The Value of an Engaged Email Audience

Are your subscribers this excited about your list?

How many times since you started learning to make money online have you heard, “the money is in the list”? Likely many, many times. The challenge with this statement is that it implies LIST = $$$. Here’s a simple example why this frankly isn’t true.

Imagine two websites in the same niche who are both actively building an email marketing list. Website A incentivizes new visitors to join its list with a “Free Ebook” offer. They use a single opt-in procedure and immediately begin aggressive daily promotional offers to the list.

Website B has a different approach. They ask their readers to join their list for the “Latest Updates” without any other incentive. They use a double opt-in procedure and send 90% high-quality, valuable email content to their readers without any sales pitch. The other 10% of emails are exclusive offers their subscribers receive as a benefit of their continued support.

If each website has a mailing list of 10,000 subscribers, which one do you feel is most valuable? Likely Website B right? So, what is the difference here? It boils down to one word…engagement.

Adjust your equation from LIST = $$$ to ENGAGED LIST = $$$.

Case Study: The Power Of An Engaged List

Here’s a real life, before and after example of the power of an engaged list from two Flippa listings of the same website.

Original Sale of DungeonMastering.com

View the listing here

  • 4,500 Email Subscribers
  • 15 to 20 New Subscribers Per Day

If you take a look at the original sale of DungeonMastering.com, you’ll see a quality list which was built by developing a strong relationship with the subscribers by sending regular high quality exclusive newsletters with very few if any offers embedded in them.

Re-sale Listing of DungeonMastering.com

View the listing here

  • 6315 Email Subscribers
  • 20 to 40 New Subscribers Per Day

After the new owner purchased the site, they aggressively promoted to the list using time sensitive exclusive offers. The result? Every time they sent an email they would earn about .25-.50 per subscriber.

That’s like getting paid $1,000 every time you like to click the “send” button. Not bad right? That’s the power of an engaged list.

For more details on the author’s experience with this site, check out the full case study.

Measure Success Building Lists With Engagement Metrics Rather Than Size Metrics

Whether you’re performing due diligence on a potential website purchase or building your audience on one of your websites, you’ll likely find measuring engagement more helpful than simply measuring the size of your list.

The simplest way to measure list engagement is by measuring the traffic to your website which originated from your lists. Here’s how to set it up in Google Analytics.

1Build a custom Analytics URL for each of your list-based traffic sources and use it for links back to your website in emails, tweets, facebook posts, etc.

2In your analytics reports, click on “Traffic Sources” – “All Traffic”

3Divide the total reach (i.e. number of emails sent) by the number of unique visits from the traffic source to get your engagement percentage.

There are other metrics you can use to help you measure engagement with different channels. Here are a few examples to get your started:

Facebook

  • Insights engagement metric
  • People Talking About This (PTAT) metric
  • Number of likes or shares on a post

Twitter

  • Number of retweets
  • Number of favorite clicks

Email

  • Open Rate
  • Click Through Rate

RSS

  • Number of clicks on in-content links
  • Number of comments on a post

For a more in depth look at key metrics with social media and other lists, read this great post by Avinash Kaushik.

Back To The Bottom Line

Ultimately the value of a list lies in its ability to generate repeat conversions. For an Adsense site, that might be getting people back to the site to click on ads. For an Ecommerce site, it might be to get people to buy complementary products. For a non-profit, it could be getting volunteers out to their next event.

In all of these cases, Lists drive engagement. Engagement drives traffic. Traffic drives conversions. Conversions drive economic  impact.

The best part? You’re not stuck clamoring for the next “tactic” to drive new visitors to your site. You’re getting better results from what you’ve already got.

Interested in buying and selling websites? Signups are open for the Internet Investment Summit, happening on October 18 – 20 2013 in Boise, Idaho. I’m one of the organizers of the event. 

Thanks to Antoine Gady for the photo!

10 Factors That Can Skyrocket (or Tank) The Value of a Website

10 Factors That Can Skyrocket (or Tank) The Value of a Website

Have you ever considered what it would be like to buy or sell a site valued over $100,000? Several times a year sites sell on Flippa in the six figure range. What exactly makes these sites command a valuation over $100,000? That’s the question I set out to answer before writing this post. First, I’ll explain the methodology I used to answer this question, then, I’ll summarize my findings into 10 factors that affect the value of a website.

Value of a Website: The Methodology

In order to determine what makes sites sell for six figures, I first had to find a source of data. Using Flippa’s advanced search feature, I set my search criteria like this:

  • Listing Format: Auction
  • Auction Status: Won Listings
  • Property Type: Websites
  • Auction Price: Minimum $150,000

This narrowed the list down to about 30-40 listings. I further narrowed it down by weeding out any auctions that only had 1 bid, were private, and those that sold more than a year ago. I ended up with 10 auctions to use as source data.

For each of these auctions, I did a little “mini due diligence” on them, making notes on what I felt increased and decreased the value of the site based on my own experience buying six figure sites. In the interest of full disclosure, this part of the process was rather subjective since I don’t pretend to know the value every buyer sees in every auction. I also assumed the seller’s statements on factors such as traffic and revenue were accurate since I had no way to verify them directly from the sellers for my research.

Value of a Website: Summary Of The Data

Number URL Bids Price Uniques Per Month Net Profit Per Month

1

 sgholiday.com

69

$160,000.00

325999

$11,883.00

2

 bloguez.com

5

$190,000.00

3450000

$0.00

3

 doneforyoutraffic.com

9

$200,000.00

159436

$0.00

4

 zerodowncommissions.com

9

$175,000.00

30000

$42,500.00

5

 makecashtakingsurveys.biz

24

$395,000.00

319508

$33,312.00

6

 blippitt.com

4

$200,000.00

920000

$6,565.00

7

 unlocking.com

26

$195,000.00

106406

$18,635.00

8

 bloggingtothebank.com

30

$900,000.00

342479

$90,000.00

9

 list-of-companies.org

26

$200,000.00

1900000

$19,600.00

10

 burnyourtodolist.com

2

$180,000.00

17927

$5,697.00

 

  • Average Number of Bids: 20.4 Bids
  • Average Price: $279,500.00
  • Average Unique Visits Per Month: 75,7175.5 Visits
  • Average Net Profit Per Month: $22,819.20
  • Average Revenue Per Unique Visit: $0.29
  • Average Price Per Unique Visit: $2.37
  • Average Monthly Revenue Multiple: 15.27 Months

The 10 Factors Affecting Website Valuation

At this point, I gathered my notes and looked at the various factors affecting the value across different auctions. I came up with a list of the most common factors which were prevalent across the data set and identified the factors that seemed to be the outliers which contributed to the value. Keep in mind, this is not meant to be a comprehensive list of all the factors that affect any website’s value, only those that I felt affected those in my data set.

1. Subscriber Lists

10 of 10 of the sites included some form of a list such as a customer list, subscriber list, membership database, forum database, social media account, etc.

The lesson: Six figure sites build and manage lists.

2. Solid Traffic History

It’s no surprise that all of these sites were generating traffic. 8 out of 10 of the sites were generating over 100,000 visits per month.

The lesson: Six figure visits to a site each month can translate into six figure valuations.

3. Solid Earning History

All but one of these sites had a history of revenue generation. Auction 3 didn’t claim it in the Flippa system, but did state the site had earned revenue in the auction copy. 9 out of 10 of the sites had earned more than $5,000 in a month.

The lesson: Four to five figures of revenue each month can translate into six figure valuations.

4. Low Maintenance

8 out of 10 of the auctions used wording like “low maintenance” or “automated” to indicate that the site could be maintained with little time. Surprisingly auction 10 seemed to require the most amount of work but also received one of the highest revenue multiples.

The lesson: Six figure sites are scalable.

5. Multiple Sources of Traffic

Based on the seller’s statements, 8 out of 10 of the sites didn’t rely primarily (more than 50%) on Google for its traffic. Even the two which did seemed to have a diverse range of keywords with no one keyword driving over 50% of traffic.

The lesson: Six figure sites don’t put all their traffic eggs in one basket.

6. Established Relationships

6 of 10 of the sites included unique relationships such as suppliers, joint venture partners, etc. which were key to the success of the sites and were included in the sale.

The lesson: Networks of strong relationships build six figure sites.

7. Proprietary Digital Products

6 out of 10 of the sites had proprietary products that could be delivered digitally. Buyers often see value in proprietary products since they can add the product into an existing business’s offerings. Digital produts also tie into the low maintenance aspect to each of these sites.

The lesson: Proprietary products that can be delivered in a scalable way increase the chances of a six figure valuation.

8. Lots of Free Traffic

Auction 2 had no claimed revenue but had the highest traffic at over 3.5 million unique visits a month. Even with no revenue, the site sold in six figures. This means a buyer likely saw the ability to monetize the traffic and could justify the price.

The lesson: Traffic alone (which can be profitably monetized) has value in the eyes of six figure buyers.

9. Effective Monetization Systems

Auction 4 had the best claimed monetization with the highest revenue per unique visit number. To be making over $40,000 a month on only 30,000 unique visits is quite a feat.

The Lesson: Create a monetization system for your six figure site which buyers can leverage.

10. Recurring Revenue Streams

Auction 10 sold for the highest revenue multiple. I believe one of the factors that contributed to this was the fact the site had over 200 recurring subscribers. Recurring revenue streams significantly reduce the risk for buyers. Auctions 4 and 8 also claimed recurring revenue streams.

The lesson: Six figure sites are able to maintain momentum and revenue after the sale.

Are these factors you look for in the value of a website prior to purchase? What else do you think factors into a high-value website? Let us know in the comments!