The Decline of the Large Website Portfolio Investor
A few years ago, it was popular and lucrative to own a large portfolio of websites. Some investors owned hundreds of cash-producing websites. The portfolio owner’s strategy was portfolio management rather than building any specific website. The owner would set up the websites and add inexpensive (often free) content to each website. Then, he would place PPC ad networks (such as Google AdSense) ads on the website. The portfolio would attract traffic, receive ad clicks, and generate daily passive income for its owner.
In most cases, no single website in the portfolio would receive a lot of traffic. But if the portfolio contained a large number of websites, the combined traffic to the entire portfolio could be relatively high. Not every website would produce cash everyday. But, on any given day, a few websites would contribute cash to the owner’s bank account.
In financial investing parlance, this was a form of diversification. A portfolio owner would own websites in lots of unrelated niches. They were cheap to set up. The owner would often use the same website template for every website. They were also cheap to operate. Once they were set up, they were rarely maintained or updated. Often, the only costs were the price of the domain name and its annual renewal fee. This was the ideal form of passive income. It was perfect, until search engines reacted.
Today, search engines reward websites that are constantly updated with new unique content. They have placed an even bigger importance on this today than they did in the past.
This is why you will notice that news websites rank very high for the most popular keyword searches and trending topics. News websites are often updated every few hours as news stories come in throughout the day. Search engines love these regular updates and the unique content published by news websites.
Websites that are rarely updated get little traffic from search engines today. As such, traffic to these large website portfolios has declined significantly over time. The business model just doesn’t work anymore.
It also didn’t help that most of the websites in large portfolios were populated with low-quality or duplicate content which could also be found on other websites. Portfolio owners of article websites often obtained a lot of their content from article directories. The same articles could be found elsewhere on the web. Thus, the web pages with duplicate content ranked low in search engines for their related keywords. It was not unique content. It was not competitive.
All of these factors caused search engine traffic to these websites to decline rapidly.
Search engines must deliver the very best web pages and content to their users’ searches. They’re constantly tweaking their software programs to eliminate websites that they deem are of little value to users. They reward websites with a regular stream of new quality content.
Of course, an investor can still own a large portfolio of websites and create unique content for each website. Either the owner has to do it himself or hire a team to do this. But it’s expensive.
The era of the big website portfolio is over. Most of our most successful investor clients own a few websites at a time. How many websites depends on the amount of time and people the investor has available to him to manage the websites. Today, to be successful as a website investor, you need to focus on a few websites.
Domain name investors can own many domains but website investors must focus on a few websites at a time. In fact, over the years, domainers have also suffered huge declines in PPC income from domain parking. Search engines rank domain parked pages very low in search results. This is because undeveloped parked pages contain ads with no other unique content of value to a visitor.
Large website portfolios suffering traffic and revenue declines is actually a good thing. It forces people to focus on websites in their areas of passion, which is the key to website success. In this way, the website owner is more likely to publish interesting, unique, and useful content on his websites. Content that visitors will enjoy.
Of course, websites are still cheap to set up. Therefore, most people still operate multiple websites in niches that they know nothing about, and care little for. The introduction of article creation software and article spinning software has also enabled people to create content quickly in any niche. However, the content is usually of very low quality.
Initially, some of these websites do well financially. But eventually, they suffer traffic and revenue declines due to low-quality content and fewer content updates as the owner loses interest. Bounce rates are usually very high in Google Analytics for these websites. Website visitors enter and exit the websites quickly once they discover that the content is not so great.
Overall, website investors are now discovering that it’s not very profitable to own a huge portfolio of unrelated websites. Many investors are focusing on a few related websites in a niche that the investor is passionate about.
Some investors only acquire websites in niches such as finance, health, or gaming. Others focus on a specific type of website such as article websites, marketplaces, or directory websites.
In each case, the investor’s strategy is the same: To bring the passions and strengths of the investor or his team to the website. The new team focuses on growing the website business by promoting it and updating its content regularly.
The strategy of the large website portfolio is out.
No more owning many websites with a little content that is rarely updated. Own a few websites with lots of content that is constantly updated.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
- Connect with Kris:
