation of the rules of Google. In fact, engaging in a link building campaign that is designed for the purposes of “cheating” or “bypassing” the search engines is not perceived as appropriate search engine optimization. Sites that evolve naturally and over time will buoy themselves to the top of the search engines on the basis of the underlying authority of the platform and should have this natural link basis. These are the sites that I typically incubate or look to acquire. While the process for incubating sites may often be a lengthy one, there is no alternative to a long range approach to ecommerce and this incubation work is absolutely paramount.

Now that we have established this background (and for more advanced etailers please excuse the prelude), what I recommend to any prospective buyer is conducting a back link analysis to determine the integrity of the link basis and the depth of its “root system”. There are many back link checker tools online that can do this.

Buyers need to be aware of any relationships the owner may have with organizations or industry colleagues that support his or her link network. Will these be removed when the site is turned over to a new owner? What about other sites may the seller own as part of a family of sites they have developed? For example, if there was a site in the outdoor water feature space, and the owner owns more than one of these or other home or garden related sites and has link relationships from them to the site being sold, is there a chance that these links will be “pruned “ post transfer. If these are very relevant links with targeted anchor text than the loss of these links would blight or devastate the rankings going forward. If the new buyer performs their due diligence beforehand they should make a contractual provision for the maintenance of these links. I cannot stress this enough as with organic traffic based sites, the underlying internet “real estate” is critical to the success of that business. Loss of rankings spells loss of traffic, and the covariance between this and revenues and cash flow is extant.

It is important to remember that if they have not done so and the sale has been completed and no provision made in their agreement, then the seller is under no obligation to keep these links so buyer beware. Keeping these links would be performed on a courtesy basis to the buyer only. As I have discussed before, I know with some site sales, it is not unusual for buyers to develop expectation that are out of alignment with sellers. It is important to remember that in the above context a seller may have a significant level of influence on ones rankings based upon choices they make about the maintenance of these links. Get the link provisions spelled out as part of your agreement to avoid any future risk or if the sale as already been made preserve the relationship.

If the seller continues to send you traffic and send you links, my suggestion is to maintain the relationship, offer them value through the construction of an affiliate program to these other sites where the seller can enjoy residual benefits, offer the visitors he may be sending you a strong shopping experience or value through high quality content and information, etc.
With one of my first acquisitions this proved to be the case where the seller owned other relevant though non commercial sites that offered link strength. I did not recognize this until after the sale and since I had not maintained a contractual provision for this I had to maintain relations with the seller and found ways to add value to him.

Therefore, do your homework, use the online tools, determine what kind of links are coming from where and if you are buying from a seller that has a family of stores, identify where a good amount of power is coming from, make a contractual allowance for these links that are within the control of a seller is crucial. If not, you will be at the behest of the seller and could be in deep trouble! Hope this helps those of you there understand this concept.

[benitez17]

Great explanation. Do you have any specific backlink analysis tools that you can recommend?

[hooperman]

Sites that evolve naturally and over time will buoy themselves to the top of the search engines on the basis of the underlying authority of the platform and should have this natural link basis. These are the sites that I typically incubate or look to acquire.

Do you have any strategies for getting good quality links to ecommerce stores?

[Clinton]

I cannot stress enough the research required by new buyers of web stores or online platforms in reviewing the strength, relevancy and sustainability of these links.

Wouldn't this be hugely relevant only for those sites that rely on organic search traffic? Wouldn't a site getting 80% of its visitors from, say, affiliates, or a particular academic institution surely be better served securing those traffic streams instead?

Buyers need to be aware of any relationships the owner may have with organizations or industry colleagues that support his or her link network. Will these be removed when the site is turned over to a new owner? What about other sites may the seller own as part of a family of sites they have developed?

On this point, Avid, I've just had someone approach me to buy one of my sites last week. He asked all the right questions so I get the feeling he's a serious buyer and knows what he's doing. He did question what other sites I owned in the niche, what links I control from other sites I own, social networking profiles, forum signatures etc. I've given him my reassurances, but do you have any suggestions for how I can convince him that I don't have control over any of the links pointing to my site? Or how he could check them himself?

I've added "AS15" in this thread, Avid, and acknowledged your contribution. Any other suggestions you have for that thread?

[Avid]

Great explanation. Do you have any specific backlink analysis tools that you can recommend?

Benitez, Ive had good success with this one....http://www.backlinkwatch.com/...although there are others. This one usually maxes out at 100 results for a sites that may have 300 plus for example, you can view the first 100 only.

Even if you have purchased a site, and havent had any issues thus far with volatility within the rankings (what we internally call a sites Beta value- we consistently apply financial tools from the investment banking world and capital asset pricing mode, please excuse the jargon) it makes good sense to throw your site into the above tool or type of tool and give it a quick "torque test". Are your links coming primarily from one source, are they relevant, how does the anchor text read, etc. As a site owner this is one element of your business that you owe to yourself to be acquainted with. If you identify that some of those focused and relevant links are related to other platforms of the previous owner, consider what you can do (or not do) to avoid the "pruning" of those links. In some cases those may be some of the oldest and most established and the ones that are giving your site its tops placements.

Clinton, per your questions, I would use the above tool and have your seller run the same analysis. It should take 5 minutes or so to evaluate the branching "root system" of your sites links. This is part of the DD of any responsible buyer. If you dont have any links pointing to your site from others that you own, than he can conduct his own research and demonstrate that conclusively for himself. If you do have some that may have been cultivated over time (and this is totally normal and natural for someone heavily involved in ecommerce and with a portfolio of sites or who own their own directories) give him a contractual guarantee that you will not remove these for reassurance.

This is especially important in situations where you have developed a deal structure where they may have been financing, an ongoing agreement, or an earn out required. I have had situations where I have trusted buyers and had agreements in writing and buyers feel like they can capriciously ignore the terms of our agreement. If the buyer feels like adhering to your contract and agreement is not important and rescinds its terms, than it is your prerogative to rescind your commitment to your provision to convey these links. In some cases, this may have a marginal impact, in others, where the seller may have authority sites this would be devastating to a site owner. I recommend using the court system in every case – that’s what it is there for – but in circumstances where things have degenerated one always has the option to use this leverage to mitigate ones losses (those links have value!).
Clinton, have your buyer run his analysis (he should be doing this on his own anyway for his own peace of mind) and then compile a list of questions. He can run a whois on sites that he thinks may also belong to you or run backlink analysis on those sites as well to see their relationships. Let him determine what the link structure is. If you have given him this direction and he still isn’t convinced it sounds to me like he may not be the right buyer for you anyway…ultimately a good buyer should be able to identify value on his or her own and shouldn’t require ongoing convincing. Hope this was helpful

[hooperman]

Benitez, Ive had good success with this one....http://www.backlinkwatch.com/ there are others. This one usually maxes out at 100 results for a sites that may have 300 plus for example, you can view the first 100 only.

Open Site Explorer shows data on up to 10,000 inbound links if you're interested in seeing a bigger picture.

Clinton, per your questions, I would use the above tool and have your seller run the same analysis. It should take 5 minutes or so to evaluate the branching "root system" of your sites links. This is part of the DD of any responsible buyer. If you dont have any links pointing to your site from others that you own, than he can conduct his own research and demonstrate that conclusively for himself.

It's not a conclusive demonstration that "self linking" hasn't taken place if other sites that the seller owns use some form of domain privacy. Many people mask their identity using private registration. If the buyer is naive, then running the above check will probably reassure them.

[Clinton]

Even if you have purchased a site, and havent had any issues thus far with volatility within the rankings (what we internally call a sites Beta value- we consistently apply financial tools from the investment banking world and capital asset pricing mode, please excuse the jargon)

What tools and how do you apply them, Avid?

hooperman, privacy reg, forum nicks, social bookmarking accounts, friends' sites - it's impossible to rule out everything. Sometimes I just identify a random few of the strongest links and spend some time investigating their independence.

The best of both worlds is deferred payment tied to site performance where the seller has a continued interest in your success. Or would it be better to avoid or heavily discount sites that rely primarily on Google and SEO, Avid?

[Avid]

Look, when you buy a site with the SEO you are buying the underlying internet real estate that has an associated economic value in terms of the current market value of that traffic through inorganic placements or external advertising. You can ALWAYS go the other way, which is to supplement through pay per click etc. if a site owner makes that decision but the inverse is never true without the requisite platform strength of the site. Therefore, well built sites that are highly placed in the rankings trade at a premium. These are the assets that an investor should focus their efforts in finding.

Google has over 200 different coefficients as part of their search engine algorithm. For example, they recently added site speed to their list e.g. how quickly sites load as part of their assessment of a high quality characteristic of a site. However, only about 15% of the total ranking power for any site comes from these coefficients, what typically fall under the rubric of “on site” optimization i.e. meta-tags, keyword stuffing, etc. Sites that tend to be move dynamic in the rankings are built on these types of search engine principals, and they may fluctuate from a #1 ranking to a #15 on a more volatile level (i.e. higher Beta value) as Google test new versions of its algorithm. Google is constantly rolling out new versions of its algorithm and testing new versions in order to filter out spammy sites that may engage in this type of SEO. If one chooses to engage in this type of SEO that is their prerogative but one will end up spending the bulk of their time “chasing” the new search engine adjustments and then modifying accordingly. This is not a sustainable strategy; therefore, underlying platform strength is paramount.

When we review sites, we engage in Monte Carlo simulations and regression analysis in order to differentiate between core platform strength versus strength that may be coming from the on site SEO work. We Beta test every site to identify sites that rank for the platform robustness and adjust for the parameters that have been manipulated “on site” by a site owner.

First time site owners, they can do this at home and I will be creating a list of due diligence items that one can use to review site acquisitions and hope to get it to this forum next week. For a 50 million dollar company this is the kind of work we would do but for a 100,000 company a simulation is not necessary. I agree with Clinton, select a sample size of 30 links and test those. In reality though there are a series of pre-due diligence items that every buyer MUST know. This is what I will focus on in this entry.

At the end of the day, Google only gets better at reviewing sites, and a site has to earn its strength. If one perceives any new acquisition through that lense, than it puts them in a much better position to assess any prospective purchase.

[Clinton]

I look forward to your due diligence list, Avid. It would be helpful if it was designed to assist with due diligence at the type of prices members here deal in - the few hundred to the few hundred thousand dollars.

when you buy a site with the SEO you are buying the underlying internet real estate that has an associated economic value in terms of the current market value of that traffic through inorganic placements or external advertising.

How does that work again? Is it your opinion that a site can be valued by taking its organic traffic and applying a PPC value to that traffic?

I take it your Montecarlo simulations rely on taste testing SERPS at regular intervals. Could you tell us how your "beta tests" collect data on non-US rankings and how they compensate for personalisation factors in US results?

[JJMcClure]

I take it your Montecarlo simulations rely on taste testing SERPS at regular intervals. Could you tell us how your "beta tests" collect data on non-US rankings and how they compensate for personalisation factors in US results?

This is somewhat relevant to what I do so I thought it worth me chipping in to say that IMO the best way to tell how effective SEO is is to look at your Anlaytics software, what ever it is, to see where the traffic is coming from and how it's behaving on-site. This is the best way I know to "compensate for personalisation factors" since you really don't know what people are seeing half the time, it's not about SERP position anymore, it's about analytics. Access to someone's analytics would be far more meaningful to me than a list of their backlinks and rankings which essentially mean nothing without that traffic data.

How you would go about making sure that those sources come with the sale is not something I have any experience with. I'd like to see the Due Diligence list to though.