Barely a day passes without more news reports of our floundering global economy. The impacts of the flaky financial markets impact business online just as much as they do our offline counterparts.

We’ve seen this first-hand at Flippa: ad network earnings for sites sold on our marketplace fell significantly in 2012. But we found that not all networks’ revenue declined by the same amount.

Average revenues for sites using AdSense fell by around 40% more than those using other ad networks.

Together, AdSense, BuySellAds, Infolinks, Chitika, DoubleClick and OpenAds/OpenX averaged a fall in median monthly revenue of 13.1% 2012. But the median monthly revenue claimed by sellers using AdSense for that period fell, on average, by 18.6%.

The trend was backed up by this SEO Rountable survey, in which 63% of respondents claimed their AdSense revenue fell in 2012.

AdSense is the web’s most popular ad publishing network, with around 74% market share. So what’s going on?


We decided to take a closer look at the reasons behind the decline—and try to work out whether AdSense still makes sense for publishers in 2013.
Algorithm updates: a likely culprit?

To make money from AdSense, a site owner needs two things: ads to fill their ad space, and traffic—people to show those ads to.

AdSense users have little trouble finding ads to fill their space, which is sold through Google’s AdWords network. But what about traffic?

When we looked at our data for all sites sold on Flippa last year, we found that monthly uniques were down by a whopping 38% on average.

And what do most of us rely on for site traffic? Google.

The SEOMoz Google Algorithm Change History shows that 2012 saw Google continue its campaign of continuous improvement to its algorithms, with large updates—or large numbers of updates—being made throughout the year.

January’s Top-heavy update was directly focused on sites that showed too many ads above the fold. It was followed up in October with what pundits dubbed “Top-heavy 2”.

This update devalued pages that contained so many ads above the fold that it was difficult for users to discern the content—something Google positioned as a user satisfaction issue.


Top-heavy really set the scene for the updates that were to follow throughout 2012. Google’s focus on providing users with quality results remained steadfast.

The Penguin anti-webspam update in April targeted blackhat SEO techniques including keyword stuffing, unnatural links, and so on.

Google said in its announcement about the update, “this algorithm affects about 3.1% of queries in English … but the impact is higher in more heavily-spammed languages.”

But it seemed that many non-spam sites were affected by Penguin too.
SERP Crowding

August’s SERP Crowding update continued Google’s work to more clearly present search results based on users’ past search behaviour.

The update saw shorter SERPs, which previously appeared in around 4% of results, show up in 18% of the searches SEOMoz conducted.

This meant that less SERP space was available to competing sites.
Other updates


Hundreds of smaller changes were also made to the algorithm through the year, focusing on links, site authority, search localization, a site’s DMCA takedown history, old and outdated content, and more.

Each update had the potential to reduce traffic to less competitive sites, and indeed, some individual reports of those impacts, like this one, appear linked to the algorithm changes.

As the updates rolled out, many in the online community noticed “ranking flux” as the search engine reshuffled sites within the rankings in the following days. Some sites that managed to retain their rankings overall may still have lost traffic during the flux periods.

While we can’t say how much of the 38% decline we saw in sites’ unique visitor stats was due to Google’s changing algorithms, we can theorize that the changes impacted site traffic—and therefore earnings potential—in 2012.

Of course, Google’s algorithm updates had the potential to affect every site that appeared in the search results, regardless of which ad network they used—if indeed they even served ads.

So can the decline in average AdSense revenues be put down to Google’s algorithm updates? Not entirely. Before we dig into the implications there, let’s look at the AdSense service itself.
AdSense: having an impact?


If Google’s algorithm changes affected site traffic, what about the AdSense service itself? Ranking flux, for example, may have contributed to ad revenue flux for site owners throughout the year.

But there were other controversies. If webmasterworld and other forums are anything to go by, many users whose ad revenues were declining put the blame on what they felt were “irrelevant” interest-based ad placements.

Sporadic reporting issues with the AdSense service didn’t do much to shore up users’ faith in the service, either.
Ad rates in decline

AdSense is fed with ads placed through AdWords advertising network, which also showed poor performance in 2012.

Google was forced to drop its ad rates by 12% in early 2012, following an 8% drop in late 2011.

With advertisers paying less for space, publishers on AdSense would inevitably receive less for displaying those ads. Google itself reported reducing earnings for the period.

Without an analysis of the ad rates for the different networks at the time, it’s difficult to compare the impacts of ad market forces on the revenues of publishers in those networks.

What we can say is that the issue of declining ad rates was market-wide, affecting all networks to some degree.
Not all bad…


Despite all this, some publishers increased their AdSense revenues in 2012—24%, according to the SEO Roundtable survey we mentioned earlier.

So what were they doing that the others weren’t?

According to netmeg, a member of the webmasterworld forums, AdSense success takes time, practice, and dedication.

“When I first started, I got really mistargeted ads too, and it took a slap year or more for Google (and me) to start learning what works on my sites. And I had to make some changes in the way I wrote for it. And I paid attention to who was using it and how they were using it. And I developed some strategies to find where else these people hung out and how to maybe bring them to the sites, get them to share it with their friends, etc.”

An interesting point this publisher makes is that she’s also an experienced AdWords advertiser. She said this experience had helped her get an understanding of how the system worked as a whole, which helped her better target her content and ads—and ultimately grow her AdSense revenues.
Is AdSense still worth it?


From our research, it seems that the AdSense service is continuing to do what it’s supposed to—deliver relevant ads to publishers’ pages—and Google’s algorithm updates are doing what they’re meant to: improve the quality of search results.

And there are, of course, more targeted updates to come.

This means that more competitive sites are getting more traffic, and a larger slice of ad revenues. And less competitive sites get less traffic, fewer ad clicks, and less ad revenue. Regardless of the ad network they’re using.

So why is AdSense revenue so much lower than the industry average?

Perhaps because the service is used by so many more site owners—and, likely, more beginning site owners—than the others.

Making money by selling ad space is hard work, and it’s only getting harder. Experience matters. Yet AdSense may well have a larger proportion of less experienced publishers on its books. These sites will continue to struggle for traffic and ad revenues, whatever network they use.

But those who are willing to dedicate themselves to their users, who watch to see what works, and use that to inform the development of their sites, will find it easier to remain competitive—and make money with AdSense, as well as other revenue streams—in 2013.
Henry Sapiecha

Back in 2005, I built a little e-commerce store that sold bird cages. My site ranked “okay” in Google and I was turning a decent profit, but certainly not enough to quit my day job over. I liked the bird cage market and knew it well, but to get to the next level I knew I needed a site that got more traffic than mine did.

I knew in time I could greatly improve my rankings and traffic volume. However, I’m not really the patient type, so I decided to look around and see if there were any “high ranking” websites for sale within the bird cage market. I found a site that ranked #2 in Google (much higher than my site ranked) for the phrase ‘bird cages’. I knew that with a site ranking that high, I would be KILLING IT! I bought the site for $1,800, spent a year and a half “fixing it up” (and making a lot of profit during that time), and then sold it on Flippa (still SitePoint Marketplace) for $173,000!

Fantasy Footwear

Why was the previous owner crazy enough to sell it for only $1,800? And how was I able to turn around and sell the same site for $173,000? Read on, and I’ll tell you.

When it comes to making money with an online store, profitability really comes down to 3 things:

  1. Traffic – obviously, you need to have visitors coming to your site.
  2. Profit Margin – there needs to be a decent-sized gap between what your customers pay you and what you pay your supplier
  3. Conversion rate – the number of visitors you “convert” into paying customers. Visitors are worthless to you unless they actually place an order.

If you take away any 1 of these 3 things, a site’s profitability AND VALUE goes way down.
Finding Sites with Traffic

So why was the previous owner of this bird cage site willing to let it go for so little? You guessed it, 1 of the 3 factors was missing. The site had high rankings and got a ton of traffic; that wasn’t the problem. And, being in the bird cage market, I knew the profit margins were good. The problem was that the site’s conversion rate was in the toilet. Even though the site had a ton of visitors, very few of them placed an order! Low SALES means low PROFITABILITY which means low VALUE. That’s why I was able to snatch it up for only $1,800.

That’s STEP 1 of this little website-flipping formula: find a website that ranks well and gets a lot of traffic but isn’t very profitable because of its LOW CONVERSION RATE.

Of the three factors, conversion rate is the easiest to fix. It takes a lot of work, time and patience to improve your rankings in Google. But you can easily double or triple (or more) your conversion rate overnight!

Take this bird cage website I bought, for example. No offense intended to the previous owner, but the site looked awful! It honestly looked like a 7th grader had made it for her website design class project. It just didn’t build visitors’ trust and confidence to persuade them to pull out their credit card. And then, even for the few customers who were ready to buy, they couldn’t even make payment online. They had to mail in their order! Very awkward!


Focus on Conversions

That brings us to STEP 2 of the formula: make improvements to the website to boost your conversion rate. A higher CONVERSION RATE means more SALES which means more PROFIT which means more VALUE. That’s all I did! I made the site professional-looking. I made it easier for customers to find what they wanted. I re-wrote product descriptions. I did everything I could to build visitors’ trust in the site and the products I offered. And I allowed customers to pay by credit card on-site.

There are all kinds of different ways to boost a store’s conversion rate, but there are two big keys. First, put your store on a first-rate, cutting-edge, professional shopping cart platform. Using the right store software makes all the difference in the world. And second, always accept credit cards right on your website.


Cash in Your Work

STEP 3 of my site-flipping formula is to sell the site on Flippa, which I can honestly say is the ONLY place I’d consider selling a website. After boosting my bird cage site’s conversion rate, profits soared (and I made a lot of money)! After showing consistent profits for several months (to establish an ongoing track record), I listed the site for sale on Flippa and ended up getting $173,000 for it.


So to re-cap, here’s my 3-step formula:

  1. Find & buy a site that gets a lot of traffic but isn’t very profitable because of its low conversion rate.
  2. Make improvements to the website to boost its conversion rate, which in turn boosts its profitability and value.
  3. Once you’ve established a good track record of consistent profits, sell the site for a huge profit on Flippa.

Dave Hermansen is an ecommerce expert who has been involved in over 50 successful ecommerce stores. His success in ecommerce led to him being interviewed on Fox News and featured in an article about ‘website flipping’ in The New York Times. Dave’s free ecommerce training course at teaches people how to make serious money in ecommerce!

published by Henry Sapiecha

There’s a valuable market in internet real estate as investors seek websites to renovate.

ASK some of Australia’s best-known entrepreneurs for tips on earning extra cash and they are likely to tell you to get flipped.

Don’t be offended. It is sound advice because ”flipping” – buying rundown websites, sprucing them up then selling at a profit – is, apparently, where it’s at.

It is the digital equivalent of renovating a house before putting it back on the market at a higher price, only without the back-breaking labour, dust mite-infested carpets and massive cash outlays.

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Matt Barrie.Matt Barrie built his career on renovating and reselling websites. Photo: Patrick Jones

”Unlike flipping real estate, it’s easy to add value to websites,” Melbourne flipper David Jenyns says. ”To add value to real estate, you must do something significant, labour-intensive and, usually, expensive, like building a new bathroom.

”But with websites, you can make small changes such as building links from other sites or improving the overall look for little cost.

”That result can be a significant increase in value.”

Jenyns, the owner of, has made hundreds of thousands of dollars online through flipping and ”domaining”, buying keyword-rich domains, stuffing them with content suited to search engine optimisation (SEO) and selling at a profit.

Among his success stories is, which he bought for $10 and sold for $10,000 after spending $100 to have SEO-friendly articles written for the site.

The Jenyns domaining repertoire includes, which was sold for $2000; ($1495) and ($997). He paid $10 for each domain and about $150 to set up the accompanying websites.

”Flipping offers the lowest barrier to entry compared with virtually any other business out there,” says Jenyns, who in 2001, aged 19, made a name for himself – and $70,000 – selling pieces of the old Ponsford stand from the MCG as memorabilia.

”You only need to be able to see the diamond in the rough and have a plan of how to unveil it,” he says.

”Even if you haven’t got the technical know-how, you can hire a freelancer from any freelancing site, who can make it happen.”

Award-winning Australian entrepreneur Matt Barrie, one of Australia’s brightest digital stars, runs such a site,, a source of freelancers for the digital projects needed by flippers, such as logo design, website programming and Facebook app development. is one of the biggest flips of all time. When Barrie bought the site in 2009, at the time called, it looked, in his words, ”grey, utilitarian and horrible, like a high-tech Ukrainian prison”.

Nearly three years later, sporting a revamped interface and new name, it has signed up more than 2.8 million employers and freelancers and the range of people making money, either by selling their services or hiring them, is diverse, from programmers and graphic designers to, last week, a scientist in the jungles of Africa needing a poster designed to extol the virtues of saving a rare breed of hippopotamus.

In fact, many of Barrie’s staff of more than 100 come from the site, a situation he says represents a ”seismic shift in the world’s labour markets”.

”It’s never been easier to start a business and it’s never been more cost-effective,” says Barrie, whose own flip turned over more than $US40 million ($38.6 million) this year and has dispensed about $100 million since the original site opened in 2004.

Barrie came upon the site while building a shop site.

Needing 1000 pieces of data entered into a spreadsheet, he was unable to find anyone to do it and reluctantly placed the job on

Within three hours, he had 74 tenders ranging from $2000 to $100 from a team in Vietnam.

He picked the Vietnamese team and the spreadsheet was returned three days later.

”It was perfect,” says Barrie, who realised the world’s labour-market model was potentially on the verge of dramatic change and immediately set about building a similar site before discovering was for sale.

He sought funding, bought the site, tweaked it and made it more friendly to Western users. ”The site’s revenue doubled in 24 hours once we changed the graphics and, over time, we’ve incorporated other changes, including rebranding and renaming the old site,” he says.

And what of arguments about the West exploiting Third World labour, albeit digitally?

”A very large portion of the world’s population live on $10 a day or less and now they can jump online and earn in one day what they would earn in a month and why shouldn’t they?” Barrie says.

”They are just as smart as us, just as motivated and want a job just as much as we do.”

Barrie cites the example of a young woman in the Philippines who now makes $400,000 a year turning out logos for businesses and websites around the world.’s top freelancer earns a whopping $1 million a year creating small $65-$100 websites and selling them to businesses that want quick and affordable web presences.

Another spectacularly successful flip is, the king of the internet’s domain-flipping destinations.

The two-year-old Melbourne-based digital marketplace will this month clock up more than $60 million in website sales and hosts more than 1000 potential buyers and sellers of domains and websites every minute.

Though the digital offerings on Flippa range from $1 domains to six-figure websites, most of them are flipped websites that sell for less than $10,000, on average about $2000 a pop.

Flippa last year hosted the sale of ($30,000), Mark Zuckerberg’s Facebook predecessor, famously created during his time at Harvard University, as well as, which was sold for $250,000, and BlogTopSites, which went for $117,000 in April last year.

Flippa may now be the world’s biggest website marketplace but it, too, started as a flip.

”I’d found this little site, called, run by a guy named Matt Mickiewicz out of Canada,” says co-founder and former Sausage Software programmer Mark Harbottle, who this year made his debut on the BRW Young Rich List with an estimated wealth of $40 million.

”I was buying advertising space on his website for some software I was selling and, eventually, he asked me if I could help him with the site’s promotion and marketing.

Despite a $500,000 offer of sale from a third party, Mickiewicz, then a 16-year-old working from his bedroom, decided to partner Harbottle and the duo spent the next year rebuilding and rebranding as, which quickly became a popular place to sell websites, particularly flipped ones.

After achieving several years of 150 per cent growth, the pair, still living in different hemispheres, decided to spin out the website sales arm into

Today, and its three allied websites (99designs, and employ 110 people on three continents and hosted about 20,000 website sales last year.

”I had no idea if it was going to be three months or three years when I started but today I get to do what I love and this whole experience has allowed me to do lots of cool stuff, especially helping others with great ideas,” Harbottle says.

”And it all started with a $400 investment in a little Canadian website.”


Six tips

1 Unless you just want a pretty site or to bulk up your digital portfolio, don’t just buy a site simply because you like it. Be sure to take the trouble to do your due diligence before handing over any cash and find out if it is capable of turning a profit. Check the site’s Alexa ranking, look at the revenue and potential revenue, as well as what technology your site is built from. If it’s in an obscure language and you won’t be able to find people to code it, there’s little point.

2 Go for premium domains. You can always fix the content but if the domain is worthless or irrelevant, you’ll have to work doubly hard. Domains that contain natural keywords are best.

3 Look into the quality of the user base, how many users (and how many of them are active), where they’re coming from and how they are being acquired.

4 Pay for quality content to be written for your site (if you can’t do it yourself). You can then use these articles to post to other sites in exchange for links to your site. This will markedly increase the SEO on your new site.

5 Be sure to ask the seller all your questions before sending the money: what is included (all the code, original, editable graphics) and what is not included (installation, changes); will you be selling this site or a site like it again; why are you selling; is the content unique to the site or created specifically for the site?; how much ongoing support will the seller supply?

6 Start small. There’s a lot to learn and you won’t be able to learn it through just reading about it. Buy a small website with as much money as you can afford to lose and have a play. Try a $50-$100 site and learn about what works and what doesn’t. Experience the buying and selling of a site, what is involved, what you get and what you didn’t.


Flipping resources

THE world’s No.1 marketplace for digital goods is crammed with more than 100,000 potential sellers of flappable sites and buyers of flipped sites.


IF THERE’S anything you want to learn about flipping, YouTube is an invaluable teaching tool. Check out Google’s Webmaster Channel in particular for search engine optimisation basics (and some advanced tips, too).

Google Analytics

SPEND the time to master Google Analytics (or any alternative analytics you may choose to use). At first it will look like gobbledygook but once you learn what all the numbers and squiggles mean, you’ll start to see through the haze and learn what people really want on your sites.

Digital Point

A FANTASTIC resource for anything to do with the internet and websites as well as marketing. Among the 15,565,000-plus posts, answers to almost anything you could ask are already there – and if they’re not, just ask one of their 492,000-plus members. See

Sourced & published by Henry Sapiecha




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