Making a move into a new affiliate niche is never a decision to take lightly.
I know I don’t.
No matter your level of affiliate SEO experience, achieving success in a profitable niche takes a significant investment of money, expertise, and — that most finite of resources — time.
But two weeks ago, I took the plunge.
I entered a new niche I’ve been eying for over a year — and I’m not looking to get in and out quick.
I’m in it to win it for the long-haul, and you’re invited to join me on the journey.
In this first installment, you’ll learn about my approach to:
- Choosing the niche
- The pros and cons of buying an existing website
- Finding the right site to purchase
- Basic affiliate site valuation and negotiation
I’ve set the bar for success high — I’ve challenged my team to go from $900 monthly revenue to $10k+ as fast as we possibly can.
Introducing Project Cashflow
LeadSpring, my affiliate SEO agency, rarely operates more than a handful of sites at once.
But recently we decided to sell one of our biggest properties…
That should mean a significant one-time cash injection. But the subtraction of this regular, reliable revenue source could negatively impact our cash flow in the future.
My goal is to balance LeadSpring’s affiliate portfolio by building a site in the education niche that generates a minimum of 5-figures a month in revenue with low expenses.
Enter Project Cashflow — my codename for the site we’ll be following in this case study.
- One aspect of SEO is explored in great detail — take link building, site speed optimization or keyword research,
- A study showcasing a big win — think “How I Flipped My Website for a Zillion Dollars.” — after the success has already taken place.
Both angles are valid— you’ll find many examples on this site.
What’s unique about the case study you’re reading now is that I’m starting right from the beginning.
You’re about to find out how I build a niche affiliate marketing site — Project Cashflow — from day one.
I’ll share the hits and misses with you along the way, as well as what to do when you get stuck…
Choosing the Niche
Depending on what affiliate program(s) you sign up for (please tell me it’s not Amazon), you’ll typically be assigned an affiliate manager.
Cherish them, buy them dinner, send them flowers.
OK — don’t go that far.
But it’s well worth your while to cultivate the relationship.
A helpful affiliate manager can smooth out problems and offer you higher commissions. And they might even point you in the direction of a lucrative niche you’d never before considered.
Long story short, that’s what happened with Project Cashflow.
One of my managers kept raving about high-ticket commissions in the education space.
Despite not having a site relevant to the niche, I was intrigued and did some research…
Turns out, my affiliate manager tipped me off on an “Oh Shit” micro-niche with low competition and lucrative commissions.
Just like it sounds, a micro-niche targets a small specific segment of a broader market.
For example, “pets” is a massive affiliate niche — dog collars is a small, specific micro-niche relevant to the pets niche as a whole.
The opportunity to enter an “Oh Shit” micro-niche doesn’t surface every day…
That’s when I decided to buy a site.
Pros and Cons of Buying an Existing Website
Once you’re ready to pull the trigger on entering a new niche, you’ll need to decide whether to start a site from scratch or buy an existing site that already operates in the target market.
The right answer largely depends on where you are in your affiliate journey.
Building a site from the ground up is an invaluable learning experience that requires much less of an upfront cash investment than purchasing an existing site…
If you’re new to affiliate marketing, I highly recommend starting from scratch. I cover the whole process in detail in The Affiliate Lab.
But starting from square one costs time…
I’m at the point in my SEO career where I can’t afford to have a site sit in the sandbox.
My time is expensive, as is the time of all the other people involved in Project Cashflow.
Given the circumstances, purchasing an existing site was a no-brainer.
But don’t worry, even if purchasing an existing site isn’t a viable option for you at this point, you’ll still pick up plenty of nuggets from this case study along the way.
Finding the Right Site to Purchase
In theory, purchasing an existing site is a shortcut to success. But it’s a shortcut that doesn’t come easy or cheap.
Finding the right niche is half the battle…
Even once you’ve zeroed in on your target niche, you still need to purchase the right website to maximize your odds of success.
So, where do you start?
But if you’ve already selected your target micro-niche, you could grow old and die waiting for a relevant site to pop up on a marketplace.
Micro-niches are highly specific. If you wanted to get into the pet niche, for example, you could probably find a site on the market within a month.
But what if you wanted to narrow your niche down specifically to dog collars?
Finding a site in that micro-niche could take forever…
To zero-in on the lucrative affiliate offers my affiliate manager was touting, I needed to find a site operating in a specific micro-niche related to education.
Here’s the strategy I used to find the micro-niche site for Project Cashflow. You can apply this technique to virtually any niche.
Website Acquisition Outreach
1. Find Sites on Pages 2-4
No fancy SEO tools required here. I simply compiled a list of the websites ranking on Google SERP pages 2, 3, and 4 for the main money keywords I’m after…
Anyone ranking on page 5 or lower doesn’t have much going on — at least not much that Google likes.
Pages 2 to 4 are in the sweet spot.
Given how narrow the micro-niche is, I can safely assume that these sites aren’t making a whole lot of money.
But from Google’s perspective, they’re already doing a lot right to rank as high as they do, but there’s still room for improvement.
With my team’s expertise and experience, acquiring a site ranked on pages 2 to 4 for our target keywords should put us in a position to score some quick wins.
2. Filter Out Irrelevant Websites
We compiled a spreadsheet of websites ranking on pages 2-4 for our four main money keywords — leaving us with a list of about 100 websites.
From there, it was easy to whittle the results down by about two-thirds.
- Sites under 18 months old and therefore likely to still be in Google’s sandbox
- Non-affiliate sites like consultants, e-commerce, and local SEO websites
- Too big or too general — not focused enough on our target micro-niche
Paring the list down from over 100 left us with 30 sites that potentially fit the bill for Project Cashflow.
3. Reach Out With an Offer to Buy
Before spending valuable time digging deeper into the sites ranking on SERPs 2-4 for our target keywords, I had my outreach team use hunter.io to find the site owners’ email addresses.
I then drafted up a quick email follow-up series. The pitch couldn’t have been more to the point. I straight up told the prospects I was interested in purchasing their site for upfront cash.
Here are the exact email templates I used…
Cold Email Pitch
Subject: Interested in buying [URL]…
Matt Diggity here, CEO and Founder of Diggity Marketing and affiliate SEO agency, Leadspring.
I’ll get straight to the point, I’m interested in buying [URL] from you at a generous market price. All cash, upfront.
Are you interested in selling?
If so, just respond to this email, and we can set up a time to talk.
Automated Followup Reply #1
Subject: re: Interested in buying [URL]…
It’s Matt here. I recently emailed you about potentially purchasing [URL]. Did you receive it?
Let me know if you are interested in selling it at a generous market price. All cash, upfront.
Happy to set up a call to talk about it further…
Automated Followup Reply #2
Subject: re: Interested in buying [URL]…
Wondering if you were able to read my previous emails?
Let me know what you think.
In addition to using hunter.io to find the email addresses of the site owners, we also used it for personalized email outreach and automated follow-ups.
Out of the 30 offers I sent out, I received only two favorable responses…
Reaching out to site owners first helped me narrow the field of 30 potential targets to just two…
Owner outreach saved my team from pouring hours into auditing dozens of websites that had no interest in selling in the first place.
4. Evaluate Potential Sellers
Now, I’ve got two potential sellers on the line. It’s time for a deep dive into what’s driving their beneficial rankings.
- Conversion Rate Optimization (CRO)
- Backlink profile
- On-site SEO
Of the two sites potentially interested in selling, one looked promising…
There’s a page on the site that’s ranking for the main target keyword I’m after — and they haven’t even optimized for it.
It’s ranking purely by chance.
If we create content targeting the main keyword, that’s a quick win right there.
Plus, the site has some pretty decent links…
For a site with a Domain Authority of just 22, it had reasonable traffic: ~4k visitors a month according to Ahrefs — primarily going to the money pages.
Now, I’ve got one site in my crosshairs, and the negotiations start.
Basic Affiliate Site Valuation
Valuing an online business is an art unto itself.
Determining the optimal selling price of a website is a significant component of the service offered to both buyers and sellers by brokers like Empire Flippers and FE International.
The bigger the site, the more complicated and crucial the accuracy of the valuation.
It’s unlikely that you’ll be in the affiliate SEO game for long before needing to know roughly how much a site is worth.
Whether you’re looking to flip your website or get a headstart on a new niche by buying an existing site, a basic knowledge of website valuation is an invaluable tool.
Almost without exception, website valuations are based upon a multiple of net income (profit).
You determine the website’s monthly profit and then multiply that amount by a fixed number of months.
Whether you’re a buyer or a seller, the first step to valuation is determining monthly profit.
Net income is the foundation of any accurate valuation — it’s verifiable and concrete.
Depending on the business’s complexity, determining monthly profit can be tricky, but it’s an essential starting point for negotiations.
Large, established sites may have recent numbers readily available because they’re already preparing Profit and Loss (P&L) statements for tax and reporting purposes.
Small, owner-operated affiliate sites typically don’t have P&Ls on tap — this one was no different. The owner had to backtrack and create P&Ls retroactively. This record-keeping oversight didn’t end up affecting the final sale price much, but it did slow the buying process down.
Once net profit has been determined, a tremendous amount of research can go into working out the earnings multiple of an online business, depending on your motivations as a potential buyer.
- Level of owner involvement (particularly if you’re looking for passive income)
- Are earnings and traffic trending upwards?
- Is revenue overly dependent on one or two pages?
In the case of Project Cashflow, I wasn’t overly concerned with the factors above…
What mattered most was that the site was already ranking for the keywords I wanted to target in this education micro-niche.
Negotiating the Price
Thanks to my affiliate manager, I already knew that successful sites in the niche had gross revenue approaching mid-5 figures a month.
And my research had already revealed that the site was already ranking for valuable keywords in the niche…
For the sake of due diligence, I asked the seller to retroactively create P&Ls showing monthly gross revenue, expenses, and profit.
When attempting to acquire a site via outreach, don’t expect results overnight.
After all, the site isn’t already on the market, and the owner may not actively be looking to sell.
For Project Cashflow, agreeing to the sale price and finalizing the purchase ultimately took 2.5 months.
The seller was looking for an inflated price because he’d invested a ton of money into marketing the site with an SEO agency — $2k per month that had minimal impact.
Despite these sunk costs, the site simply wasn’t worth what he thought it was. So it took a while to arrive at a mutually agreeable price.
Ultimately, we agreed on a multiple of 30.9x:
Average Monthly Profit (last 6 months): $1,003.01
Negotiated Multiple: 30.9x
Purchase Price: $31k
I’m not much of a haggler — not only am I after a good deal, but I also want the seller to get a fair price.
It’s too early to say, but I see the deal as a win-win.
The seller walked away with $31k in his pocket and no longer has to toil away and invest in a site that provides only supplemental income.
For me, I get Project Cashflow — a site that’s already ranking for money keywords in a niche related to the affiliate products I want to sell.
Now we’re really ready to roll.
What’s next for Project Cashflow?
As I write this, I was handed the keys to the site less than a month ago.
Other than purchasing the site, there aren’t any wins (or losses) to write home about just yet.
I’m going to wrap this up for now with a taste of what’s to come next month:
- First Steps: From site speed to CRO, what are the first things to optimize when taking over a website? Almost all of this applies to new sites too.
- Welcome Aboard: Expanding LeadSpring’s portfolio means expanding our team. You’ll get an insider’s look into our hiring process — the hardest thing to get right when scaling your business. What makes a candidate a good fit for us? It may not be what you think…
- From Baseline to Bottom Line: Has the optimization we’ve done so far had any positive or negative impact? On revenue? On traffic? Share of voice? Plenty of rankporn to look forward to…
My goal is to take Project Cashflow to 5-figures in monthly gross profits as fast as possible…
If you join me on this journey, you’ll get an insider’s look at our onsite and offsite strategies, our shortfalls (and how we deal with them), and our wins (and how we got there).
Stick around. This is gonna get good…
Got Questions or Comments?
Join the discussion here on Facebook.