10 Due Diligence Tips for Content Website Businesses

When it comes to buying or acquiring a content website business no one should be surprised by the idea that due diligence is one of the most important steps of the process. When buying, some steps might not be as intuitive to a beginner as to a seasoned pro.

A good in-depth due diligence process should not only cover the basics but also be tailored towards the type of online business being assessed.

In this article, I cover 10 critical tips you should utilize when acquiring a content site.

Let’s get into it!

Why Due Diligence Is Crucial…

Buying a website isn’t cheap. Considering the average market pricing for a content website business is 30 to 40 times average monthly earnings, that’s a lot to invest only to find out you’ve been duped.

While there are a lot of honest website owners, there are many others who are not and might fudge the numbers on traffic, earnings, and other important information.

When the right due diligence system is in place, a buyer can be much more confident in their decision to buy and is far less likely to get ripped off.

Here are ten important tips for a good due diligence process.

Get the Traffic Numbers

Getting the traffic numbers to the site and confirming them is crucial. While screenshots are a good first step, you should be given access to the Analytics of a site. This is standard practice for buying a content site and should not cause any red flags.

Setting up an account in Analytics that is view-only isn’t difficult, and will allow you to verify all the information on traffic that is being provided.

Don’t just look at pure numbers. While those are important, you also want to study trends and traffic sources.

Look at Trends (Both Short and Long Term)

The short-term trends come from looking at traffic over the past year. Use Google Analytics to confirm the traffic numbers provided and look for trends, changes, or any irregularities that don’t fit in with the obvious patterns.

Trend information to look for:

● Is the traffic trending upwards or downwards?

● How steep is the trend - is it mild or sharp?

● Is there any history of massive traffic drops indicating a possible Google penalty?

When it comes to finding long-term trends, use Google Trends to look at the niche. Sometimes a site might look okay, but the larger industry is actually in major decline.

An example from the outdoor niche would be paintball. From 2010 to 2020 the traffic looking for paintball guns, paintball gear, and other related keywords has plummeted.

Is there still traffic and money to be made? Sure, but there’s no denying it’s being replaced by airsoft and other outdoor activities. The ceiling is much lower than it was ten years ago.

Knowing the health of the overall niche is important to avoid a mistake in buying a site with more limited upside than its traffic numbers might indicate.

Where Does the Traffic Come From?

Organic traffic is best. Social media traffic is okay but generally considered lower value. If a lot of traffic is coming from paid advertising, email, or direct visits, it is important to dig into that.

Are you getting the email list? Why was paid advertising used?

If you notice a sharp drop in organic traffic recently and paid traffic jumps at the same time, that could be a bad sign the seller is trying to hide a recent Google penalty and dump the site while they can.

Compare Reported Income to Niche RPM Average

Revenue determines the selling price, so it’s important to confirm the numbers. This is obvious, but there are other things to look at. Especially in comparison with the traffic numbers.

The average RPM for a niche is information that is easy to find online. Look at the average RPM for display ads, affiliate earnings, and overall RPM for the niche.

If the numbers being reported as revenue are abnormally high that’s not necessarily a red flag if the site owner knows how to optimize monetization, but it’s important to look closely to see if anything is strange and why.

Monthly Revenue & Costs

A detailed look at the revenues and costs is important. Gross profit versus net profit, consistent expenses, and other factors that affect what the revenue numbers are.

A site will have expenses, but some niches require a lot more work than others to bring the revenue numbers up. With content websites, most shouldn’t have that much in the way of expenses once the site is properly set up and running.

What costs will need to remain? Which can be fixed with better tools? Are there more things that need to be taken care of that currently aren’t?

These are important questions to follow up on for a full picture through due diligence.

Ask for a P&L

Ask the seller to provide a P&L and fill in one you will provide. This is the easiest way to get the data you need to validate the business plus make an offer.

Here is what a simple P&L looks like:

Look at Monetization Sources

Is the content site mostly affiliate in nature? Mostly display ads? Do they balance both very well?

Even beyond the broad strokes take a look at what providers they use. If they’re only using Google AdSense for ads, then switching to a better ad provider could drastically improve revenues.

If they only use Amazon for affiliate links, that means there’s space for better deals. Depending on the niche there might be other obvious monetization methods that are or aren’t being taken advantage of.

Due diligence should not only confirm the revenue numbers but it should also give you an in-depth understanding of how the site made those revenues.

Look at the Domain History

The history of the website and the domain name are important when doing due diligence on a content website. How old is the website, and how long has it been in the hands of the current owner?

You also want to check out the domain history. Is this a repurposed domain name? Was it ever used for a thin or spammy website that could explain slower than expected growth?

Understanding a domain’s history is important. Having great backlinks is a good sign, but the age of those backlinks, how long the domain name didn’t have a site (if this applies) and the long history of the domain matters.

Wayback Machine

The Wayback Machine is a free online tool that can be very useful for this purpose. Many investors have been surprised at a domain they thought only had history from the last 5 years or so having 2 or 3 previous iterations even further back.

Google looks at the full domain history. A domain that has had clean sites on it for 20 years looks very different versus a domain that had questionable content 10 years ago.

Don’t skip this step - you might be surprised at what you discover!

Audit the Backlink Profile

Backlinks are an important part of SEO. Good backlinks make a site very attractive, and bad ones can incur the wrath of Google.

A thorough audit of the backlink profile of any content website should be a part of any serious due diligence.

Look for spam links, PBN links, overuse of keyword anchor text, if there were bursts of links acquired at once. You want to know all about the backlink profile of the site.

Backlink Questions:

● Are there any signs of obvious link schemes, link building, or PBN use?

● If there was an explosion of links, can it be tied to one piece of content?

● What type of link building did the website owner engage in?

Are There Easy Revenue Wins?

Buying on projected upside isn’t a smart move, but looking for easy revenue wins that could be enacted quickly is an often underlooked part of due diligence.

This can tell you how quickly an increase in revenues could be expected, and might make some deals more attractive on a deep dive than they were at first glance.

Actionable Takeaways

Taking these tips and adding them to your due diligence process, or even build a framework for due diligence around these tips, will supply what is needed for a solid in-depth look at any potential content website business.

● Look at overall niche traffic trends in addition to site traffic trends

● Examine the details of how a site makes revenue

● Dig deep beyond the surface information

● Use free and paid tools to get all the detailed information needed

● Don’t ignore red flags

Follow these tips and you will have many successful acquisitions ahead!

By: Mushfiq S

Bio: Mushfiq is a prolific investor that buys, grows, and sells online businesses, specializing in content websites. He has done 180 website flips to date and several have resulted in 6-figure exits. He runs a free newsletter, The Website Flip, where he discusses growth case studies, guides, and shares sites for sale that anyone can purchase.\

Opinions expressed here by contributors are their own.

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