Doing your research is perhaps the most important part of the website buying process.
When you’re buying a website, you need to make sure that you’re actually getting what you’re paying for in terms of traffic and revenue. In addition, you should also do as much research as you can into how much the site can potentially make in the future.
Here are a few of the most powerful research tools you have at your disposal when researching a potential website buy.
Analyzing Google Analytics
Google Analytics is the most common type of statistics program used by webmasters. It’s also one of the most common types of reports you’ll see when you’re researching sites to buy.
Here are a few of the most important things you should look for in a Google Analytics report.
Overall Health
The first thing to look at is the overall health of the website. You can get a sense for how much people like this site by looking at stats like the pages per visit, the bounce rate, the average time on site and the percent of new visits.
Traffic Sources
Another important thing to understand is exactly where all your traffic comes from. There is a huge difference between running a forum that’s mostly recurring traffic and a website that gets mostly new traffic from SEO.
Keyword Analysis
The keywords that people type in to get to your website can tell you a lot about the kind of people that end up on the website. It can tell you whether they’re buyers or browsers and what kind of information they’re looking for when they end up on your site.
Breakdown by Countries
One big mistake buyers make is not checking the countries that traffic comes from. It’s not uncommon to see a site listed that gets a lot of traffic – Only to later discover that the majority of the traffic comes from third world countries.
It’s possible to make money from third world traffic, but it’s important that you know where your traffic is coming from before you buy.
Detecting Link Types
Many of the sites you’re considering buying will get most of their traffic from search engines. Link building is the most important component of search engine optimization – Unfortunately, a lot of people take shortcuts.
When you’re buying a website that gets traffic from search engines, it’s important to do at least a basic analysis of its link structure. This will give you a good idea of how links were built to your site and what the risk of losing your rankings is.
If you’re buying a website with a lot of spammy links, there is a real danger of being delisted. On the other hand, if you’re buying a website with strong, relevant backlinks, you can afford to pay a bit more as the rankings will likely improve in the future.
One tool you can use to analyze the backlink structure of any given website is Open Site Explorer. These two tools both use their own web spider engines to build an index of the web on their own servers. They can then use this index to find backlinks back to a specific website.
Here’s an example of what an Open Site Explorer search result looks like:
Open Site Explorer has a unique feature called domain or page authority. This figure is designed to mimic PageRank. It takes into a large number of factors and gives you a number on how authoritative a specific domain or page is.
This figure is logarithmic. That means it’s much easier to go from 30 to 40 than from 70 to 80. This number is usually a lot more useful than PageRank, because it’s constantly updated while Google only updates PageRank a few times a year.
Overall what you want to look for are legitimate backlinks to your website from other sites in related industries. Try to avoid sites that are linked to from many spammy, low quality, unrelated sites.
Is the Industry Trending Up or Down?
When you’re buying a site, you need to evaluate the industry it’s in. Avoid buying sites in dying industries or topics and invest in sites that are on the up and up.
One good way to demonstrate this is with the iPhone 3G. When the iPhone 3G was released, the very quickly got a lot of hype. People built sites around the iPhone 3G, and some buyers even paid as much as 30x the monthly income for those sites.
Of course, the iPhone 3G’s hype quickly died down over time to be replaced by the iPhone 4. You don’t want to be buying a 3G website based on the peak’s traffic, hoping it’ll continue to rise.
As you can see, the traffic in 2011 is about one fourth of where it was in 2008 when the iPhone 3G was unveiled.
Point “B” would be a great time to sell a website but a terrible time to buy.
Using Google Trends, you can easily identify whether an industry or topic is picking up or going down. If you’re in a dying industry or a short-term industry (as shown above,) you probably shouldn’t invest.
Predicting AdSense Income
If you’re buying a website that you plan on monetizing with Google AdSense, it can often help to try and predict how much you’ll earn by placing AdSense on a website.
First, take a look at the types of ads that might show up on your site after you put AdSense on it. You can do so using the AdSense Sandbox Tool.
Just type in the keyword or URL you want to check potential ads for.
To get an estimate of how much you might earn per click from Google AdSense, use the Google Traffic Estimator. To access this tool, you need a Google AdWords account.
Log into your Google AdWords interface, click “Tools” then “Traffic Estimator.”
Type in the keyword(s) you think people who’re targeting your site might type in. The resulting CPCs will give you a ballpark of whether your site will get high CPCs or low CPCs.
Keep in mind that these estimates are for Google AdWords, not Google AdSense. There isn’t a tool that can accurately tell you how much you can get per click from AdSense. Instead, using the AdWords Traffic Estimator, you can just get a sense for whether you’re in a high paying or low paying category.
If you really want specific numbers, you can use 30% of the Google AdWords bids as a rough guesstimate of your CPC. If the CPC is $1, expect to earn about $.30 cents per click on AdSense.
These are a few of the tools you might want to use to evaluate both the validity of the website’s traffic stats, as well as the earning\ potential of the website in the future.