Buy Profitable Website
First, this is not investing or financial advice. Anything you do is at your own risk and your own decision. This is simply an example of a mental model I use when I invest in websites. You can read and learn and start thinking about developing your own website investing and general investing mental model.
The VSOT method, also known as the Website Value Investing method, is a framework you can use to help determine if a website is a good buying opportunity and to scale growth and earn back your investment as quickly as possible.
This video goes through the VSOT method and explains how the different pillars came to be through my experiences. The article also goes through the method in-depth.
VSOT – Value Website Investing Method
The VSOT method is one way you can walk through a website purchase before making it to help determine if it makes sense for you.
The method allows you to look at the purchase from different angles to help set you up to buy an online business that can actually return money and profit month after month.
The first two sites I purchased I didn’t put through a rigorous method and ended up making poor investing decisions. That’s when I started thinking more carefully about how to fully vet sites and what makes a truly good website purchase.
This is when I started thinking about a mental framework to think about what makes a good site purchase, and started developing the VSOT mental model even though I didn’t think of it that way as an official method yet.
The second two sites I bought more than paid for my two mistakes as well as grew to the point where they paid for and pay for my current lifestyle, so its safe to say I learned a lot from my first and second mistake purchases but that I was able to parlay them into knowledge that has given me a great structure and method I use to make my successful website purchases that fund my lifestyle today.
The method I developed is called the VSOT value website investing method and I’ll go through each step below. It is designed to help you make good website purchases by buying sites that will earn your initial investment back so you can start earning profit from your website each month.
The first step in the VSOT method is verification:
First you need to verify all revenue and traffic sources explain how, so you know the site is being truthfully represented and its traffic and revenue and profit.
You’ll need to get access to all analytics and revenue and cost sources and it is best to get added as a primary or secondary user on each account, and screenshots and live video shares can also be supplements at this stage.
The next step is Source evaluation where you can determine where the traffic and revenue is coming from and how risky the number of channels are and the type of channels are.
Here is where you look at where the site’s traffic is coming from:
You can evaluate the traffic sources and look at how dependent is the site on a single traffic or revenue source. You want more than one traffic source and you want to fully understand how that traffic source works. You also want to understand how you can maintain and increase that traffic source once you own the site and how to add new sources into the current mix.
You’ll look at how diversified is the current traffic mix and revenue mix. If one affiliate program gives the site all its revenue, is there a risk of that going away and how can you prepare for this happening? Same with traffic sources, you need to think this all through and it can help to write this all out. This will be one way to flesh out the risk level.
Is traffic all from Google, or from a certain ad type, or from a specific social channel or an email list? This is the time to dive deep into all traffic sources and determine how healthy it is.
You’ll need to check what country and language the traffic is.
Ad providers pay more for US and UK traffic and English speaking traffic bc these countries are more affluent, and take the time to check if the traffic is high quality and staying for a long time on the site. If everyone is bouncing or not sticking around you’ll want to know.
It is important to know where all traffic and revenue is coming and going from, and one way to do this is to get out an excel sheet and list the following:
- List all traffic sources
- List all revenue sources
- List all expenses
- Do you know all the expenses?
- Are you dependent on a single affiliate network? Or a trend etc
- Are you dependent on a single back link or few back links or PBN or bad links? Link audit is important here too
- This is where you dive deep to find what could easily stop your traffic or revenue or profit so you have a clear understanding of the risks
- See how dependent your traffic And profit are on A single source this helps you evaluate risk and create a growth plan
The third step in the VSOT method is O for Opportunity
Opportunity means looking at the opportunity you have to increase the site’s traffic and revenue. Here you can look specifically for ways the site is currently undervalued or under-monetized.
You can also look specifically for traffic and monetization opportunities.
Opportunity means looking at the the site’s current input, AKA traffic, and its current output, aka monetization, and determining the different possibilities and ways you can increase each as the new site owner.
Your own skills and talents will come into play here. For example, I am experienced with SEO and paid ads, so these are both areas I always audit and look to increase traffic, and profit and decrease costs on.
There are often many Organic traffic opportunities after you buy a site: before buying you can do an SEO audit – there is often an opportunity here to clean up current keyword targeting, cut dead pages or change keyword targeting on current pages.
You can do a current keyword ranking audit and plan how you can direct more powerful internal and external Links to areas with opportunity for ranking boosts
Additionally this is the time you can start to do keyword research and create a new plan for keywords and content to grow your site over time, think long term and how much room this site has for content and keyword growth.
This is the least sexy or flashy part but the part that has the most benefit over time as you figure out what search engines see your site as an auth for and then continue to publish in that area and see traffic growth slow and steady over time
The site I bought that has been the most successful with the highest ROI got that way not from a flashy ad network switch or a quick hack, but from me adding hundreds of keyword researched articles over a few year time period and I was able to see huge organic traffic and revenue growth over time.
Then if you’re good at ads or social media or whatever you know how to do, you can think about how you would approach that with the new site and what the growth potential for that would be.
For example, does the site currently sell high ticket items and are they running either super expensive ads and wasting ad spend you can quickly cut? Or are they not running ads and missing the opportunity to add a ton of profitable sales each month.
These are things you can test and change once you own the site and are potential opportunities to quickly increase the site’s monthly profit and value.
Another opportunity to look at during this time is to ask the questions:
- Is this asset a supplement to something you already own? Another site in a similar niche it can support in brand or in SEO?
- Will it boost your brand in a non tangible or even tangible way?
Think about how it fits into your overall vision, brand and portfolio and if it adds value in any less obvious way.
Lastly and arguably one of the most important opportunities to think about is monetization. What is the current site doing to monetize and how can you add to this and improve upon it?
Anyway you can add a monetization method or switch monetization methods to be more profitable, do it here. Test test test first and then find what works best for the site.
Organic traffic opportunity: Do an SEO audit – there can be an opportunity here to clean up current keyword targeting, cut dead pages or change keyword targeting on them.
You can do a current keyword ranking audit and direct more powerful internal and external Links to areas with opportunity for ranking boosts.
Start to do keyword research and create a new plan for keywords and content to grow your site over time.
This is the least sexy or flashy part but the part that has the most benefit over time as you figure out what search engines see your site as an auth for and then continue to publish in that area and see traffic growth slow and steady over time.
Ad traffic opportunity Here are some questions you can start by asking:
Are currently making a littler visitor or sell high end products? Consider running ads to your site and test if could be a profitable opportunity.
Is this asset a supplement to something you already own? Another site in a similar niche it can support in brand or in SEO?
Will it boost your brand in a non tangible or even tangible way?
Think about how it fits into your overall vision, brand and portfolio and if it adds value in any less obvious way.
Anyway you can add a monetization method or switch monetization methods to be more profitable, do it here. Test test test first and then
Is your monetization currently affiliate? If its amazon can you switch to a different affiliate network that pays more and Test it
Or can you switch completely affiliate or wholesale?
Are there ads on the site?
If there are not currently ads on the site even if it is monetized in other ways you can often add ads especially on high traffic sites and get a big revenue boost without hurting your other areas of revenue including affiliate or even e-commerce depending on what you’re selling.
May not always work but always a good idea to try and look at overall profit for a few weeks compared to few weeks before and year prior and just see if there’s a lift or not
Test ad networks:
Ad networks pay different rates for different niches. I’ve seen 2-4X increase from switching ad networks and different ad networks pay different amounts per niche so there isn’t one best network overall. Key is to test here, rpm specially if ads are your site’s only revenue source .
Reach out to brands to put banner ads on your site for a monthly fee or in your email newsletter or as a social shoutout.
I was getting $500 flat fee in euros actually when that was higher than USD for a header banner on one of my sites that was also making a few hundred a month from the other ads running on it in addition the flat fee banner
Having brand sponsors can be hugely profitable and often they’ll reach out to you but you can brainstorm who would be a perfect fit and reach out to them to.
Remember when reaching out is not all about you, it’s about how you can help them, they are the hero and winner in the story if you want to close a deal
Social Media & Customer Communication
Next you can look at how the site communicates with customers, look at social media, are there areas you can improve and automate, then look at email.
Does the site have an email list? Start regular emailing build up trust and intimacy.
Use this an an opportunity to build real connections with your Audi be and reply and have conversations. Having conversations also puts your email in more people’s inbox and not promo or spam folders as email providers see that as a real person trust signal.
That’s why my Her.CEO emails have such high open rates (right now 42%+ and land in a lot of main inbox folders), I have other lists I didn’t do This with and took over when I bought with much lower 10-13% open rates and get pushed into the promo folder as a default.
Add more value than trying to sell in every email or social post. Every so often you can send a sales email for something you know your audience actually wants and people will stay because they like your emails, even the sales ones because At that point your sales emails aren’t selling Anymore because you’re giving your readers what they want to pay for anyway.
Create a product
Then there’s the under-appreciated monetization opportunity which is to create a product- Your site has traffic in a spec niche but no revenue or only ad or affil rev? you can start offering a wholesale product or even take The step after wholesale which can actually be more profitable than wholesale which is to create your own product.
Your site has traffic in a spec niche but no rev or only ad or affil rev? The step after wholesale and can actually be more profitable than wholesale is to create your own product.
First of all, do you think the people running ads on your site are doing so out of charity because they like handing you free money Each month? Obvs not! There is so much tracking available online these days they know what they’re spending and the profit they’re getting from running ads on your site.
What if, you decided to sell what they’re selling using your traffic generating site as the vehicle?
I never thought of that you’re thinking! Genius!
Why thank you,
You can always step your site monetization game up a level from ads to actually selling something whether that is wholesale or your own physical product or even service or ebook or non physical product .
If you have traffic you can monetize it all you have to do is brainstorm every possible way then test every possible way then pick the winner.
For your long term revenue source, and try stacking revenue methods by doing more than one at the same time.
For example you can even triple dip and run ads on your site while promoting affiliate products while selling your own products on your site and you may find you make the most money while doing all three at once as opposed to only picking one at a time and you’ll never figure that out unless you try and test it.
Create supplementary videos
More opportunities include generating traffic through other channels, and you can do this by repurposing content or crating new content in the form of videos.
Think about how you could Create supplementary videos in the website’s niche.
One site I own I created a viral 600K video for expecting the video to drive site traffic and sales, which it did in a small way but this also added an entirely new monetization method to the site and the video itself ended up earning more in Youtube ad revenue than the website earned the first year in affiliate income.
Getting more eyeballs to your site with videos can drive more sales and more revenue just from the videos themselves in some cases worth a try
Reach out to brands to put banner ads on your site for a monthly fee or in your email newsletter or as a social shoutout. I was getting $500 flat fee in euros actually when that was higher than USD for a header banner on one of my sites that was also making a few hundred a month from the other ads running on it in addition the flat fee banner.
Having brand sponsors can be hugely profitable and often they’ll reach out to you but you can brainstorm who would be a perfect fit and reach out to them to. Remember when reaching out is not all about you, it’s about how you can help them, they are the hero and winner in the story if you want to close a deal
You can always let brands reach out to you for sponsored posts or reach out proactively to start getting sponsored posts on your site. Having more traffic helps with this and having an uber specific niche also helps.
Lastly, you can always think of more ways to monetize the site, there isn’t a limit on what you can do. My list includes ones I’ve personally done or thought of but the list is endless and only limited by your creativity and what your audience does, wants or needs, and think of how you can best serve them in a way that also allows your site to generate revenue.
The next step in the VSOT method is Timeframe.
Timeframe is how long it will take to earn your money back. You can determine the timeframe and the subsequent Value of a website by looking at what multiple is the site priced at? If nothing changes how long will it take you to earn your investment back?
For example, if the site is priced at 30X its monthly profit multiple that means if nothing changes it will take you 30 months to earn your investment back assuming your site is not hit by a traffic or monetization penalty that you already evaluated the risk of in the step 1 the Verification step in the VSOT method.
I always plan for say none of my optimizations work or nothing changes, I’ll make it back in X months.
You need to be ok with that because nothing is ever guaranteed.
I’ve bought most of my successful sites at either 10 or 20X monthly profit valuation. New French Affiliate site I bought Was at 30X valuation but was lower price so I knew it’d be ok even if my plan to wholesale didn’t workout, but also easier to justify because going from a few dollars profit to 10-20X+ that per sale would mean earning back my investment in less than 2 months If my wholesale and estimates worked out.
Run through a few situations using the opportunities you found as well and figure out best case scenario earn back time period as well.
Using These estimates as a range can help you decide if the investment seems worth it to you.
I’ve bought most of my successful sites at either 10 or 20X monthly profit valuation. The new French Affiliate site I bought was at a 30X valuation but it was also a pretty low price and there was a huge revenue opportunity to move from affiliate to wholesale so I knew it’d be ok even if my plan to wholesale didn’t workout. It is also easier to justify because going from a few dollars profit to 10-20X+ that per sale would mean earning back my investment in less than 2 months If my wholesale and estimates worked out.
Everything is risk reward and you can use these steps to help you make an informed decision but you also have to realize there are risks involved in any purchase.
Let me know what you think of the VSOT value website investing method – this is something I’ll be continually updating and adding more detail to as I go along – let me know in the comments the #1 thing you look for when buying a website.
Get the Website Investing Checklist here.