New Yorker Eric Porat has made a career out of digital investment. Here’s what we can learn from him.
In Part 1 of this series, we talked about a few tips we can learn from digital investor Eric Porat. The main ideas to take away from the previous section are:
- Target Niche Markets
- Poor SEO and/or UX is a Sign of Viability
- Digital Appreciation Takes Time
For our second chapter here, an important starting point is the fact that experienced digital investors like Eric Porat repeatedly acquire, build, and grow profitable websites by practicing proven methods and time-tested processes. It’s not catching lightning in a bottle. It takes time, effort, and careful, careful market and traffic analysis.
So with that in mind, let’s move on with a few more tips and tricks we’ve gleaned from Eric Porat.
Invest In Sites with Income Diversification Potential
One of the main reasons why investing in websites is such a great option is that there are a wide variety of ways you can make money from them. For example, you can use Google Ads or other ad networks, create sponsored content for brands, selling digital products, promote affiliate merchandise, sell via dropshipping, or add a shop to your site and sell physical merchandise directly.
Best of all, you can do all of the above at the same time!
The best thing about income diversification is it doesn’t just increase your monthly income as you grow the site, it dramatically improves the overall value of your website when you go out to sell it. The more methods in which a site can generate income, the more attractive it is to any potential buyers.
The Questions
There are a few key questions we need to ask ourselves concerning making digital investments. Here are some of them.
How Old is the Site?
A site’s age is a crucial metric, and you shouldn’t purchase without taking it into account. Domain age is a major Google Search ranking factor. The older a site is, the faster it will rank for any given keyword.
Secondly, the older a site is, the more footprints it has around the web. Things such as brand mentions, backlinks, indexed pages, and more. These are valuable tools you can put to use to grow your site, even if they’re lying dormant. As a general rule, you should attempt to look for sites that are at least one or two years old, and the older the better. Any domain that is less than a year old you should steer very clear of unless there’s something extremely special about it.
When Eric Porat built his first website from scratch in 2005, it took him 3 years to grow it to 70,000 visitors per month and sell it off. Don’t make the same mistake. Buy sites that are aged.
Is it a Long-Term Business?
It goes without saying that if the site is based on a fad or otherwise temporary market, it’s a bad investment. That said, it can be difficult to determine the longevity of a project at first glance.
Whether you want to invest in an affiliate site, eCommerce store, a blog, or something else, make sure it generates revenue from what the industry likes to call “evergreen” sources. A great way to do that is instead of product-focused sites, scan the industry for sites that are based around solving specific problems.
For example, one of Eric Porat’s most successful ventures, which we mentioned in Part 1, was an e-commerce technology project that used a web crawler to automatically scan thousands of brands’ websites, find products that were on discount, and then link to them with affiliate links. Porat sold this project for a massive sum two years after it went live.
Has the Site Been Sold Before?
Are you buying the site from its original owner or another investor like you? Sites that have been bought and sold multiple times, for one, are more likely to have a flawed core concept. Another factor at play is that these sites are more likely to have used sketchy, or “blackhat” SEO techniques and could be blacklisted without warning,
Is the Owner Cooperative?
Just like when you’re buying a car, an uncooperative or shady owner is a bad sign. You need to gather as much information about your potential investment as possible, and you can’t do that without the owner’s cooperation.
More importantly, an uncooperative owner usually has something to hide.
Most sellers are happy to share the detailed history of their site, things that have worked for them and things that haven’t, their recommendations for the future, and so on. Eric Porat and other successful digital investors would all advise that if an owner is acting sketchy, then it’s a sign that the site itself is sketchy.
Whether that means blackhat SEO techniques have been used or something about the UX or content isn’t what it appears… if a seller is being difficult, be wary.
Should You Be Interested in the Content?
Short answer: it depends. Eric Porat has bought and sold dozens of sites in niches he didn’t care about at all, but his long term projects, like GeoIQ, a web-based analytical platform offering real-time analysis for advertisers to help them track and optimize their media buying campaigns, are all in niches he is passionate about.
If you’re looking to flip, there’s no need to be picky about your topics, at least from an interest level perspective. Just pick sites that are viable and have growth potential. If you want to work on a project for years and years and potentially own it indefinitely, then having some personal interest in the content will be helpful.
Does the Site Have Diverse and Steady Traffic?
Traffic is the life-blood of any website. Without stable and diverse traffic, no site can stay alive for long. In order to invest in a smart way, you have to closely monitor the traffic trends of any site you want to purchase. At least check out the Google Analytics (GA) reports for the last 12 months, if not older.
Is there an upward, a downward, or a stable trend to the site’s traffic? Is it going up one month and down another? A viable site is one that has an upward trend, or at the very least one that is stable. This proves that the site is acquiring traffic from stable sources. Having stability as a launchpad is paramount, because it gives you the legroom to plan ahead.
If your site is already leaking visitors, you’ll be so focused on patching up holes in the sinking ship that you won’t have time to row forward.
You need a stable, diverse visitor base right out of the gate to move forward and improve on all the lacking factors that you want to improve on, whether it’s SEO, design, or branding.
Finally…
Be Money Minded!
When you buy a site, Eric Porat and others would always tell you to make sure you’re aware of the sale potential, so you can negotiate a solid price. A great general formula to use to find out viable sale prices is this:
Multiply the site’s average monthly profit for the year with a number between 20-50 (use a higher number depending on the niche, income, traffic, assets, etc.)
This means if a site is making a profit of $500/month currently, if it’s a viable project then eventually you can probably sell it for at least $10,000 or more. Of course, this is variable based on how optimized the project currently is, but it’s a good general starting point.
Now get out there and start investing!
