Websites are digital real estate – instead of physical land and buildings, you own digital assets like domain names, hosting, content, and most importantly attention and traffic.

The barriers to building a simple website have dropped radically thanks to WordPress and other do-it-yourself tools.

However, achieving real success requires ongoing optimization, traffic growth, and adapting to algorithm changes.

Top reasons websites can provide outstanding returns:

Low start-up costs: You can launch a website for less than $100 if you do it yourself. Outsourcing adds costs but it’s still inexpensive versus physical businesses.
Global reach: Anyone around the world can access your site 24/7. No brick-and-mortar constraints.
Passive income potential: Well-optimized sites can earn money while you sleep through advertisements, affiliate links, digital products etc.
Scalability: You can exponentially grow traffic and revenue without linearly growing expenses.
Flexible ownership: You can run websites yourself or have passive ownership stakes.

However, website investing has risks too. You won’t get rich quickly without effort. But approached strategically, websites can yield life-changing returns over time through consistent, focused effort.

13 Reasons to Invest in Websites

With countless options competing for your time and money, why should you invest specifically in websites? Numerous compelling reasons make websites a standout internet business model and asset class worth focusing on.

Low Barriers to Entry

Starting a basic website costs less than $100 annually for hosting, domains, and templates.

Even extensive outsourced development costs far less than funding physical business infrastructure, inventory, licensing, and permissions.

This lowers the risk barrier to start building online assets.

Infinite Global Scale

Websites enjoy unlimited global reach and scale, unconstrained by geography or time.

Anyone across the world can access your site 24/7. You never miss potential business outside operating hours thanks to perpetual availability.

Virtually Unlimited Scalability

Online offerings can scale exponentially since websites have virtually no incremental delivery costs per additional visitor or customer.

Variable revenues minus fixed costs mean vastly higher margin potential over time as audiences scale exponentially compared to physical businesses.

Full Automation Potential

From content publishing to order fulfillment, technology enables automating several website operations passively without needing extensive ongoing human involvement.

This enables income generation around the clock.

Showcase Thought Leadership

Websites demonstrate deep industry expertise and thought leadership by persistently publishing high-value content aligned to niches over months and years.

This drives authority, trust, and customer conversion.

Meet Modern Customer Expectations

Today’s customers expect businesses to have an online presence they can engage with digitally on demand.

Websites deliver on those norms now set by market leaders that users actively patronize.

Parity With Competitors

Websites help keep pace with competitors probably already using their sites to accelerate growth.

Lacking online assets risks falling behind rivals gaining leverage daily. Don’t surrender such advantages.

Owned Media Assets

Building websites means constructing owned spaces channeling audiences rather than renting third-party social media real estate susceptible to algorithm changes.

Stability and control matter long term.

Targeted Audience Magnet

Websites draw incremental new visitors and customers in target demographics you likely couldn’t easily reach or attract otherwise without an online presence.

Expand your total addressable market.

Alternative Asset Class

Websites constitute an alternative digital asset category allowing portfolio diversification beyond traditional securities or physical real estate requiring large upfront capital.

Personal Branding

Websites establish personal expertise and reputation online independently without being tied to any specific employer brand. Build your own personal media channel.

Passive Income Potential

Well-optimized websites can continually earn money while you sleep through advertisements, affiliate links, digital products, and various monetization models. Leverage technology for leverage.

Asset Appreciation

Websites building valuable visitor traffic and audiences tend to increase in worth over time – like any asset gathering renters or inventory appreciating.

This gives websites investability beyond just current year profits.

The above factors make websites such a compelling internet business model and asset class to consider amongst the many modern options now emerging online.

Evaluating Website Investments

You wouldn’t purchase an apartment building without carefully examining fundamentals like financials, location, condition, etc. Likewise, don’t buy websites without thorough evaluation.

Key Criteria to Evaluate

Traffic and Revenue: Examine historical and current site traffic via analytics along with revenue records. Make sure both are consistently growing over at least 6-12 months. Spiky, declining graphs are red flags.
Industry/Niche: Carefully assess the niche and overall industry. Growing, high-demand industries have greater upside. Avoid stagnant, dying ones lacking innovation.
Cost Per Acquisition: Take lifetime revenue divided by total ad spend for a site’s CPA. The lower the better. Under $10 CPA is excellent for monetized sites.
Page Speed: Faster sites outperform slower ones in conversions and rankings. Sub-3 second speeds for mobile and desktop are good goals.
Mobile Optimization: Over 50% of traffic is mobile so sites mustadapt. Examine mobile layouts, load speeds, crashed pages etc.
Backlinks: More referral links to a website improve authority and rankings. But focus on quality over quantity.
Site Architecture: Evaluate site navigation, internal linking structure, metadata, etc. Difficult architecture hampers users and algorithms.
Technical Infrastructure: Review the technologies used like CMS, hosting stack, etc. Outdated or vulnerable software can cripple sites.

Conducting due diligence across these areas will help you make wise website investments and avoid money pits. Patience is key – perfect sites rarely appear overnight.

Buying an Existing Website

Instead of building a site from the ground up, buying an existing website has some key advantages:

Immediate Cashflow Potential

Profitable sites with consistent revenue histories offer instant income streams you can optimize further. Speculative new sites take ages to monetize.

Site History for Evaluation

Traffic analytics, conversion metrics, and past revenue data allow you to deeply evaluate sites before paying a dime. Limited guesswork involved.

Turnkey Infrastructure

The domain, hosting, site architecture, content, and technical infrastructure are ready for you to take over instead of building from scratch.

Gain Expertise

Operating an existing site lets you better understand its inner workings – traffic sources, conversions, monetization, etc. – so you can replicate success for future projects.

Lower Risk

While the upside of new sites can be astronomically high, existing profitable sites have much lower risks provided you evaluate them properly.

Where To Find Sites To Buy

Marketplaces: Leading website brokers like EmpireFlippers, FEInternational, and WebsiteClosers maintain marketplaces with vetted sites. They handle screening, valuations, and escrow. Commissions vary from 10-25%.
Direct Sellers: Connecting directly with motivated sellers through online forums, social media groups, and networking events allows you to avoid middleman fees. But risks are higher with fewer safeguards.
Auctions: Flippa pioneered the website auction model. Like eBay for digital assets, you can find deals if you filter carefully for quality sellers with positive reviews.

Building a Website from Scratch

Crafting an entirely new website has challenges but also tremendous advantages too:

Complete Control

Instead of inheriting someone else’s problems, you control all aspects of creating your online asset without compromising on crucial factors.

Lower Upfront Costs

Building on open-source platforms like WordPress can cost peanuts initially. Even with outsourcing expenses, costs pale versus buying profitable sites.

Higher Future Valuation

Selling down the road, sites you’ve built organically can often fetch higher valuations because future revenue projections are higher for immature properties with longer runways for growth.

Focus on Scalability

If you take a strategic approach initially, the sites you launch can be designed specifically to facilitate aggressive expansion down the road exactly how you want.

Where To Get Started

Choose Profitable Niches: Select underserved, high-demand niches with money-making potential – stay away from oversaturated ones lacking growth runways.
Research Competitors: Use tools like SEMRush, Ahrefs, and Alexa to analyze sites dominating niches you’re targeting to model what works at scale already.
Get Help If Required: Recruit freelancers to help with design, development, and content via services like UpWork so you don’t have to do everything yourself.
Prioritize Speed: Fast load times, mobile responsiveness, streamlined navigation, and solid internal site search help visitors quickly find information and convert. Site speed is a crucial ranking factor as well for Google.

The hardest part about building new sites is having patience in the early stages. But artificial growth tactics like dodgy backlinking schemes ultimately backfire.

Focus on high-quality content and user experience instead, to build durable, trusting audiences.

Traffic and revenues will compound over time.

Driving Traffic and Monetization

Whether you buy or build sites, website investors must master driving traffic to profit. Some strategies to consider:

Search Engine Optimization (SEO)

Free search engine traffic can transform sites. But achieving high rankings now takes providing genuine value to searchers versus deploying tricks. Tactics include:

Researching and targeting valuable keyword phrases with decent search volume but low competition.
Crafting content meticulously optimized around chosen keywords but still reader-centric.
Generating backlinks from reputable publications to signal authority to algorithms.
Building internal linking structures so visitors easily navigate information architecture.
Fixing technical errors like broken pages, meta tag issues, site speed problems, etc.

Executed properly over 6-12 months, SEO growth fuels extremely scalable income without recurring advertising costs hindering profit margins.

Pay Per Click Advertising (PPC)

PPC ads like Google AdWords quickly drive targeted visitors to new sites lacking organic search presence. But costs add up fast without positive ROI from conversions. Always test extensively before scaling budgets. Ideal for:

Driving awareness rapidly for new sites otherwise invisible initially to searchers.
A better understanding of searcher intent through keyword experiments before investing heavily in content development.
Retargeting visitors who previously engaged with your content and brand for higher conversions.

PPC works best when integrated tightly with organic SEO using shared keywords so paid traffic also benefits organic rankings long term.

Content Marketing

Inbound marketing via quality content that attracts and engages clearly aligned audiences over time has become crucial for sustaining growth. Tactics like:

Building email lists to own audiences instead of third-party platforms. Lead magnets incentivize subscribers.
Publishing content consistently – long-form tutorials, research reports, product reviews, etc target users throughout the buying journey.
Promotions via social media expand awareness beyond search engines to referral traffic. Links amplify content further.

Visitor retention increases dramatically when users consume multiple pages per session. Hence scalable content marketing, not vanity metrics like pageviews, becomes more important over time.

Monetization Models

Website investors sink if they don’t ultimately monetize the audience assets they build over time. Some options include:

Advertising: Google AdSense, display ads via Mediavine, and Amazon affiliates at lower thresholds offer reasonably simple implementations for beginners before advancing.

Freemium Content: Offering some content for free while having some exclusive, premium offerings for paid members and subscribers works extremely well for highly engaged niches.

Digital Products: Leveraging audiences to sell information products aligned with site content – like ebooks, video courses, toolkits etc – converts existing traffic instead of continually hunting new users.

Services: Some bootstrapped sites successfully grow large audiences and then offer specialized, high-end services to a smaller subset of buyers. The leads generated online transition to offline transactions.

Marketplaces: If you build a heavily trafficked site in an area like real estate or recruitment, transactional revenues from listing fees, commissions, etc quickly accumulate.

Physical Products: Once established, sites driving targeted traffic can integrate with e-commerce platforms like Shopify to sell physical products aligned with content.

Affiliate Marketing: Promoting third-party products or services to earn sales commissions and referral fees works well for content and product-based sites, often as a kickstart monetization method.

No silver bullet monetization solution exists across website niches. Testing using analytics informs which approaches your distinctive audience best responds to long term.

Managing and Optimizing Your Website

Profiting over the long run from websites involves ongoing optimization using data plus anticipating market shifts ahead of competitors.

Technical Site Maintenance

However you initially build your site, assume unexpected issues will arise regularly:

Server outages interrupting uptime.
Software vulnerabilities enabling hacks.
New patches breaking site functionality.
Content management system upgrades causing conflicts.

Actively monitoring site performance metrics allows you to quickly respond to technical problems before they spiral. Don’t take a perfectly running site for granted. Technical debt accumulates over time without vigilant management.

Consider managed hosting solutions like WPEngine or Kinsta if you don’t have DevOps skills. They specialize in site reliability and performance specifically for WordPress sites.

Audience Analysis

Visitor analytics inform what is resonating or failing with users. Solutions like Google Analytics and Clicky provide invaluable intelligence:

Visitor demographics – location, age, gender, interests, etc.
Traffic sources by channel so you allocate marketing budgets effectively.
Site search queries revealing research behavior and inform content gaps.
Email and on-site conversion funnel metrics pinpoint where users fall out.
Scroll depth data determining what content keeps audiences engaged.

Continually optimizing the site experience based on observed visitor interactions will fuel stickiness while decreasing reader churn.

Keep Learning

Digital marketing constantly evolves so you can’t remain static either. Stay on top of the latest algorithm updates, new monetization models, shifts within your niche, etc.

Things you master today become obsolete tomorrow without continual learning.

Knowing When to Sell

All websites eventually run their course. The decline can be self-inflicted by the owner failing to adapt or external factors like Google algorithm updates. Regardless of the cause, deciding when to sell is key.

Signs It May Be Time to Sell Your Website:

Consistent traffic and revenue decline over 6+ months impervious to your optimization efforts.
Key search ranking plummets you fail to fix through troubleshooting.
Core website images and content get deindexed regularly by Google with no clear fix.
Major algorithm update negatively impacts the niche with no alternative insight yet into recovery.
Emerging duplicate content from rapidly growing competitors you struggle to outpace.
Buyer warns your site relies heavily on a specific traffic source at risk of disruption

Just like a stagnant business location, selling a once thriving but now declining website to a turnaround specialist before it craters completely maximizes value. Be sober about frankly assessing when sites cross past points of no return.

Timing the sale well ahead of such an irreversible decline makes salvaging some value easier. Even if net profits collected over the years outweigh a site’s eventual sale price, that cumulative income justifies the endeavor.

Websites remain fundamentally speculative assets with finite lifecycles.

Investing in Domains

Beyond buying full-fledged websites, niche domain names themselves also offer speculation opportunities.

Domain Name Investing Strategies

Brandable domains: Short, catchy, easy-to-remember domains that relate well to various potential niches can fetch good resale prices despite lacking existing content or traffic.
Numeric domains: Number-based domains like 1234.com can sell simply for vanity phone number potential even without specific vertical association.
Expired domains: Letting registered domains lapse is common. Quickly snapping up these expired domains preserves their existing history, backlinks, and traffic potential.
Prefix/Suffix domains: Adding unique prefixes like “best” or suffixes like “hq” to generic words that could attract type-in direct traffic works.
Geography/Industry targeted: Domains targeting specific locations like CanadaBikes.com or niche markets like Drones.com attract buyers.

Key Tips

Speculating on multiple cheaper domains allows testing opportunities versus sinking money into overpriced “premium” domains.
Sitting idle, domain values erode over time. Creating basic parked pages and optimizing backlinks preserves more upside.
Set Google Analytics to track direct traffic and landing pages for data informing niche viability for various domains.
List via Flippa auctions regularly to gauge market pricing instead of just guessing at valuations.

Like physical real estate, the most coveted online property gets bid up quickly these days. But opportunities still exist searching for more hidden gem niche domains before wider market recognition.

Valuing a Website

Determining fair value pricing for websites being bought and sold is equal parts art and science. Site valuations blend quantitative and qualitative assessments.

Quantitative Valuation Factors

Revenue Multiple: Annual net profit x standard multiple ranges for the niche – (15-30x being fairly common) or Annual revenues X 3-5x.
Traffic Value: Worth per site visitor based on monetization levels achieved – (Ranges from $1-100+ per lead/email subscriber depending on vertical). For example, when Instagram sold to Facebook, Instagram had 30 million users valued at $30 per user. Facebook acquired Instagram for $1 billion.
Ad Earnings Value: Years of projected annual ad income discounted to today’s dollars.

Qualitative Valuation Factors

Technology: Modern tech stack built on current best practices versus dated or obscure platforms warrant premiums.
Team: Assembled staff running sites merit higher valuations versus reliance only on founders.
IP: Unique intellectual property like software or non-replicable content justifies higher multiples.
Growth Rate: Fast scaling trajectory implies higher future compounding value via extrapolation.

Valuations often remain as much art as science, but combining earnings figures only with metrics like site strength and future scaling possibility provides a sensible balance in assessing sites.

TL;DR

Key takeaways:

Websites provide global reach and passive income potential but still require extensive ongoing optimization work. Quick get-rich schemes are unrealistic.
Buying established sites or building new sites – both work depending on your skills, risk tolerance, and goals. Different models suit different investors.
Search, social, and content drive traffic growth. Balance patient audience building with continual aggressive experimentation.
Analyze visitor behavior and know that all sites have finite lifecycles, irrespective of early wins. Maximize value before the decline.
Domains, apps, and websites offer speculation opportunities. Assess your capabilities before committing extensive capital.
Valuations blend quantitative earnings data and qualitative growth indicators. Fair value assessment remains art meets science.

No formula guarantees returns. But frameworks can guide decisions through uncertainty. Define goals, craft flexible plans, and continually reassess progress to calibrate approach.

Introduction