This whole website investing journey began over a year ago with my parents becoming interested in using websites as an alternative investment vehicle. They were kind enough to trust me with thousands of their own dollars to go out and buy a website of my choosing. This began my search for a website and within a matter of weeks, I was able to find the perfect website for $6,000.
The deal I had with my parents was that they would put up the initial $6,000 to buy the website and then we would split the monthly profits 50/50. Then when/if we decide to sell they would get their initial investment of $6,000 back first and then we’d split the remaining profit 50/50.
This website was making $500/month at the time we purchased it, but I felt that it was being undermonetized and that I could grow the website further. This was 12 months ago and a lot has happened since then. I’d suggest reading the updates below if you haven’t already:
- I Just Bought a Website for $6k, Here’s Why
- The 3 Month Update
- The 6 Month Update
- The 10 Month Update
I can’t believe that it’s already been a year since we bought this website! Before we get into this new update I just want shoutout my parents for trusting me with their money and having faith that I would be able to put their $6k to good use.
Snapshot of the Past 12 Months
Let’s dig right in and take a look at the most important stats from the past 12 months.
As this graph shows, the site’s monthly revenue has been improving month after month. To give you an idea of the monthly improvements, let’s look at the average monthly revenue from the first 6 months that we owned the site compared to the most recent 6 months.
Average Monthly Revenue in the First 6 Months: $643.76
Average Monthly Revenue in the Last 6 Months: $947.22
Over a $300/month increase!
This is due to a combination of many things, including increased traffic, continuous ad optimization, and adding new sources of revenue. If you recall, when I purchased this site it was making around $500/month and now 12 months later I have nearly doubled that
You might be wondering why I chose to look at revenue instead of profit first, good question!
The reason is because revenue is the best metric to show the true growth of a website. There are exceptions to this, such as if you were using paid advertising and ignoring the costs of runnings ads and only looking at revenue. Then revenue would not be an accurate representation of growth. However, in my situation where the only expenses are from new content and buying products, it makes sense.
With all of that being said, we can’t ignore profit as it’s the most important overall metric for any website so let’s look at that now.
The graph of the monthly profit follows the same trend as the revenue graph, which is a solid upward trend. In the same way we compared the average of the first 6 months to the average of the last 6 months with the revenue, let’s do the same for the profit.
Average Monthly Profit in the First 6 Months: $550.42
Average Monthly Profit in the Last 6 Months: $894.47
A solid ~$350 increase in the average monthly profit, not bad.
Although not as drastic as the revenue/profit growth, the traffic has grown fairly well since I took over as the owner. The large spike you see is from a Facebook post going viral and driving 30,000+ visitors during that month. Aside from that large surge, the traffic remains fairly consistent month in and month out.
Pinterest remains the major driver behind the site’s traffic despite my best efforts to grow the organic and Facebook traffic. I’m not too worried about the bulk of the traffic coming from Pinterest as much as I was when we first bought the site because I have learned that Pinterest is a very high-quality traffic stream. I have explained this before, but Pinterest is great because the traffic is not “one-time” type of traffic like Facebook and Twitter is. Instead, it acts more of a “search engine” than anything else.
Let’s take a look at the Pinterest referral traffic from the past 12 months:
Pinterest Traffic L12 Months
Very solid growth.
I major reason for this growth is due to consistent posting every day. That along with posting high-quality content is the key to doing well on Pinterest. It’s also worth mentioning that the niche of my site is perfect for Pinterest as well, which has a lot to do with the success. I can’t stress how important it is to find the community where your audience hangs out and then become an authority within that community. That’s the quickest way to gain momentum within any niche.
Sticking with Pinterest, let’s look at the growth of the overall account. When I first took over ownership of the site and the Pinterest account it had 2,777 followers.
Now, 12 months later, my Pinterest account has over 21,100 followers:
The account has grown by more than 18,000 followers!
That’s some awesome growth. I’ll be looking to continue doing what already works, but I am also interested in starting to test some different strategies out and see how it pans out.
Facebook has been very inconsistent, but it has slowly started to drive more and more traffic. The first few months that I owned the site I didn’t utilize Facebook at all as I was mainly focused on Pinterest at the time. However, over the past 6+ months it has become a major focus and it looks to be paying off so far.
The large spike you see is from a post that went viral and drove over 33,000 visitors in a very short period of time. This was awesome, however, the traffic eventually died down. Since the large spike in March, the traffic has been seeing some growth compared to the months before the spike. This is largely due to being consistent and posting 2 two times every single day.
It’s hard to tell from the graph as the large spike skews the graph so badly, so let’s look at the numbers themselves and compare the last 4 months since the spike vs the 4 months before the large spike. I am not counting the large spike in this calculation because I am more concerned with organic growth and not “viral posts”.
Average Monthly Visitors from November 2015 – February 2016 (4 months before spike): 502/month
Average Monthly Visitors from April 2016 – July 2016 (4 months after spike): 3,004/month
This is a good representation of the growth of the Facebook traffic in the last few months. Although I have nearly 6x’d the FB traffic, I still feel like I’m only scratching the surface and will be looking to continue to grow the traffic from here.
As you’ll see, the organic traffic is not growing but not as fast as I’d hoped. Check out the organic traffic from the past 12 months below:
I have been fairly inconsistent when it comes to getting new content produced for the site, and that’s a major reason as to why the organic traffic has grown slower than I had originally planned. Let’s compare the first 6 months to the last 6 months:
Average Monthly Organic Traffic in the First 6 Months: 7,008/month
Average Monthly Organic Traffic in the Last 6 Months: 8,720/month
A decent 1,700+ visitors per month growth. I’ll be looking to grow this even more over the coming months.
Selling physical products has been a minor focus the last few months but I’ll be looking to ramp things up. I will talk more about my future plans a little bit further down in the article, but I will be attempting to make this a large part of the site’s revenue.
The first thing we should look at is the store’s traffic:
Note: The store is a subdomain on my main domain such as “shop.mymainsite.com” so it has it’s own Google Analytics account
Right now, the bulk of the traffic is coming directly from the main site. There is a link in the navigation menu called “Store” which directs them straight to the store. That is the main source of traffic right now, aside from a few referral visitors from Pinterest. The reason why I haven’t pushed the store harder on the main site yet is because I only had a handful of products and they weren’t very good.
Even with these products, I was still able to make a few sales. Check out the sales stats below:
Two sales were made. Not fantastic, but it is a good sign that there’s some potential here. Also, I made 5 sales in the month of August (not in this report) which is promising. Keep in mind that the product pictures were taken from my iPhone, the product descriptions were put together in 15 minutes and the only true promotion has been one link from my main site.
I’ll be spending more time optimizing my store because I feel like it could be a new source of untapped revenue that could add to the bottom line of the site. I’ll talk more about my plans to grow this in a minute!
What’s the Site Worth?
A few months back my parents and I were seriously considering selling the site, but we decided to hold onto the site and it has only grown in value since then. As a refresher, the common way to determine the value of a site is to use the last 3 months average net profit and multiply that by a multiple based on various factors.
First, let’s get the last 3 months average net profit.
Net Profit in May: $748.97
Net Profit in June: $936.70
Net Profit in July: $996.22
A very solid ~$900/month in profit the last 3 months. Now that we have the L3M average, we now have to determine the multiple. Like I mentioned earlier, the multiple is determined by a variety of factors such growth, owner time involvement, and most importantly profit.
Based on those factors am going to assume a 25x monthly multiple, which is a very common multiple for this type of site.
$893.96 * 25x = $22,349
As of right now, the site is approximately worth $22,349 if we were to sell it based on the numbers through July 2016. When you remember that we bought the site for $6,000 12 months ago you can get a taste of the type of returns websites can provide if you know what you are doing.
Let’s take a look at the site value over time. The green line shows the value of the site based on the last 3 months average net profit multiplied by a multiple of 25x. The blue line represents the purchase price of $6,000.
As the graph shows, the value of the site is way above the price we paid for it. It also shows that the value of the site grew quickly in the first 6 or so months and has remained fairly steady the last few months remaining above the $20k range.
Return on Investment after 12 Months
All of the other stuff we have talked about so far is cool, but this section is the most important. My parents invested their hard earned money into this site and they expect their return on their investment just like any investor would. For that reason, the ROI is a metric that I keep in mind for any decision that is made.
Let’s take a look at the ROI for my parents $6,000 investment 12 months ago. Keep in mind that my parents and I have a deal where we split the monthly profits 50/50 and then when we sell the site they get their initial $6k investment back off the top and then we’d split the remaining profits 50/50.
Parents Initial Investment: $6,000
Total Site Profit: $8,669.37
Parents Profit: $4,334.69
So in 12 months my parents are $1,500 short of making their entire initial investment back. Based on the recent months, I’d assume that in 3 months that they will have made their entire $6k back. Once that happens it will be all profit from there on. We have to remember that this is SOLELY from the monthly cash flow of the site and isn’t accounting for the current value of the site.
You can see the payback progress in the chart below, we’re getting close to pure profit:
Just like real estate, the largest payout comes once you sell the asset itself. The fact that we have almost made our initial investment back within 12 months solely from the monthly cash flow is very good. Next, I want to look at the ROI if we were to sell the site right now. We will use the estimated site value which we calculated above.
Website Value: $22,349
Profit from Cash Flow: $8,669.37
Total Profit: $31,018.37
Parents Profit: $12,509.19 (plus their initial $6k investment)
If we were to sell the site my parents would have made over $12.5k in profit on their initial $6k investment 12 months ago. That’s a real solid ROI! However, as you’ll see we are not planning on selling right now and I’ll continue to grow the site even more.
Future Plans and Goals
As I just mentioned, we aren’t planning to sell the site anytime soon and I’ll keep trying to grow the site. I have some growth plans in place that I think will take the site to at least $1,500/month in profit by the time we decide to sell. Let’s dive into what the future holds for this.
Grow Shopify Store
I think this could be a game changer for the site.
I have purchased a variety of products and will be testing to see which ones are popular and then invest in more stock. I’ll also be looking into Pinterest and Facebook ads to promote my products. I think it could be a great way to systematically scale the Shopify store and grow the site’s profit. Right now, the profit margins are 80% on all products that are sold so I have some wiggle room when it comes to runnings ads and still remaining profitable.
I’ll have more info regarding this in the coming weeks, but this will be a major focus for this site moving forward.
Goal: Add $500/month in profit to the bottom line from the store
Test Alternative Ad Networks
I have had good success so far with Adsense, but I am interested in testing out other ad networks to see if I can further optimize the ad revenue. I have been messing around with Media.net and have been seeing some decent results, but I’ll need to test it more to get a good idea if it’s worth pursuing further.
I also want to look into other ad networks such as Ezoic. I think it could be worth making the switch and this is something that I’ll be looking into. I really want to get to $1,000/month in ad revenue.
Goal: Reach $1,000 a month in ad revenue
Sell the Site for $30,000
I think selling the site for $30,000 is very doable and the plan is to reach this goal within the next 12 months. As of right now, the plan is to sell the site sometime next summer. To sell for $30,000 we will need to get the monthly profit to around $1,500. I think this should be fairly easy to accomplish between the Shopify store and testing new ad networks.
Although this is the plan as of right now, it could change at any point. We’ll see what happens and you’ll all be here to see how it goes!
I can’t believe it’s already been a year since we purchased this website! This was the first website that I purchased that would be considered “substantial”. I bought a couple super small sites for a couple of hundred dollars before this site, but nothing in the thousands of dollar range. However, in the 12 months since this purchase I have picked up 4 new sites that have all been fairly big. I really enjoy buying new sites and growing them using a variety of strategies. My plan is to keep doing this and start to get into the six figure plus sites as soon as possible.
As for this site, I’ll continue to keep you in the loop with quarterly updates so you can follow along the progress of this site. Thank you all for reading and I want to give a huge shoutout to all of the people that have been reading this case study from the beginning. I hope that you have enjoyed reading each update and have been able to learn a thing or two.
Before I end this article I just want to let you all know that you should expect more content coming from me soon! You can also expect a brand new update in my Website Flipping case study to come out within the next week or two. Anyone who has found this case study to be interesting will love my new one.
Thanks again for reading!