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GuestUser4aMPs1
Guest
Normal affiliate-monetized content sites with 100% organic traffic.
Also, correct. They *are* sold by EBITDA, but with the largest ongoing cost off the P&L.
Maybe the industry has changed but at least when I was helping to broker content sites in 2020/21 at a place that specialized in it, the only costs written on the books were fixed hosting and (maybe) plugins costs. Meaning the sites would sell at ~99% profit.
I'm not an accountant, so bear with me for this next section...
The reasoning is that although Content Writing is often an expense that site owners have to cope with to maintain and grow rank, it's not recorded in the P&L/Income Statement because it doesn't directly contribute to revenue. One could argue that writing articles in hope that it'll rank is speculative in nature, so I don't think it fits in the COGS section of your P&L.
Therefore, it's categorized separately as a Capital Expenditure, which isn't on the P&L. If you write content, you might or might not make more money as a result of improved ranks/traffic. If you stop writing content, you'll still make money (for a time) if you let the site sit there. It's sort of a "passive" asset at that stage.
I don't agree with the practice because an owner will always need to pay for writers, but it is what it is.
Therefore, the multiples were, and still are *massive* due to a combination of factors:
— Somewhat "Passive" model, at least in the eyes of the buyer
— Extremely Scalable Business Model (just sell other people's stuff)
— Almost no expenses on the books (contributing to insane valuations)
Some other time-relevant factors:
— Huge outside interest during the pandemic, as it could never be shut down.
— People buying a bunch of stuff with stimulus.
— People spending WAY more time online.
— Cheap money propping up asset prices across the board.
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