As any SEO will tell you, clawing your way to the top and staying ahead in competitive verticals online continues to get harder – not only is the Google algorithm an ever-evolving beast but SEO is a zero-sum game with more entrants than ever vying for a finite number of positions.
Say you’re getting XXX,XXX visitors per month, some big numbers, you’re ranking well across the board and have a process for capitalizing on new keyword opportunities as well as systematically ranking for existing opportunities. How do you grow your search traffic any further? There comes a point when growth with plateau and if the internet accounts for a large amount of your new business generation, at some point this plateau is going to impact on your ability to hit the next quarterly sales targets.
We’re looking today at tactical website acquisitions specifically for the purpose of enhancing a company’s presence in organic search results – in essence, you swallowing up a SERP competitor to own more of that prime real estate and grow your business.
I had the opportunity to speak with Thomas Smale, one of the co-founders of well-respected website brokerage firm FE International. You may have seen their Website Penalty Indicator which was recently released and is a very useful tool for anyone looking to get a quick snapshot of a domain’s performance without the need for access to Google Analytics.
Today I’ve got the write-up of that chat with Thomas…
1) Tell us about yourself and what your company does?
I’m a UK based entrepreneur who co-founded FE International in 2010. We help internet business owners sell their websites through our brokerage service and work with investors to help them safely acquire online businesses.
2)Would you describe these kinds of tactical website acquisitions as a growing area, with companies looking to squeeze maximum potential out of the internet?
Yes, this is definitely becoming wider practice with established buyers. Most buyers will have very specific requirements but may work with us to make their strategy more practical (it is rare to be able to meet very specific demand).
3) Why is is better for someone to have more than one website in play (even in the same industry)?
As a defensive strategy, it is a good way to hedge risk and diversify. Less reliance on a single site/revenue source is always a prudent strategy and ultimately enhances entity value. As a more aggressive strategy, owning more websites can be a way to gain market share more quickly than organic growth alone.
4) What should we look for in terms of a target website to be acquired?
This depends on your strategy and strengths. Some buyers will just be looking for sites that have existing traffic in their niche, but not so worried about the current income or monetization as they already have an existing monetization strategy. Others might be looking to expand into a synergistic niche where the existence of their current business can add value to the website they are acquiring (perhaps through the addition of a new revenue stream). We have also seen buyers acquire competitors who outrank them just for the purpose of shutting them down or putting a 301 redirect in place to their own site. This is an extremely aggressive strategy and not necessarily suitable for a less experienced business owner.
5) Once you are set on a target what should you look for in terms of due diligence to ensure you don’t get burned?
If you are looking to buy a website as an investment, due diligence is an extremely complex topic so I would recommend hiring a professional if you don’t know what you are doing. When I have acquired strategic websites personally (and we have clients who do the same), I will reduce my due diligence criteria significantly. For example, if I am looking to buy a site because of its current rankings and intend on changing the monetization, there isn’t much value verifying income (although an advanced strategy would be doing more in depth verifications and using any issues as a way to lower the purchase price). I like to keep things simple so will only verify the parts of the deal that I am acquiring for. You can go significantly more in depth, but when buying strategically, I will often overlook red flags that might be deal breakers if I was purchasing as a standalone investment. This makes it extremely important to understand exactly why you are purchasing.
6) I think some people shy away from this sort of thing because they haven’t acquired a website before. Can you give us an “in a nutshell” explanation of the mechanics of a deal?
A basic overview of a deal if applying the processes we use internally would be:
- Initial information sharing/questions
- Make a formal offer (usually in the form of a letter of intent)
- If offer is accepted, start due diligence (this can vary in length depending on size/complexity of a deal)
- Negotiate terms and sign an asset purchase agreement
- Buyer would send funds into Escrow. We use Escrow.com for safety
- Seller transfers website
- Buyer releases funds on receipt of everything
- Seller gets their money. Buyer gets the website.
Thank you for your time Thomas.
Summary & Action Points
This tactic is potentially higher-risk because of the financial outlay required to make an acquisition and because any budgets you have allocated for online marketing may now be diluted between more than just the one website.
There are multiple angles we can explore for tactical website acquisitions; you may be looking to acquire to:
- Mitigate the risk of a main website being slapped with a Google Penalty
- Expand coverage on a key SERP
- Grab the content or other assets
- Benefit from the solid link profile
The reason for the acquisition then determines the extent and type of due diligence.
Overall, this is a good strategy in certain situations for an experienced individual or business looking to grow search traffic and avoid the plateau that can occur when an SEO campaign hits a certain size.