Sure - I held off on sharing detail in the main post since valuation is more complex than revenue estimation.
Valuation calculated as multiple of monthly net profit
- was in the teens for most of the "casual" visitor sites
- dropped to the mid single digits for the higher value traffic sites
My Working Hypothesis:
- This is a "quality of sales issue"
- the revenue from the lower value sites was derived from traffic which was very likely to repeat (strong SEO position, repeat visit topics) and the higher value sites had more "one time" business.
I've got to do some additional work to prove this however, and may need to bulk up the dataset so I've got enough sites in this category. First step will be to sort out the product sites by recurring vs. non-recurring offerings.
Other stuff to watch out for with valuations:
- Market exhaustion or short product cycle (looking at SEO services and Info-products, these loose value quickly)
- Distressed Sales
- Trust/Data Sharing Issue (asymetric info hurts valuations)
Think about how much SEO-Related Infrastructure / Services (link farms, article directories, spinners, cheap content writer services, link spam) were devalued by Penguin/Panda. Social media submission / follower spam is likely next.
From a business perspective, I'd value any pure-play SEO service using the assumption that the product offering would need to be totally replaced in under 18 months. Google changes that fast.
Now - granted a lot of this was spam and likely should not exist... but there were a lot of legitimate / semi-legit revenue streams for large sites derived off helping new sites navigate the Google Pagerank Algorithm...
Maker's Note: This started off as a post-mortem on a weekend project (why did we make $X when I expected $Y) and I realized others might find it useful. Would welcome your feedback.
Valuation calculated as multiple of monthly net profit
- was in the teens for most of the "casual" visitor sites
- dropped to the mid single digits for the higher value traffic sites
My Working Hypothesis:
- This is a "quality of sales issue"
- the revenue from the lower value sites was derived from traffic which was very likely to repeat (strong SEO position, repeat visit topics) and the higher value sites had more "one time" business.
I've got to do some additional work to prove this however, and may need to bulk up the dataset so I've got enough sites in this category. First step will be to sort out the product sites by recurring vs. non-recurring offerings.
Other stuff to watch out for with valuations:
- Market exhaustion or short product cycle (looking at SEO services and Info-products, these loose value quickly)
- Distressed Sales
- Trust/Data Sharing Issue (asymetric info hurts valuations)