Investing in Small Websites: 2012 to 2019

It’s been about 4 years since we last wrote about website valuations, continuing the work of a project we started 8 years ago. One of our readers recently commented that valuations have risen. He’s absolutely correct – and here’s why….

The Market for Websites – 2019 vs. 2012

Digital investing has come a long way as an asset class over the past decade. When I first started looking at this business, it was effectively an “operators only” market, especially for small websites. You had to be close to the asset.

Read moreInvesting in Small Websites: 2012 to 2019

Goal Setting: The Truth About Change

Every executive I’ve ever met seems to love change programs. They’re excellent fodder for any update you need to send up the line. And in some cases, they might even generate actual results…

That being said, organizations appear to systematically misjudge the time and effort required to deliver these beasts. Various statistics from leading consulting firms point to a high failure rate for corporate strategic initiatives. Perhaps some of these might have been salvageable with different assumptions.

Read moreGoal Setting: The Truth About Change

Getting Run Over By a “Paid For” Truck

I stared at the email and fumed. What do you mean we lost the business?

This wasn’t driven by pride or ego. We really HAD provided them our best price, quoting a pricing level where we should have been assured of victory. This proposal was offered at break-even pricing to protect other business in the account. On a generic spec, commodity grade product. Where we had the lowest cost in the wholesale industry.

And we had just… been owned. Not merely losing the business, but getting buried.

Read moreGetting Run Over By a “Paid For” Truck

Strategic Flaws of Statistical Price Targets

These days, everyone in the analytics space has a pricing product to talk about. Toss enough transaction data points at the problem, you’re going to get a few insights that may help you earn higher margins. Even better, moving the pricing process to a modern software tool often improves your control over pricing errors and sales rep concessions.

Can this work? Absolutely. For an organization with weak pricing practices, the first wave of pricing optimization often yields brilliant results.  For a typical manufacturer or wholesale distributor, this can raise your net profit margin by one to three percentage points. Given the low margins in many of these industries, this is a meaningful improvement in the overall profitability (and thus, valuation) of the business.

But you need to have a careful plan for Act II. There are limits to how far you want to ride this horse.

Read moreStrategic Flaws of Statistical Price Targets

Investing In Existing Websites: Growth and Failure Rates Three Years After The Auction

Several years ago, we completed a website revenue study focusing on small websites. The goal of this study was to understand how much a typical site should make. We accomplished this by looking at 100 websites listed for public auction at a major site. We recently ran an update on this study to understand how the sites were doing today.

This update measured two things:

  • What % of the sites were still online and indexed by Google?
  • Has the site gotten better or worse since the sale (using competitor analysis tools)?

Of our original 100 sites, 93 were in a position to be effectively tracked using 3rd party competitive research tools such as SEMrush. The remaining sites got a hall pass; these had been executed as confidential sales (no site name), where we vetted the site anonymously and were unable to find them for a follow-up. Since a basic due diligence review was run on every site included in the study, we are comfortable that each of the sites was operating as a legitimate business at the time of the sale – although many were “window dressing” from a SEO and traffic generation perspective to boost their statistics.

Read moreInvesting In Existing Websites: Growth and Failure Rates Three Years After The Auction

Accelerating Analytics: Decrease The Cost of Asking Useful Questions

After twenty years in the business, I am giving up on the idea of asking brilliant questions. They don’t exist. Ironically, most of the questions which have delivered serious money in the past tended to look like relatively dumb ones…

The first set of significant wins I had in my analytics career was in direct marketing, where I moved the campaign analysis process for a $5MM/year program in-house. From a technical perspective, this was pretty straightforward: write a SAS program to merge our mailing list with our customer file then aggregate response and sales data. Since a common key existed on both files (finders file number), it was a simple matter to join the files and summarize the data into an Excel Pivot table. Intern level stuff.

Read moreAccelerating Analytics: Decrease The Cost of Asking Useful Questions

Linkedin Endorsements: How Might They Affect Linkedin’s Search Algorithm?

Linkedin rolled out their one-click endorsement feature this past month. As I’ve traded clicks with friends and colleagues, I’ve been trying to figure out what their real goal is. On the surface, this feature feels redundant with their existing “recommendation” feature. Given their aggressive efforts to promote this new feature, the data they are gathering is clearly important to the development of the algorithms behind their services – but how?

Linkedin has been fairly quiet about the inner workings of their search engine. This is likely to prevent people from manipulating the results, since there is significant value in being on the first page of a Linkedin search for a lucrative professional skill. They share some basic pointers about how to “be visible” on their help page. Key points from their page:

  • There is no single rank for Linkedin Search – results are unique to each user/query
  • The profile keywords of both parties (searcher, results) play a significant role
  • Rankings are adjusted based on how prior searchers have reacted to your profile

While the above metrics are fine for identifying which candidates are relevant to a search, they don’t rate candidate quality: who actually knows their stuff? What’s missing here is a broader assessment of “page trust” (graph model analysis concept) that candidates possess the skills that they reference on a profile. For example, Google’s search algorithm incorporates an evaluation of the credibility of a site using link patterns, brand signals, and social activity. With these new features, it looks like Linkedin may be trying to adapt Google’s Pagerank algorithm (or something similar) to ranking candidates for specific skillsets.

Read moreLinkedin Endorsements: How Might They Affect Linkedin’s Search Algorithm?

Escaping The Walled Garden of Enterprise Analytics: Using R and Python For Data Analysis

In which an experienced analytics guy advises the younger generation to leave the walled garden of enterprise analytics tools and learn how to write code using a real programming language. Specifically advocating the use of R and Python for data analysis and related programming. But hey, I’m flexible on that point…

The use of COBOL cripples the mind; its teaching should, therefore, be regarded as a criminal offense.

– Dijkstra

I was taught a long time ago in some Management 101 course to sandwich constructive criticism between two compliments. So I’ll open with this statement:

SAS and the other BI vendors have done a nice job of bringing statistical computing techniques within the reach of the typical college graduate.

Now pull up a chair and grab yourself some popcorn, since I’m going to bite the hand that fed me for the first half of my career. I spent the first seven years of my career in roles involving significant usage of SAS and a variety of drag & drop query tools. The COBOL of the analytics world.

Read moreEscaping The Walled Garden of Enterprise Analytics: Using R and Python For Data Analysis

The Online Marketing Sanity Test: Is Your Website A Waste of Money?

‘Cause only one thing counts in this world: get them to sign on the line which is dotted.

– Glengarry Glen Ross

Here’s one simple question that will identify about 85% of the completely worthless website and content development efforts out there:

Does Google show your site to people who don’t already know your name?

Read moreThe Online Marketing Sanity Test: Is Your Website A Waste of Money?

Website Revenue Models: Real Revenue Statistics For Small Websites

Driven by a passionate desire to “scratch our own itch”, we released the first draft of a little project we’ve been working on this weekend. As our regular readers are aware, we built our first public website earlier this year. We started running ads earlier this summer (just to pay the server bills) and wanted some perspective on “what good looks like”. This is where things get furry: there aren’t any reliable and comprehensive public sources on revenue benchmarks for a small website. So we decided to build our own data set and create some benchmarks around how much a small website could earn. Here you go…

As you can see below, profit-per-visitor numbers vary widely. More after the jump…

Read moreWebsite Revenue Models: Real Revenue Statistics For Small Websites