Buying A Website: Be Cautious of Pump & Dump Affiliate Websites (even brokered listings)

Buying A Website: Be Cautious of Pump & Dump Affiliate Websites (even brokered listings)

By: Corey Philip
Updated: September 30, 2020

You’re shopping for an income producing website to purchase. You find one producing solid and growing income and looks sharp. It’s listed by a broker, not some crap on Flippa, so it has to be good — that’s what you think.

I’ve been in the market for a website recently and have contacted a few brokers regarding listings. I’ve primarily stuck to brokers as I believed their sites would be higher quality then what I find on Flippa and other websites. Yet, all have been abysmal… what I call ‘pump and dump’ affiliate sites.

Typically these sites are created by an experienced ‘niche site’ builder, set up with an awesome design and conversion elements, filled up with excellent generic content, blasted with backlinks, and have started making money. In some cases great money.

I’ve ran across many of these sites, broker represented, in my search over the last few weeks.

I received an email this morning from a broker with the subject line “Consumer Electronics Review Resource – $42.6K Gross/Mo”. I was naturally intrigued.

I clicked through and looked at the site.

The email contained the full data on the site, without requiring a non-disclosure, so I guess I could technically share all the details, but to avoid any issues, I am going to withhold the brokers name and the site.

It looked sharp and well put together, like many of the sites I describe.

From buttons, to tables all the conversion elements of a pro were in place. And you have to be a pro to drive that much revenue.

While the design and elements are great, the content on the website is nothing special.

Just long form reviews of rehashed reviews and other content online, yes it is well written, but there are thousands of other writers that could do the same quality easily.

Truly great content, which in the review space is done by taking delivery of the product, and testing it, can lead to rapid growth, high valuations, and long term sustainability, but that is not what I see on this one.

A quick look at the revenue & pricing.

While the email advertisement claimed 42k + in revenue /m, that was arguable correct. Only 1 month had it generated that revenue — the last month. Average 12m revenue was only $17,600.

The asking price on the site $1,280,000. A whopping 72x on the average 12m.

From there I took a look at age & search traffic.

My go to tool for this SEM rush. That will show you how long a site has been up, and if it has been subject to any penalties.

I look for a site that has stood the test of time… in website terms, 3 years, and that sounds humorous next to the words ‘test of time’ ????. Also a steady traffic pattern.

This site has been around for about one year.

A site that has accelerated growth this quickly is rare, and likely not sustainable. I have countless examples of sites I have looked at like this that go on to drop in traffic.

Here is the SEM Rush details from a different website that was for sale a year ago.

See what happened there? Major drop in traffic. Could you imagine paying a multiple for the site based on current earnings, then less then a year later, your revenue drops 75%?

Yes, I understand there is risk in any business, but this risk is substantially higher in line businesses dependent on Google.

Now back to the original website that is for sale…

To determine whether or not the website is sustainable you need to look at the backlinks.

In a 100% organic and sustainable website, you would see many links from a REAL WEBSITES. You don’t need to be a genius or have fancy tools to identify real websites. SImple look for websites that real people use.

If you see all their links are coming from weird pages that real people would never read, you’ve ran across a pumped up website.

Here’s what the backlink profile of the website being pitched to me by a broker looks like:

Spanish and Russian links… the pages are funky… the links are in the ‘comments’. 100% not natural.

This is a textbook pump & dump website for sale.

This website is what I call a ‘pump & dump affiliate website’. The developer of this site created it quickly, got it making money, and is now trying to sell it before a Google Algorithm updates and traffic drops radically… along with revenue

I am surprised anyone buys these websites, but valuations seemingly increase every year on them… so people must be buying them.

Quite frankly, I am surprised brokers even take these listings, yet their listings are rife with these junk websites!

I hope by reading this you avoid some ‘soon to bust websites’ if you are considering buying a website, or investing in website properties.

Corey Philip
September 30, 2020
Corey Philip

Founder of a home service / specialty trade contracting company (think patio's and deck) with a focus on customer experience. Quantitative investor. Data driven marketer. Runner.