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Traffic Through Acquisition

Traffic Through Acquisition

November 11, 2004
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" ...luck is what happens when preparation meets opportunity. "

I spend a portion of my advertising budget every month on the acquisition of traffic generating properties. I find that it is often more profitable to purchase websites, domains and other properties that can generate traffic for me month in and month out. Dividing your budget and utilizing these techniques both maximizes the traffic you have today as well as the traffic you will have tomorrow. The catch is that this method takes more time and significantly more skill.

Finding Opportunities
Many wise men have said that luck is what happens when preparation meets opportunity. You can be prepared to capitalize on deals but not do many of them if you aren't out there looking.

I utilize a few techniques to ensure that I run across as many deals as possible. First, I let everyone know that I'm always buying. My signature on the message boards reads "I buy domains, free sites, pay sites, anything. I also invest in smart people with great ideas."

This, of course, gets people coming to me with deals. I am also always asking people if they would sell their assets. I've done everything I can to get the word out that I'm a buyer. Lastly, I incorporate a bit of hunting. This requires always keeping an eye on various auction websites as well as actually searching for stuff to buy that fits a specific traffic need I may have. If I want more teen traffic I search out the owners of the best teen sites and domains and I approach them.

Evaluating Properties
Accurately evaluating and appraising an asset is simply the most complicated step in this whole process and would take me much more space than XBiz World has given me to explain all the methods which can be used. The good news is that there are a ton of deals out there so my suggestion is that you keep your cards close to your chest and your wallet in your pocket unless you feel extremely confident in the transaction.

Each property that you evaluate will have its own expense and revenue structure so there is no system that always works all the time when appraising assets. Let's assume for a minute that you come across an asset that is closely related to your current business model. Since you know your business, you can determine the positive cash flow that you can generate every month after buying the property. You then only need to judge the rate of return that you are looking for. In other words, a domain name that could generate $10,000 a year worth of traffic will be worth $5,000 to some people but $100,000 to others. You need to determine your own threshold and required rate of return. Personally, I try to get my money back the first year I own the asset when I am using my advertising budget, but I'm willing to pay more if it is strictly an investment.

Cutting Win-Win Deals
The art of the deal comes down to this key factor. Your ability to close the deal and do it in a way where you and the other party are satisfied will determine your success. Your goal should never be to cut a deal but always be to be a dealmaker. In one way or another I'm always cutting deals with someone. It's what I do. Cutting win-win deals means people will come back to you again and again.

Often a deal will come down to finance or cash. I've been known to make counteroffers of more than someone was originally asking. The conversation goes something like this:

Me: How much do you want for it?
Them: $20,000 (U.S.)
Me: I'll give you $30,000
Pause…
More pausing…
Them: What?
Me: That's right. $30,000.
But I want to pay it off over three years so the cash flow generated from the asset can pay for a large portion of the acquisition price, which helps me. You can get more than you wanted and regular cash flow. Sir, I'll give you a binding contract and do whatever else I can do to make you feel comfortable.
Them: That's a very interesting proposition.

The lesson here is that most individuals and companies won't part with their valuable assets if they are uncomfortable. It's the last transaction they'll do with that asset and they want to make sure they do it right. Your challenge is always to make them feel comfortable and put yourself in a winning position at the same time. Failure to do so puts the deal at risk every time.

Over the years, I've learned quite a few things that can put your recent acquisition at risk. The first one that comes to my mind is changing the brand. If you buy a TGP and immediately change the logo and features you will lose bookmarkers every time. It is generally not a good idea to immediately relaunch the site unless there was really no sustained traffic there in the first place. I suggest owning it for a few months and managing it the way it was at the time of purchase, allowing yourself time to get the feel of things before doing any major adjustments.

Keep Eye On Bottom Line
Buying a site and immediately recruiting more staff and/or beefing up the hosting for the product can put you straight into the red. Before spending money on the big things like advertising, hosting, staff and content, make sure a couple of months have passed so that you have a real idea of what the revenue is. Otherwise, you might just find out that the seller was a bit off base on his projections and get yourself in trouble.

Buy sites, domains and anything else that you can get your hands on that produces traffic with part of your advertising budget and you will increase your in-house traffic exponentially over time. Search out and find the opportunities, accurately appraise each one of them, attempt to cut a win-win deal and manage carefully your new acquisition and you'll do just fine. Good luck and happy shopping.

Rick Latona works with Dollars.com, CJ Bucks, Consumption Junction and CJ Traffic.


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