If you are looking to acquire a profitable content-based website, you will need to perform extensive due diligence. There are many moving pieces to a website that can make or break a deal. In this guest article, Mushfiq Sarker shares his experience in content website due diligence and the 3 major red flags to watch out for when analyzing deal flow.
TABLE OF CONTENTS
What are Content Websites?
Content websites are simply websites that aren’t built around tools, graphs, or videos, but around information and content. Content-based websites make up the majority of the niche site market.
These websites are built on a platform, usually WordPress, and consist of large numbers of articles meant to rank in Google to get organic traffic. Backlinks are built to improve rankings and make a content website more profitable.
Content websites not only provide major monthly cash flow, but the average sales price based on monthly earnings has skyrocketed over the past several years.
Why is Due Diligence Critical?
Buying a successful content website is a great way to invest, but there are plenty of scammers and grifters out there. I’m always looking for red flags when a deal on a content website comes up.
Due diligence is critical to prevent a five or six-figure buying mistake. Even the smallest of exaggerations or number changes on a site’s earnings could change the value of the asset by tens of thousands of dollars.
If the earnings numbers are fake, then I’ve just spent thousands on a worthless asset. There isn’t any realistic recourse, either.
Due diligence not only saves a buyer from these mistakes but also gives me confidence whenever I’m about to make a sale. That confidence and lack of stress allow for negotiating a better deal and hitting the ground running once the site transfer is done.
3 Due Diligence Red Flags for Content Websites
While double-checking every detail is important, three red flags, in particular, that stand out when I’m doing due diligence.
1. Duplicated Content
Duplicate content, or content that is repeated on the same site or from others, is a huge red flag. Not only is this bad for SEO and staying in Google’s good graces, but it connects to another concern: laziness.
If the site owner was willing to cut corners here, where else did he/she cut corners in a way that could get the website penalized by Google down the line? If they outsourced content creation and didn’t check to make sure the content was unique, how do I know it’s not plagiarized?
Duplicate content, by definition, can’t offer anything original or better compared to the competition where that content came from. This means duplicate content is almost always a deal killer.
How to catch duplicated content
- Use a plagiarism checking tool like Copyscape: you can plug in specific URLs from the site you want to buy and see if the tool finds any other sites with the same content
- Plug snippets of text into Google to see what shows up
Note: if the tools show duplicated content, make sure to check if the content was first published on the site you want to buy. You can do this by checking the published date. What matters is where the content first showed up; not later. If a site publishers quality content, it’s bound to get copied. You want to make sure the seller published the content first.
2. Toxic Backlink Profile
Backlinks are an important part of creating site authority and ranking in Google. Link building schemes are also heavily targeted by Google. I would never consider buying a website without seeing the backlink profile.
Every website attracts random, weird, and junk links. What I’m looking for are obvious red flags that something is wrong. Signs like:
- Links from gambling or adult websites
- Loads of international links from other countries, especially those known for active hacker communities
- An unnaturally high percentage of “do-follow” backlinks
- An unnaturally high percentage of exact keyword anchor backlinks
- Links from known PBNs, link farms, or sites that look like they belong to those categories
All of these are seriously bad news in and of themselves. When I see a link profile that combines many of them, that’s a toxic link profile I don’t want anything to do with.
Skipping this step in due diligence leads to most stories we hear about someone buying a $10K/month site that was slapped completely by Google a month after sale and never recovered.
Don’t mess with a toxic backlink profile. It’s not fixable.
How to review backlinks
- Use third-party backlink tools, e.g., AHREFs or SEMRush: These tools collect backlink data for website. You can get a generally good idea of the link profile; but remember they do not catch all backlinks.
- Use Google Search Console: This is Google’s own tool and it is free. You can download a backlink report and analyze them to see if any red flags.
3. Downward Traffic Trend
This is different from an expected seasonal dip.
A website on surfing is going to see big traffic drops in winter just like a niche site on skiing will see a drop in summer. But long extended downward trends in traffic are bad news.
A website may have received a Google penalty and lost rankings. The niche might have been a short-term fad, or a long-term hobby being replaced by a new one (example: look at the decline of paintball sports the last ten years as airsoft took their place). Maybe the site kept losing rankings to a better competitor.
Whatever the one or combination of reasons that create this downward traffic, it’s a major red flag. Declining traffic means declining profits. Sometimes this can be fixed, but sometimes it’s not worth the effort. Or it should heavily affect the agreed-upon sales price to make it a good deal.
How to catch traffic trends:
- View Google Analytics: this will showcase the overall traffic trends for the website in question. You can view different time horizons to see traffic quantity and trends.
- View third-party tools, e.g., AHREFs: tools provide a rough estimate of traffic trends which you can use to obtain an idea of how the website is performing
3 Methods to Perform Due Diligence
Doing quality due diligence can be daunting. Most investors fear they may miss out on some read flags leaving them with a dud deal. The good news is that there are several good options when it comes to due diligence.
1. Outsource to DueDilio Experts
Getting due diligence right is crucial. Anyone feeling like they’re in over their head or only have income for one investment, going with professionals is a great option. DueDilio connects due diligence experts that specialize in the type of site sale that needs review.
This is especially handy if specialty knowledge or skills are needed to accurately look for any potential red flags that might be software, business, or niche-specific.
Going with a DueDilio expert is a great way to make sure the job is done right so you know whether to buy in confidence or walk away and look for a better deal.
2. Practice on Live Deals
When honing your skills, nothing beats real-world experience. Learning how to confirm traffic numbers, check analytics, and estimate profit numbers are all important skills. Especially if you’re handling the majority of your own due diligence in the future.
That being said, expect to make some mistakes early on. Mistakes in due diligence tend to be costly, so be aware that’s part of the process.
To practice, review deals on all of the brokers and marketplaces where content sites are sold, and then perform an emotion-free data-based analysis of the deal. Practicing now will save on mistakes later.
3. Use a Due Diligence Framework and DIY It
If you want to DIY due diligence for a content website, make sure to check out this due diligence checklist from The Website Flip.
A proper framework can help you keep organized, collect the right data to catch red flags, and ensure your emotions are not making the decision.