trying to buy my first web-site. Hoping for community input

[floriauck]

Hello,

I am interested in buying a web-site and would like to get some feedback from the community. An open discussion on this forum will hopefully bring up some important elements and help guide me to a good offer and decision.

I am not sure how to go about it but here is the site point listing.
[Can all information be discussed here openly?]

I have more information than you will find on the flippa auction because I have been requesting additional information from buyer. So if it is allowed I will share anything that may be important. I am at the point of starting due diligence and also was thinking about hiring a professional to help me with that job, since this would be my first web site business purchase. I emailed a few members already but have not found a match yet. If anybody is interested in working with me on this, please let me know. For now, I would love to get an open dialog started regarding the opportunity with this web site.

Best regards,
Florian

[tke71709]

since this would be my first web site business purchase

No offense intended, but I don't think I would make my first ever website purchase one that is going to put you back 6 figures.

If the information is valid, it looks like a good site though.

[3Six]

Florian, I'd be happy to have a look and add some comments tomorrow if you add information. I take it you are not under a non-disclosure agreement with the seller. Apart from your agreement with him there shouldn't be an issue with discussing it openly.

[benitez17]

A agree that buying that site would be quite an undertaking for a first time buyer. If I take the buyer for his word, the revenues actually seem a little low for the amount of traffic the site has, though he points it out as a place to improve the revenues. It looks like a solid site, and one of the better ones for sale on Flippa.

My questions to him up front would be:

• What does he mean by "We have never featured any CPM or Banner ads of any kind" when there are 125x125 banners on the site? What does he consider BuySellAds ads to be?
• Can he break down the revenue so you can see the total from each source? He gives enough information that you can pretty much figure it out, but I would like the details if I were you.
• Who does the custom background work, and would they agree to stay on with the new owner (unless you want to do this work yourself)?

Also, I don't know what Matt Mickiewicz is doing posting in that listing, but I would almost definitely pull out of any auction that he shows an interest in, because he has the potential to access all sorts of data behind the scenes and use it to have a huge advantage. If he or anyone else who owns or works for Flippa gets involved in bidding for a site, there is a huge conflict of interest, and I would be pretty annoyed if I were the seller that he was poking his head into my sales thread.

[floriauck]

No offense intended, but I don't think I would make my first ever website purchase one that is going to put you back 6 figures.

If the information is valid, it looks like a good site though.

thank you for the comment. I agree with you. It would probably be better to 'ease' into the business of buying an online business by starting with a few smaller web sites and building up experience etc to a bigger project like this one. I have been watching flippa auctions for about 1 to 2 years now and it is not very often that I see a web site which fits my situation. This one does. I am pretty confident that I could run this site well. I have been freelancing as a web designer and developer for close to 10 years, so I am not a novice in that field. This is also one of the reason why I am interested in this particular site. I would be able to create all the custom backgrounds myself. This is where the bulk of the revenue comes from. So, even though I have never purchased a web site, I have created many.

@3Six

No, I am not under a non disclosure agreement. Should I inform the seller of this discussion? Not sure if there is a common etiquette thing for this? I am enjoying a really nice relationship with the seller. They have been very forthcoming with each request and seem to be really nice folks.

@benitez17

What does he mean by "We have never featured any CPM or Banner ads of any kind" when there are 125x125 banners on the site? What does he consider BuySellAds ads to be?

From what I understand, the seller is talking about CPM networks like ValueCLick, Tribal Fusion, Casale Media or openx. These are a little different than buysellads because they pay per thousand impressions or per clicks. So, they have never had any CPM banners on the site. However, the ads from buysellads have been on there and created pretty good revenue.

Can he break down the revenue so you can see the total from each source? He gives enough information that you can pretty much figure it out, but I would like the details if I were you.

I have received a pretty detailed pdf with daily stats about custom orders and personalized orders as well as the monthly buysellads (from here on out BSA) revenue.

Who does the custom background work, and would they agree to stay on with the new owner (unless you want to do this work yourself)?

They have two designers on staff that create the custom backgrounds. I would not outsource that, but rather do it myself.

Thank you for pointing out the situation with Matt Mickiewicz. I was not aware of this.

A few more details:

1.) I contacted some of the businesses listed on the custom portfolio to talk about their experience with twitterbackground.com. I also just wanted to verify that they were who they said they were. I talked to 4 businesses and all checked out.
2.) they are willing to provide some on site training at their office in Arizona. They did the same thing for somebody who bought magmypic.com from them. They also offered to let me contact this buyer.
3.) revenue was down for December because they had raised the price for custom designs to $250 in order to force fewer orders to free up time for the designer who are busy with facebook game design. Now they adjusted to $149 which I personally find a good price. Between June 2009 and December the price was $99 and they received an average of 55 custom orders per month. [Industry average price for custom twitter bg seems to be around $79 and $150.] Just to clarify, personalized orders and BSA is automatic revenue not requireing any extra work like the custom bg does. Personalized order average is around 380 per month. BSA average is around 1500 per month. BSA revenue is down right now, they played around with pricing and some advertisers jumped off due to price increas. They lowered price again now and it looks as if slots are filling in again. A third advertiser signed on today I saw. I see alot of potential here because they have not really played much with different banners. They only offer two 125x125..

Some thoughts that I have:
- Twitter experienced huge growth in 2009. You could call it a boom. However, it is probably leveling out now... So the revenue may have been higher due to some hype which may not be sustained in 2010. I am pretty sure that twitter will be around, but maybe not receive as much of a trend in 2010.Twitter integration with google search is a good trend IMHO for twitter future.
- Custom orders require a good amount of time. I predict around 3 to 5 hours per customer. Revenue is depending heavily on custom orders. Competition in this niche exist but does not seem to be saturated.
- The google search results are great for some important keyterms.
- I like the amount of traffic. 40% from referring sites. twitter being a big percentage. I guess due to the large number of followers.
- One item keeps bothering me. The fact that they forward the domain and changed it from twitter to twitr. Is this common practice? Does anyone see a concern there? I guess just the fact that something gets redirected throws up some flags for me, for probably no good reason but I wanted to mention it.

At the moment that's all the information that I can think of. As more questions are asked I am sure I will think of other elements.

At this point, what due diligence work should I be doing? What am I missing?
I appreciate all the input. I hope you guys know how much it means to me!

Lastly, sorry for the late reply. I was waiting for an automatic email to let me know about replies but I did not choose the correct setting from the notification bar. I was really looking forward to getting replies in order to drill into this project more.

best,
Florian

[benitez17]

I like to buy sites that don't require any work to maintain, but it's nice that the site fits into your current design work, and you seem to have a good grasp on what it will take to run the site. Also, the fact that the seller is willing to let you come and train with them and gave you references is a good sign. You seem to be on the right track as far as due diligence is concerned. I would make sure that you are aware of all of the expenses, since that is a point that gets overlooked often.

If I were the new owner of the site, I would think about moving away from BSA to a more traditional CPM based network because you can get into pretty much any major network you want with 4 million impressions a month, and have some pricing power. From my experience, you could get at least $1.50 CPM per U.S. page view, which would put you around $3k a month just from those impressions based on the stats provided, plus whatever you can get for all of the international impressions (it would probably be substantially less than the U.S. rate, but could be a nice amount of cash based on all that traffic).

I was going to post in the thread and find out what Matt is doing asking questions that make it seem like he is interested in buying the site, but I decided against it since I have no interest in owning the site and don't want to butt in. I would suggest that you find out what is going on there.

[3Six]

With the anonymity of bidding in Flippa, Matt could be bidding on any other auction without you knowing it. I'm fairly sure he's done it in the past, other Sitepoint staff have. If he's come out and made a comment, when he could have done it by PM, it's more likely that he is not interested in this site

[benitez17]

With the anonymity of bidding in Flippa, Matt could be bidding on any other auction without you knowing it. I'm fairly sure he's done it in the past, other Sitepoint staff have. If he's come out and made a comment, when he could have done it by PM, it's more likely that he is not interested in this site

You are probably right, but you would think even Flippa could understand that there is an obvious conflict of interest there that they need to avoid, especially with other auction sites getting nailed for shill bidding in the recent past. I was initially surprised that Luke could go buy a site to get some experience, but then I remembered who I was dealing with.

[Clinton]

Shills at other auctions? You mean the snapnames scandal? Crazy stuff!

[Clinton]

Who'd like me to make a case study out of this and do a full due diligence on the website as if I were buying it? I'd start a new thread and go step by step through what I do.

It would serve as a good guide for new visitors to our site and for those savvy people we're looking to attract from other fields who may not be experienced with DD.

You'll have to shout really loud and all together if you want me to spend the time to do a full website due diligence report!

Or one of you can volunteer to do it.