Setting your investment criteria and sticking to it is critical for any investment. Website assets are no different.
In the website asset space, your investment criteria will outline what kind of asset you are wanting to acquire.
In this guide, I cover:
- Investment criteria framework for websites
- My investment criteria
Note the discussion in this guide pertains to content-based websites. However, the overarching framework can be tweaked for any income-producing digital asset.
Let’s get into it!
Investment Criteria Framework: 8 Major Targets 🎯
When you are searching for the ideal acquisition, make sure to set your criteria for the following targets:
- Type of website
- Traffic sources
- Traffic minimums
- Revenue sources
- Monthly revenue
- Website age
- Backlink types
What are my targets when acquiring?
Before we get into the nitty-gritty of explaining each of these, I will lay out an example of the criteria that I use when I am in acquisition mode:
- Type of website: content blog built on WordPress
- Niche: All except spammy niches, adult, or gambling
- Traffic source: Organic search; Google Analytics access to verify
- Traffic minimums: At least 1,000 page views per month
- Revenue sources: Affiliate and/or digital products
- Monthly revenue: More than $100/mo over the last 3 months. Growing or steady trend.
- Website age: At least 1-year-old. Preferably, older.
- Backlink types: No PBNs or spammy links
With these criteria, I always have plenty of deal flow to review. I like to cast a wide net and see what’s available and then prune down. However, if you do not have time to review such a wide set of deal flow, you can always tighten the criteria.
Think of each of these targets as levers you can increase or decrease to impact how much deal flow you review.
Let’s get into explaining each high-level criteria within the framework.
1. Type of Website 🖥️
Understanding the type of content site you want to acquire is key. There are a few forms of content-based sites. They include:
- Blog with archived posts (typical affiliate sites are like this)
- User-generated content (think forums)
In terms of available deal flow, blogs will be the most common type of website you come across. They are easy to build, grow, and maintain.
2. Niches 💡
The niche is one of the first things I look at. When starting out as a website investor, you may buy a few sites in various niches to diversify and get an understanding of how to manage a portfolio.
However, over time as you figure out which niches work for you, it’s good to start focusing on specific verticals. This is because you have economies of scale once you’ve built up a team of writers, and understand the monetization options available.
The two strategies I utilize are as follows:
- Buy, grow, and flip (BGF) within 6 to 9 months
- Buy, grow, and hold (BGH) to build a portfolio in a specific vertical
I covered details on these strategies in this article.
For the strategy of BGF, I will enter any niche. The goal here is to find under-valued websites, perform various easy wins, and then flip.
For the strategy of BGH, I am looking for websites in a specific vertical where I am trying to obtain a stronghold. This is a longer-term play that can span 3+ years.
3. Traffic source
Honing down on what your traffic source expertise is key.
I only buy websites that already rank in organic search and bring in traffic. Having a site with diversified traffic is a plus point from the get-go.
With my experience, systems, and process, I can scale such a site by performing on-page SEO, adding more content, and improving monetization. That’s my bread and butter.
You need to decide what your traffic source target is. I know people who are Pinterest experts and thus they should acquire sites that have a strong Pinterest presence.
4. Traffic Minimums 📈
Traffic numbers dictate whether a site is a “starter” or established site.
A site with less than 1,000 visitors a month is still a starter site, in my opinion.
In my investment criteria, I am looking for sites that have traffic above 1,000 page views per month. Realistically though, I am looking for sites with more traffic but I do not want to miss out on any diamonds in the rough that may have lower traffic, but high domain authority and was neglected.
5. Revenue Sources 📊
Make sure to determine which type of revenue sources you want to target. I like to focus on affiliate (including Amazon sites) and digital product-based sources.
Other investors may solely focus on Amazon Affiliate sites. Determine what sources you are comfortable with and which ones you have a deep understanding of, and then focus on those.
Over the years, I have come across interesting business models with unique monetization opportunities (e.g., phone call-based lead generation). The notorious “shiny object syndrome” is always a problem for investors, including myself. However, I have made it my goal to ONLY focus on what I am an expert at. It’s hard but necessary.
6. Monthly Revenue 💰
How much does the site have to make monthly to get you excited?
I look at deal flow in two ways:
- Under-monetized sites that I can immediately grow revenue to my preset criteria after the acquisition, or
- Sites that already make revenue above my preset criteria.
If you are a beginner, it will be in your best interest to acquire a small revenue site so you can learn. This minimizes risk. As you become more experienced, the smaller sites will not make sense on a scale of time versus effort.
7. Website Age 📅
There are many facets to age. A site that has survived through many Google updates is valuable. A site that has passed the notorious “Google Sandbox” is also somewhat valuable.
Everyone wants a site that is 10+ years old and has survived several Google updates. But that will limit your available deal flow.
Criteria of 1+ years old will ensure you get sites that have somewhat proven themselves in the search engines and get traffic. These can be scaled.
8. Backlink Type
Last but not least: backlinks.
I focus on sites that have no PBN links or spammy links (e.g., adult, gambling, etc).
Note that once you start due diligence, you will need to comb through backlink reports to see if the existing links are quality. You will find that many sites that don’t have PBNs or spammy links still have low-quality links.
🤝 Wrap Up
Going in blind on website acquisition without a thought out investment criteria can lead to trouble.
Take some time to tweak the above investment criteria to your liking and then hit the ground on acquiring.
If you would like a framework to help you perform due diligence and fine-tune your investment criteria, make sure to check out EasyDiligence.io.