Flippa yields 88% return in 2011
  • A great post on the Flippa blog that reviewed the 2011 market.

    State of the Website Economy

    A couple of interesting things that I took from this were:

    [*]Sites in the IM niche typically sell for 5.4x monthly earnings.[/*:m]
    [*]Comparatively, sites in sports niche typically sell for 23.2x monthly earnings.[/*:m]
    [*]eCommerce sites are typically valued at 6x monthly earnings.[/*:m]
    [*]Advertisings sites are typically valued at 17x monthly earnings.[/*:m][/list:u]

    The article also shows that a $1000 site investment typically yielded $881, compared to a $0.71 return from LinkedIn shares or $44.61 from Google.

    The Flippa writer does hold their hands up and admit that its not really fair to compare the two investments in this manner but it does give you an idea of how much more investing in websites can yield.

    Obviously, it would be interesting to dig into the stats a little further. An eCommerce internet marketing site might be valued at only a few month's revenue, but at the same time could be generating much more for the owner than a sports-niche advertising site, which would obviously be a much more lucrative sale.
    Post edited by Unknown User at 2012-01-03 10:10:02
  • I'm not a big fan of this post. They completely ignored most of what their market sells: turnkey sites with no income or traffic. Also, buying stock in major companies and buying websites is like comparing apples to oranges. In addition, they are basing all their numbers on what sellers are stating. If you've spent any time browsing around Flippa and doing a little due diligence, you know that when a seller states $1000/month, in reality it's probably half or less.

    That said, it's great seeing the numbers broken down like this and how it compares with my portfolio.
  • Personally, I'd like to know if the values were weighted averages or not, its easy for folks to throw an Adsense module into their site and then list the thing on Flippa. This in turn makes for lots of sites that use advertising as a revenue stream and consequently comparing 30,000 advertising sites sold in a year that sold for 11x net monthly profit to 1,000 eCommerce sites sold at 4x monthly profit isn't really fair.

    But again, as you said, how many of the sites used in their stats had verified income?

    There were a lot of comments attacking Flippa for making these comparisons but I think its pretty foolish to buy into them too much anyway. The simple fact is that its nice to see them collated for the sake of argument.
  • I do think the numbers in aggregate reflect the type of buyers on Flippa. In my opinion, people are looking for passive income streams and ad based sites fit that well. Ecommerce sites also generally have a lot of hidden costs like cost of good sold that many sellers don't list. I suspect that's why you're seeing the numbers so much lower. This is a pure guess, but I'd assume if you look at real net profit after accounting for the amount of work that needs to be done to maintain the sites, the multiples would be pretty close across the board.