03.28.08
How Much Is Your Website Worth?
Do you know what your website is worth? The short answer: Multiply the number of unique monthly visitors to your website by $38. That is, if you average 1000 unique monthly visitors, your website is worth $38,000; if you average 100,000 unique monthly visitors, your website is worth $3.8 million.
Consider some of the following purchases in the last year:
Dow Jones purchases MarketWatch for $519 million
America Online purchases Weblogs Inc for $25 million
News Corp. purchases MySpace for $580 million
InterActiveCorp purchases Ask Jeeves for $1.9 billion
In an article entitled “What Works,” the December issue of Business 2.0 magazine looks at recent sales of websites and analyzes the websites’ traffic to reach a value for each monthly visitor. The figure they came up with is $38 per unique monthly visitor.
So what does this mean? For high traffic websites, bubble-era buyouts are back. If you own a high traffic website you can, potentially, sell it and strike it rich. Now, the above example of a website that generates 1000 monthly visitors is just that, an example; nobody’s interested in 1000 visitors. But, if you have 100,000 monthly visitors and up you may be on to something. High traffic is worth money in advertising revenue. Internet advertising spending will reach $12 billion by the end of this year.
The article states that venture capitalists look at three metrics when valuing an internet company:
1. The cost of enrolling new users to the website
2. The stickiness of the website (the frequency of repeat visits)
3. Add-on services (like premium accounts)
I would go further to say that websites that target a niche audience that isn’t already saturated by other websites will be worth more. Take MySpace.com, for example; it targets the 18-35 age bracket. Off the top of my head, I can think of dozens of websites that directly compete for the same advertising dollars… TheFaceBook.com, Friendster.com, ClassMates.com, HotOrNot.com, to name just a few. Yet, MySpace.com sold for $580 million. What if your website has high traffic but also attracts a different demographic, a demographic that advertisers would like to get to but don’t yet have the opportunity to do so? How much is that worth?
Also, I would say that websites that find a way to get users to pay for unique services will also cash in. We’ve all seen websites that offer free accounts but require a fee to upgrade to premium accounts. PhotoBucket.com, a photo sharing site, requires a monthly fee for increased bandwidth. Ryze.com, a business networking site, requires a monthly fee just to be able to email other members on the site. But what if your website charges users a fee for unique information? And, what if your users are more than willing to pay for it? How much is that worth?
So, how much is your website worth? Only time will tell.
Tino Buntic is the creator of TradePals, providing qualified sales leads to business professionals and entrepreneurs across The United States and Canada.
