Many asked why I decided to purchase The University Kid, despite claims that the blog was “falling apart”. While others said this was a “great pickup” and an absolute “steal”.

In this blog post I’m going to share my thoughts on how I evaluate websites and what goes into my decision-making process. The majority of you asked for more case studies and success stories to be covered in the future. I guess you can call this our first “case study” – the purchase of The University Kid.

There are 7 things I look for when buying a website:

1. Background Research

Do this first. Always do your homework or else you’ll lose out. There are three main things you want to research:

• On The Owner – I know Jason and I met up with him before so I know he’s legit. But in the case of a stranger, just Google his/her name and see what pops up (you never know what might turn up). Check their ratings on the site you’re buying from (e.g. iTrader at DigitalPoint). If I see any red flags then I’ll pull out immediately.
• On The Website – Do a “Whois” lookup (e.g. whois.net) and check the ownership. Also, make sure you do a thorough research on the history of the website – has it been banned from Google before? A quick scan using the wayback machine at Archive.org might be useful.
• On The Sale – If the sale is listed through a forum, then check that it’s not sold on other forums at cheaper prices. With the case of TUK, the deal was made privately through MSN so this wasn’t a big issue.

2. Income

Not only how much it’s making but also where it’s coming from. It’s got to be something that YOU can take over from the previous owner (e.g. consulting services would be a bad revenue source). The site was making about $500 per month at the time of purchase, all of it was through advertising and paid reviews, so it’s pretty easy to maintain. Let’s just assume that things remain steady (I’m being conservative here), in 12 months time that would be $6,000! A 100% return on investment (ROI) in a year – not bad

Income Value = $6,000

3. Traffic

First, make sure you check the traffic stats CAREFULLY to make sure the numbers the seller is giving you aren’t inflated – or worse, artificial. Get them to show you their Google Analytics or Awstats and check the referrals (click on those links and check the websites out manually). Any goofball can go out there and buy crap traffic for $5 on DigitalPoint’s marketplace and make it look like genuine traffic if you don’t check carefully. With blogs, a quick look at the number of comments per post will give you a good indicator as to how much TARGETED traffic the blog is bringing in.

At the time of purchase, TUK was averaging around 4,000 unique visitors per month (about 48,000 visits per year). Let’s say we start a new site and generate that traffic through Google Adwords and, for arguments sake, we paid $0.10 per click (again, I’m being very conservative), that’s $4,800 worth of traffic!

Traffic Value = $4,800

4. Subscribers

The blog has around 1,200 RSS subscribers. In the email marketing industry, the general rule of thumb is “$1 per subscriber per month”. Obviously, RSS subscribers aren’t as responsive and valuable as email subscribers. And you got to take into the account of the fact that many are probably going to unsubscribe because of the change in ownership. So this is a tricky one. But let’s just say 500 subscribers stick around and using the “$0.10 per subscriber per month” (chances are RSS subscribers aren’t ten times less valuable as email subscribers), that would be $600 per year.

Subscriber Value = $600

5. Content

Make sure you VERIFY the source and ownership of the content: Is it unique? Is it purchased? Is it ghostwritten? Is it copied off another site? Having been a follower of TUK for a year now, I know the content is original and of high quality. At the time of purchase, the blog was just shy of 400 posts. If we hired a writer at $10 per article (which is dirt cheap for the kind of quality on this blog – but again I’m being conservative with my numbers), it would cost us $4,000.

Content Value = $4,000

6. Areas That Can Be Improved

These are the “potential” values. Find areas that can be renovated or optimized to help increase the value of the site. The best deals tend to come from sites that are getting tons of traffic but aren’t monetized to its full potential. Looking at TUK, three things came into my mind immediately:

• Monetization Model – The blog isn’t heavily monetized at all – which means tons of untapped revenue channels waiting to be explored. Just on the top of my head, I could think of several more monetization models: affiliate marketing, sponsored links, more banner ads, RSS text ads, peel away ads, consulting services, drive sales for my own products etc.
• Email Subscribers – I’m sure you heard of the saying, “The money is in the list”. I can easily put up an opt-in box on the sidebar and start my own newsletter (I use GetResponse) for the blog. I can create an autoresponder series, promote affiliate products and do all sorts of things on the backend. I’ll save that for a future post
• Marketing Channels – The blog isn’t heavily promoted. Marketing channels such as social media (we’re currently tapping into Twitter), buzz marketing, guest blogging can all be explored to help boost the traffic and readership.

Potential Value = $3,000

7. Sale Price

Finally, look at the sale price. I was offered $3k by Jason over MSN (another tip: The best deals are made when done privately). First, let’s add up the numbers above…

• Income Value = $6,000
• Traffic Value = $4,800
• Subscribers Value = $600
• Content Value = $4,000
• Potential Value = $3,000

Total Value = $18,400

What this number tells me is that TUK has the potential to become a $18,400 blog in just 12 months time. This falls right within Jason’s claim: “With the right level of promotion, this could be a $10-20k blog”.

This is why I ultimately decided to purchase it without hesitance, even though many might think the profit/traffic has dipped a lot and wasn’t looking all that impressive. I’ve bought and sold a lot of websites in the past but this definitely had to be one of the better acquisitions I’ve made.

Hope this gave you an insightful look into my decision-making process of purchasing TUK

Gotta go catch Man Utd play Sunderland. Anybody else watching that game?