Affiliate marketing is big business. It’s just one part of the booming economic activity that’s existed for well over a decade online, and which has only accelerated due to the COVID-19 pandemic.
Statista reports that affiliate marketing spending in the U.S. will reach $8.2 billion by 2022. According to TrueList, 81% of major brands have affiliate programs, and Findstack notes that nearly 65% of affiliate marketers across the globe attract traffic simply via blogging.
Where does this leave the individual affiliate website owner? One who may have built up their online presence into a valuable business over time, and now wants to sell their site?
An experienced affiliate marketer can start learning about how to sell their business and begin laying the groundwork. However, most will be best served by working with an experienced business broker who understands how to sell affiliate websites.
The right broker will know how to raise your site’s worth, and will help you sell it for the highest possible amount.
VALUATION METRICS FOR AFFILIATE WEBSITES
According to AM Navigator, only about 10% of all affiliates are responsible for driving 90% of sales and conversions. That means only a few affiliate websites are positioned to fetch a high sales price.
If your website isn’t among those ranks, you can potentially get it there by improving its standing over time, and by holding on to it until you’ve reached a certain level of consistency in affiliate sales.
Some of the contributing factors to your website’s value are:
INDUSTRY AND TYPE OF PRODUCT
Affiliate programs exist in just about every industry, from personal finance and health to enterprise business software and physical products. You might sell physical products as an affiliate, or you may deal with mostly digital products, such as ebooks, monthly memberships, and online courses.
Furthermore, products sold through affiliates come in all price points, from inexpensive to very high-end products and services that sell within the tens of thousands of dollars.
Commissions vary accordingly, with some affiliate site owners only having to sell a few products per month to make a healthy profit, and others having to rely on a job or other business activities to ensure a stable income.
SIZE OF AFFILIATE PROGRAM
Some affiliate programs are small, corresponding to relatively small businesses or solopreneurs who hand-select and forge private agreements with a small number of affiliates.
Other programs, such as Amazon Associates and the eBay Partner Network, are implemented by big brands and employ many thousands of affiliates. Larger programs are often able to share more promotional resources with their affiliates, such as online marketing materials and strategies.
TRAFFIC GENERATION METHODS
Blogging is perhaps the most popular traffic source, however other methods include paid social media advertising, backlinks and search engine optimization (SEO), pay-per-click (PPC) advertising, podcasts, and influencer marketing.
Some methods are more expensive than others and the ROI of the traffic generation methods used can be a large determining factor of how highly an affiliate website is valued.
It’s important to keep in mind that not all traffic is of the same quality. Affiliate websites that regularly attract qualified, high-intent leads are better able to produce more sales.
UNIQUE BRAND IDENTITY
Some affiliate websites are simply small online portals for an email marketing funnel. However, other affiliate website owners build large, unique brands that organically attract customers. They might even have a branded blog that features affiliate sales as just one aspect of their profit model.
Having more than one stream of income besides the affiliate venture can put you in a better selling position than marketers who run simple, unbranded affiliate websites as their sole source of business income.
Email autoresponder campaigns can be a major part of affiliate marketing, as they can nurture leads on a completely automated basis. Your email list is a very important business asset, especially if you’re optimizing it for better conversions over time.
If your affiliate website represents a healthy, growing business, an experienced broker can apply several valuation methods to give you a good sense of what it’s worth.
VALUATION FORMULAS FOR AFFILIATE WEBSITES
Two standard formulas that can be used in the valuation of affiliate sites and other online businesses are EBITDA and SDE.
SDE AS A VALUATION FORMULA
Seller’s Discretionary Earnings (SDE) estimates the value of a business based on what earnings the owner has generated from business activities. Here’s the formula:
(Pre-tax, pre-interest earnings) + (vehicles, travel, other transactions listed as business expenses)
SDE adds back expenses with some degree of personal benefit to the owner. These expenses might include travel, personal salary, and charitable contributions. For small affiliate businesses, SDE can be a useful way to project a future owner’s financial upside.
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)”. This formula is commonly used to determine business valuations. As implied by the name, EBITDA adds back some expenses to the earnings total.
SDE and EBITDA are both calculated with multiples to arrive at potential sales prices. A healthy affiliate business can often sell for as much as 30-40x monthly net profits.
Depending on the size and unique dynamics of your business, a broker may apply one or both valuation formulas to your affiliate website to arrive at a price you can eventually sell it for.
Getting ready to sell involves making sure your business is in good legal and financial shape, and preparing it for transfer to another buyer.
A TIMELINE FOR SELLING YOUR AFFILIATE SITE
It makes sense to push the sale of your affiliate website out a year or two if you can afford to do so. This gives you time to raise your website’s value.
Smaller, less complex affiliate websites can reasonably be sold in less time. However, larger affiliate businesses that provide a full-time personal income for the owner deserve more consideration before selling. Giving it a year’s time before soliciting buyers can help you maximize your selling price.
Assuming you’ll go by a 12-month timeline for selling your affiliate website, here are some key milestones:
SIX TO TWELVE MONTHS BEFORE SELLING
A full 12 months before you plan to sell, you should ramp up certain activities to increase your affiliate profits. That includes building your email list by leveraging paid online advertising and SEO, creating more blog content, and attracting more customers to your website through social media.
It helps if you have a systematic plan for getting this done. Having your standard operating procedures (SOPs) for online marketing written down, and employing competent freelancers to help with content creation and lead generation tasks, are good ways to boost your affiliate profits.
Ultimately, if your activities are leading to more sales, and if you achieve a “Top 10” affiliate status with the brand you’re representing, you’re moving in the right direction. If you’re not there yet, you should retool and readjust.
SIX TO THREE MONTHS BEFORE SELLING
At least 6 months ahead of selling your affiliate website, you should begin to get your financials in order. This includes a profit and loss (P&L) statement, taxes, and other documents about money matters within your business.
You’ll also want to gather all key assets to transfer to the next owner of your affiliate website. Your most valuable asset, besides and even more so than your website itself, might be your email list. Others can include contractor relationships, software licenses you employ, and elements of your online brand such as logos and social media profiles.
Documentation of your standard operating procedures (SOP) is important for many serious buyers. You’ll want to note the exact steps you take to attract traffic, create marketing content, supervise freelancers or virtual assistants, and troubleshoot technical issues.
THREE MONTHS TO THE POINT OF SALE
At this point, you should be finalizing your documentation, making sure you’re as personally removed from the business as possible, and ensuring all business assets related to your affiliate website are prepared to hand off to the next owner.
You should also be actively looking at how you’ll enter the market and what kind of buyer you’re most willing to engage with — whether they’re an individual or a larger business, for example. Knowing this ahead of time will help you prepare for negotiations and understand how much you’ll be involved post-sale.
WHERE TO SELL YOUR AFFILIATE WEBSITE ONLINE
There are several popular online marketplaces for selling online businesses, including affiliate websites.
Flippa is one of the most popular. You can list website stats such as SEO keyword rankings, monthly profit, and traffic sources to attract potential buyers.
BizBuySell is a platform where both traditional and online businesses are sold. Here, your affiliate website will be in the mix with established brick-and-mortar companies, making this outlet better suited to high-income affiliate ventures.
Finally, private groups on Facebook have become popular places to buy and sell websites. The advantage is that you can get a feel for what attracts buyers. The disadvantage is that sellers are often vulnerable to scammers or unscrupulous investors who will make a lowball offer.
It’s usually best to work with a broker who is experienced with selling affiliate websites, and can introduce you to serious buyers.
HOW A BROKER CAN HELP
The right business broker is an experienced professional who will offer a credible valuation of your business, help you do your due diligence as a seller, and connect you with serious, qualified buyers who are prepared to pay a fair price. Raincatcher is here to help.
Raincatcher’s brokers are familiar with all the intricacies and pitfalls of selling web-based businesses, including affiliate ventures. You can count on a Raincatcher broker to provide a fair assessment of your site’s value, help you increase it over time, and connect you with buyers who will be excited to acquire your business at a high price.