Why can't we value free traffic at the same price as PPC traffic?

[Clinton]

I've had someone submit their site for sale to me by email today. He's one of those who's making no money from the site and makes this argument (paraphrased):

I'm on the first page of Google for xyz term and get 100 visitors a month on that term. If you were buying that term in Adsense it would cost you $300. So the minimum benefit you're getting from buying this site is $3,600 per year. If each of those customers becomes a repeat customer, how much is that worth to you, $100? $200? Multiply that $200 by 1200 visitors a year and you can see how valuable this site is

Can you help me out here? I want a good standard reply to give these people ...and maybe a thread to point them to.

Why is that free traffic not worth the price you'd pay to buy that number of visitors via PPC? Is there a comparison somewhere that shows that for a given site organic converts less well than PPC? Any other good arguments?

[hooperman]

Why is that free traffic not worth the price you'd pay to buy that number of visitors via PPC?

One reason is that you can buy any old kak in Adwords and it might not help your site. Just because there's a price on the keyword, it doesn't mean it has value for the site. Look at how the site in question is converting those keywords into cash, for example.

[mgallone]

Isn't free Google traffic possibly worth more? These are visitors who have searched for the term you rank for- so right off the bat are more likely to be interested.

[petertdavis]

Clinton, why do you feel the need to reply to nitwits like this? Every time I've engaged into a conversation with someone of that mindset, I can feel my IQ being dragged down to their level. It's to be avoided. If anything, I'd forward them to a page where they can prepay for your consulting time, suggested price $475 per fifteen minutes, based on the theory that if you spent an equivalent time clicking on Google ads, that's about what you'd earn. I doubt they'd get the concept there, though, of the comparison between the value of their untested traffic and the value of your time they want to waste.

[Clinton]

One or two of those "nitwits" ended up joining here and becoming good members. I won't name them.

I try not to engage with them but instead point some of them to a resource that covers what I would have said if I took the time to make a personalised reply. Who knows, they may develop the site and come back to me one day.

These people aren't looking for consulting or valuation, they're looking for a buyer and some of them have at least half-decent sites one of two of which I post in BSTE or pass on to members. (You may remember a PM or two about forums. )

I don't reply to every email, I do junk over 50% of them but this guy today had some pretty decent acaiberry and other domains and was looking to get rid of his whole portfolio. By entering into the odd discussion I can bring something to the forums that I feel adds value for my members.

[Thomas]

Not exactly answering your question, but I get a fair few emails like this too and tend to tell them something like:

The majority of buyers will only buy based on PROVEN revenue and not forecasted revenue, especially based on the Google Keyword tool which is known to be quite inaccurate as it is. Some people may be interested, but you're narrowing your target market hugely by not having real proof to back up your claims. There are many other variables that affect the earning of a site besides those you mentioned. My advice would be go away and monetize the site for a month, and then come back with your revenue. This will give potential buyers something to use as a yardstick.

I'd have to agree with Peter that generally they aren't worth getting into a conversation with, but I find replies like this usually get a thanks and quite often I've had the same person come back to me (after monetizing the site per my advice) and wanting me to sell it for them then. A cookie cutter reply like above takes 30 seconds and if you're getting something out of it (ie a % as a broker - not that you are Clinton) you only need a few to take your advice on board, and many do, especially if you are considered an "expert".

Thomas

[petertdavis]

....quite often I've had the same person come back to me (after monetizing the site per my advice) and wanting me to sell it for them then. .....

Well, there's an incentive for you to be nice and helpful. Unless it's a thriving forum, I don't really ever work as a broker for websites, nor am I personally interested in buying sites like that. I might buy plain content websites as Adsense earners, though, but not based on what the owner thinks it should be making. It's not my intent to offend people either, it's just if I took the time to respond to every email I get every day, I'd be pretty much an unpaid email processor and nothing more.

[Andy]

It seems to me one should value the site on profit and not where the traffic comes from. In this case, if the traffic is not converting, then it's (the traffic) is worth nothing. It may NEVER convert. It may not convert because of what visitors find when then land on the site. As hooperman pointed out, just because there is a price on a keyword, doesn't mean you can use that price to value the traffic.

Andy

[JJMcClure]

Where is he getting the $300 figure from? Is he saying that you'd pay $3 per click for that term? I think his figures fall down right there because Adwords works on a bidding system and bid prices vary enormously so unless he can make a valid comparison between the number of organic visits for that term (and a conversion rate) and the visits from PPC it's impossible to make a value comparison.

Then he asks you to imagine that every visitor becomes a repeat customer. First of all not all the visits will even become customers, 5% would be a great conversion rate probably and then only a small portion of them in turn will become repeat customers. etc tec

[Thomas]

Well, there's an incentive for you to be nice and helpful. Unless it's a thriving forum, I don't really ever work as a broker for websites, nor am I personally interested in buying sites like that. I might buy plain content websites as Adsense earners, though, but not based on what the owner thinks it should be making. It's not my intent to offend people either, it's just if I took the time to respond to every email I get every day, I'd be pretty much an unpaid email processor and nothing more.

Sure, it really needs to be looked at in context for each individual.

For yourself and Clinton, with established portfolios, and the fact you don't broker sites for a fee, there's clearly far less of an incentive and you may value your time differently to mine.

As I build my personal portfolio, brokering is a good way to build a bank roll in order to purchase more established sites myself. I certainly don't reply to all emails but will if I see potential. For example, had someone approach me with a site that gets 10k UVs a day and it's not monetized - in that case there's merit in replying. If it's a site that gets 10 UVs a day I might not.

I think Clinton makes a very valid point that sending them to a helpful resource would be easier - either a forum thread, article or blog post, but that would still require a response