Flippa Blog - Buying your First Website - Excellent example of a horrible purchase?

[tke71709]

I was reading a post that Luke M had made on the SP forums recommending his post about making your first purchase...

http://flippa.com/blog/buying-websit...-a-case-study/

Is this a really good example of a really bad buy or is it just me?

He goes through the thought process to buying this site in the post.

The website is young, not making any money and will need time spent on creating more content, but it has a solid foundation and ticked some important boxes.

Ok, so we have a site, that in his own words, has no revenue and no search engine history. Two X's against it but that's ok, maybe he can buy it cheap.

Oops, he paid almost $400 for this site. But in his defence, the other bidder was up to a whopping $30 so he had to act fast.

As you can see above, Google’s keyword tool suggests that “pregnancy workout dvd” receives 6,600 searches monthly. That’s 220 searches per day which is reasonably healthy for a highly targeted niche such as this. Google results are generally on the optimistic side so let’s round it down to 200. If I’m in position #1 for this keyword I might expect to receive about 56% of this search traffic (according to a Cornell University study). That’s about 120 visitors per day if this site can rank #1 for this one keyword phrase.

Technically what he says there is correct, what he fails to mention and what we see later on in the post is that Amazon is ranked #2/3 with an indented listing. The search term that he is targeting is commercial, people who search for this are looking to buy. Who are they going to click on? A trusted brand name like Amazon or Joe Blow who threw together a website on WP? If you don't rank #1 you're not getting any traffic, and even if you do, with Amazon right behind you and indented, you can throw the standard CTRs right out the window. Even if you do get the initial click, once people see that you aren't selling the DVDs they're hitting the back button and going to Amazon.

Another simple metric I use to establish competition is to find out how many other pages appear in Google for a phrase search.

Seriously? At least do an intitle:"pregnancy workout dvd" + inurl:"pregnancy workout dvd". Results 1 - 10 of about 787 for intitle:"pregnancy workout dvd" + inurl:"pregnancy workout dvd"

Competition level is fairly low still, but it doesn't matter due to the Amazon listings IMHO.

In this particular case, the site isn’t generating revenue. The Flippa stats, available to the right of the auction, or a quick Whois search tells me that it’s less than a month old. There’s no data available for the domain on SEMrush.com (another handy keyword research tool),

No revenue, no search history, and the part that I love best.

but Google shows that a basic search for the core keyword phrase shows that the site is already ranking at position #8. Pretty good for a site that’s less than 1 month old and shows that the developer knows his stuff.

Orly? This doesn't show that the developer knows his stuff. This shows that exact match domain names in low competition keywords can rank, this is pretty fairly well known. Heck there are entire "guru" information products based entirely around that concept. The developer had nothing to do with it's ranking, it's purely a domain name based thing. Heck, he probably ran MicroNicheFinder and ran with that info in the hopes that he could sell the site to some sucker.

make sure the site doesn’t just duplicate content from another. This particular site lists DVD’s for sales with blurbs referenced from Amazon, so I’m comfortable with a little bit of duplicate content.

Fair enough...

Seller Profile – Make sure the seller has a good trust rank in Flippa.

Ok, let's see...

They've verified a trustworthy phone number.
+1 They've got some positive feedback in the last year.


+1 They've connected a brand new LinkedIn account.



WOW! I'd let him babysit my kids with that kind of trust level... Anyway, Flippa trust is about as useful as... well anyway...

But looking at his profile makes it even more interesting... This is the second listing for this site, I hope Flippa didn't make him pay two success fees.

Even though I’m proficient at using Wordpress and I can cobble together a site, if I wanted to build something like this from scratch and do some basic Search Engine Optimisation, I know it would take me about 10 hours of work. That was the clincher. After all the research, $397 seemed like a reasonable price to pay for a site that would take me 10 hours to build and get ranking.

Or you could have paid someone less than $100 to do all of the above (including writing 5 quality articles to replace the ones that you purchased with the site).

So how is it working out you ask? 2 1/2 months later...

The site’s currently ranking #5 for “pregnancy workout dvd” (Google US), and has made a whopping $3.32 in revenue from Amazon and AdSense.

So 9 more years to break even...

Thoughts? Am I being too rough? Dead on? Somewhere in the middle?

[Clinton]

It would be interesting to see the update (the third in the series) that Luke has promised.

3Six, hooperman and others have called him out on a lot of the new-buyer misconceptions he has. You seem a nice guy, Luke, but it's certainly not best practise to let a newbie write posts "guiding" other newbies. And it's certainly bad form to have the posts written by someone whose job it is to drive sales - there's an uneasy conflict there.

Bottom line: The post isn't there to teach new buyers as much as it's there to encourage them to spend money buying sites. Sorry, but that's what it looks like. If the intent was to teach new buyers you'd have got someone who's an expert in the field - even various SP mods are active in the Buy/Sell forums and are evidently knowledgeable in this area.

I wish Luke good luck with the site.

[hooperman]

I was wary from the point I discovered the motivation for buying this site in favour of all the other turnkeys:

Why did this grab my attention? Pretty simple really, my wife’s expecting so I have pregnancy on the brain

If only more business decisions were made like this

I think a little explanation of why that site was chosen in favour of all the other turnkeys would have been useful. The jokey quote above doesn't say enough about this decision. A significant ommission from this "case study", was what made him think that the purchase price + required work/investment would be worth it.

[petertdavis]

Is this an example of your lacking in insight on how to value digital assets, or you just like to go after the guys at Flippa?

To be blunt, I think he made a very good buy.

Let me explain. First, the one glaring error I see is the way in which the seller misused the keyword tool. Luke followed along with that in his blog post, and you failed to correct it in your post. When you use the Google keyword tool, you don't want to rely on the broad match results. That can be very misleading. You'll find examples of broad match showing huge numbers while the exact match, which is what you should be paying attention to, shows a small fraction of it. This difference has to do with long tail search terms that Google associates with the main keyword. Luckily, in this case, the exact match shows above 50% of what the broad match shows. For a more dramatic illustration of what I mean, look at broad match for 'workout dvd' which shows less than 20% when you switch over to exact match.

Now, I will grant that Luke may not have understood this, and may have lucked himself into a good purchase, but either way the value of the domain here is solid. An exact match domain of a commercial keyword holds a far greater value on the domain market than on the website market. To be honest, I thought twice about posting this, because I've made tens of thousands of dollars doing quick flips in this fashion in recent months, but I think its wrong to mislead people into thinking that Luke made a bad buy.

There will be nothing like 200 visits a day on this keyword. It's something like 100 searches a day, give or take. You can't count on precision with the keyword tool, just rough estimates. Domainers do use it to value domains though. I'd guestimate that a top ranking on the term would result in 10-30 visits a day. Enough to build a business around? No. Enough to make $400 a sound investment? Absolutely.

What would I suggest Luke do with the domain? I think he should hire a freelancer to create a workout video for him. Invest a few hundred into the video and build the website around it. He could offer it in two formats, digital download or physical DVD. I would recommend he look into Amazon for fulfillment of the physical DVD sales, as it may not be feasible for him in Australia to do this out of his office. That, plus he'll get a greater volume of sales from being in the Amazon catalog.

And, speaking of Amazon, it's really not that difficult to out rank them on long tail keywords like this one. Any SEO worth his salt knows that an exact match domain with some basic link building will easily rise up to #1 for this keyword. I'd be a bit more concerned if I saw Wikipedia in the listing. I think Luke would do well to get rid of the copied content that's on there and get a few good articles written, maybe some nice pics. Get a decent logo done at 99 Designs, of course. But, mostly, it's the link building that's going to get him to rise to the top, good content just makes link building easier.

[tke71709]

Now, I will grant that Luke may not have understood this, and may have lucked himself into a good purchase, but either way the value of the domain here is solid. An exact match domain of a commercial keyword holds a far greater value on the domain market than on the website market.

So your argument is that Luke fluked into a potentially good domain name buy so therefore the post is a valid example for new buyers to follow?

Does the domain have value, yes it does, if anything that is the only value in the purchase. Heck, every other extension is also available to purchase for reg fee at the moment.

Is the original post about the value of the domain? No, it isn't, it's about buying a website, SEOing and throwing some more content on it to generate affiliate/adsense income.

I also don't know of any place where you can get a decent quality video made for a few hundred bucks, the videographer and editing alone is most likely going to cost you more than that, not to mention writing a script, hiring a model/actress (preferably one that is pregnant). But I've never done that, so I will defer to you if you have done so in the past.

As I stated, can he outrank Amazon, potentially yes, does it matter if he has a MFA content site? Not in my opinion. If he wants to invest in creating his own DVD and the such, then yes but that isn't what the goal in the post was and he needs to tell the new buyers that he plans on investing at least another $1000 or so into content and the such.

I admit that I have a bias because I feel that Flippa is right up there with the snake oil "gurus" out there pushing domain flipping as a get rich quick scheme while the only people getting rich are them through their fees and products and I'll call any of them out on that. I also feel that they have a responsibility to hire people that actually have a clue as to how things work to write their articles for them, they're not a brand new site with no revenue just scraping by so I am going to hold them to a higher standard.

[petertdavis]

I also feel that they have a responsibility to hire people that actually have a clue as to how things work to write their articles for them, they're not a brand new site with no revenue just scraping by so I am going to hold them to a higher standard.

That's the only thing I agree with you about there, but I would have worded it more nicely.

I was disappointed when they discontinued the newsletter. I felt that we were just hitting our stride with it, and I had some very nice things planned (including an interview with Clinton). I can only speak for myself, but I'm sure I'm not the only one who would be willing to work with them to write some articles, if that's what they wanted. OTOH, I do appreciate that they've been more communicative about the development (new features, policies, etc) via the blog.

[petertdavis]

I also don't know of any place where you can get a decent quality video made for a few hundred bucks......

Craigslist ROCKS for stuff like that. Actually, now that you mention it, I don't know if it's as easy in Australia as it is here (I'm in the Metro-Boston area). YMMV

[tke71709]

I would have worded it more nicely

Honestly, I let my anger (for lack of a better term) at the amount of disrespect shown to potential users when Flippa launched color my language.

Craigslist ROCKS for stuff like that. Actually, now that you mention it, I don't know if it's as easy in Australia as it is here (I'm in the Metro-Boston area). YMMV

Thanks for the tip.

A little off-topic from this thread but I'd love it if you could start another post about your experiences doing that, I'm sure many of us would be interested.

Those are the sorts of topics I'm hoping to see beyond the just how to buy and sell sites ones. How to monetize in different ways, it would never even had occurred to me that you could get something like that done up fairly cheaply.

[Clinton]

Post it wherever you want petertdavis and I'll move it to the place where I feel it will be most useful, and promote it to the frontpage.

[LukeMoulton]

I was disappointed when they discontinued the newsletter. I felt that we were just hitting our stride with it, and I had some very nice things planned (including an interview with Clinton). I can only speak for myself, but I'm sure I'm not the only one who would be willing to work with them to write some articles, if that's what they wanted. OTOH, I do appreciate that they've been more communicative about the development (new features, policies, etc) via the blog.

Peter, I'd love you to do some guests posts if you're interested. PM me your email address and we'll chat further.