Advertising Due Diligence: How to Evaluate an Advertising Business Can Backlinks Affect Your Business Valuation? How to Start Planning Your Exit Strategy
Performing due diligence on a website monetized with advertising is a process that has unique aspects to it.
The first aspect to pay attention to is the origin of the traffic. US visitors are higher value than certain other countries. Organic search, social, referral, email, direct or paid – the more diversity, the safer it is. Usually, up to 80% of traffic is organic traffic.
If the website has direct advertising agreements in place, you also need to understand if the current advertisers are interested in remaining. Also, it might be the case where some of them have yearly agreements in place, but the revenue for the remaining months will have already been pocketed by the current website owner.
You should also understand which keywords attract the most visitors, whether organic traffic is split among a wider variety of keywords and pages, and how consistent the keyword rankings are. Finally, it is important to understand the general trends of the niche you are getting into, and choose a niche with a growing audience and interest.
Another important part of due diligence is the backlink profile of the website you are buying. Ideally, the links pointing to the website should come from trusted websites, with plenty of visits and authority, and it is relevant to the niche in question. In this case, the backlink profile will be healthy and desirable.
As you move further away from this ideal scenario, the backlink profile becomes lower and lower quality. And even if you on-site content is the best in its niche, with relevant media to support it, poor quality links will certainly hurt your site. As Google refines their algorithms, you will be more likely to trigger a penalty – even if the dirty work was done in the past by the previous owner.
If, on the other hand, you find yourself on the other side of the equation and you are planning to sell your site in the future, you should take into consideration a series of measures at least one year prior to actually advertising your website sale. Sellers like to look at numbers and processes and having a complete picture for a full year can increase your chances of both reaching a higher price and a faster sale.
Regarding traffic, the very minimum you need to install and configure are Google Analytics to track your website pageviews, Google Search Console to deal with warnings or penalties, monitor your keyword rankings and your competitors movement, monitor your inbound links for the authority links you build plus prevent any negative SEO attacks.
As for the website finances, you need to treat it like a business if you plan on selling it. At the very least you should have a spreadsheet containing bank account statements, earnings reports, and all business expenses – both one-time and monthly overhead. Fluctuations in monthly earnings should be explained.
You should also document all website processes, so the new owner can easily replace the tasks and roles you play with someone else. You should know how long and how often you need to perform each task, so the new owner can factor those weekly work hours into the purchase decision. You should also have already a positive spin on why you want to sell your business.
Do all these actions and you will surely have a smoother transaction when selling your online asset.
