Advertising & Adsense Website Valuation
Generally speaking, content websites that generate the majority of their revenues from display advertising or Adsense, sell for approximately 2x to 3x their trailing twelve-month profits or earnings.
However, we have seen advertising sites sell for anywhere from 1x to 5x+ their earnings. That’s an extremely wide range, so, how can you tell if your advertising website value falls on the low-end, high-end, or even outside of the average range?
The earnings multiple that a buyer is willing to pay is a representation of how risky the website investment is, and how much opportunity there is to grow earnings.
While there are dozens of factors that go into valuation, we’ve determined what we believe to be the 5 most important factors that determine an advertising websites value. While this guide will help give you a better feel for where you fall in the range, it won’t tell you your exact earnings multiple. At the end of the day, valuation is subjective and there isn’t a formula that you can use.
5 Biggest Adsense & Advertising Valuation Factors
- Traffic acquisition sources
- Traffic consistency and pageview diversity
- Who creates the content?
- Advertising platform
- Opportunity for further monetization
1. Traffic acquisition sources
Your traffic acquisition profile is a breakdown of where your traffic is coming from. Organic, paid ads, referral, social, and direct are the most common traffic acquisition sources.
Organic and direct traffic tend to be the most valuable, followed by referral and social, and paid ads as the least valuable. While I personally love sites that are 80%+ organic traffic, having a concentration in one traffic source tends to negatively affect valuation.
What happens if you or a previous owner unknowingly did bad SEO, and Google penalizes your site? Traffic could fall to zero if it has a concentration in Google organic traffic. The least risky traffic profile is one that gets its traffic from diversified sources, so that if one falls off, the traffic doesn’t go snowballing down.
With that being said, if you do have traffic concentration, having it in the Google organic category is the best.
2. Traffic consistency and pageview diversity
Traffic is the revenue juice for an advertising website, the two have a direct correlation. When you look at your 12-month traffic history on Google Analytics, you want it to show a consistent upward trend. If it’s not consistently upwards, you want it to be consistently flat.
Obviously, some niches are seasonal. If you’re in a seasonal niche you’ll want to have multiple years of historical traffic. On seasonal websites, you’ll want to be showing year-over-year traffic growth, as it’s more important than month-over-month, if you have let’s say a skiing and snowboarding website and you’re trying to sell your website in June.
Selling a content-driven website while traffic is currently (and or consistently) trending downwards will always result in a lower earnings multiple.
The second piece of this is pageview diversity. For the reasons you want diversified traffic sources, you also want diversified pageviews. If 2 pages are getting 90% of the traffic, you have very risky traffic. Maybe they get the most traffic because they rank #1 in Google for two big keywords. What happens if you drop a few ranking spots?
3. Who creates the website content?
I have a content site with my brother. Our traffic is very consistent, highly diversified, and recurring. Our website performs so well in the SERP’s because the content is so well written and super detailed. And that’s because my brother and I write all of the content ourselves, and we are experts in the subject we are writing.
We wrote 13 blog posts last month. At an average of 4 hours per blog post, that’s 52 hours spent on content creation.
Buyers want websites that do not require a ton of fresh content, or websites that have outsourced content writers. While I would argue 50+ hours of content creation is not required for our website to continue performing well, it would certainly be a negative valuation factor if it was required.
If a buyer is going to need an outsourced content writer, they are going to value your website lower. This is because they will have additional expenses they will need to take on immediately which will lower earnings or profits.
4. Advertising platform
I’ll start this one off with saying: if your website is banned from Google Adsense, you’ll take a valuation hit for it. If you sell advertising directly, you’ll likely take a valuation hit since it is riskier than something like Adsense.
Buyers love Adsense, because it’s a great platform. But also because Adsense sites usually have an immediate 20%+ of upside to them by simply optimizing the ads, or by moving platforms. Ezoic, Mediavine, and AdThrive all boast significantly higher ad RPM’s compared to Adsense.
For example, when I moved my Adsense site to Mediavine, I saw a 5x increase in ad earnings. I think this is an extreme case, but it proves a point. I love buying Adsense websites because I know I can easily move them over to a new advertising platform (if the traffic fits the platform criteria) and drastically increase earnings.
With that being said, I 100% recommend moving your site over to one of these platforms, before you sell it. The extra earnings will drastically increase your websites total value.
5. Opportunity for further monetization
Buyers are willing to pay more money for a website when they know they can increase the earnings starting on day 1. Most buyers know that if a site is only making money from advertising, it is likely under-monetized.
The most popular method is combining affiliate earnings, such as through Amazon Associates, with advertising earnings.
Additionally, check out my post here on how I used my blog to site to build a $100,000+ revenue E-Commerce store.