Table of Contents
INTRODUCTION
What Will You Learn From This Website
What this Website is Not
PART I – ONLINE ADVERTISING ARBITRAGE: PLAYING BOTH SIDES OF THE ONLINE MARKETING MARKET TO MAXIMIZE PROFIT & WEBSITE VALUE
Basic Market Components
Supply
Demand
Price, Bids, Asks
Elasticity
Pricing
Demand
Supply
Real Arbitrage Example
Online Advertising and Arbitrage - The "Click Thru Value Chain" and Commoditizing the Market
Development, Traffic, and Hedging Your Cash Flow
Part 2 of Development, Traffic, and Hedging Your Cash Flow
PART II: Valuing a Website: What is Your Site Worth?
 
The Headaches Pricing Websites
Historical Growth: Geometric Mean vs. Average
Terminal Value
Summary of Discounted Cash flow Analysis for Website Valuation
Market Value Approach to Website Valuation
A Note on Using Metric Multiple Website Valuation Models
Website Valuation: Who, What, and What Not    

Who This Website Is For

This is a semi-technical website about a rather technical topic: how successful websites build positive cash flows through advertising arbitrage and how the value of those websites is established. It is written with the non-technical person in mind with plenty of discussion around each topic and basic examples to get the points across. The topics are a mix of practical and theoretical business analysis within the context of the internet world. Many of the teachings are simplified versions of college-level business finance courses applied to the development, strategy, and valuation of websites and website-based businesses. However, the topics are not simplified enough to make them impractical. The methods discussed are “real-world” in nature and many of the techniques are used in the business world today by investment banks and financial analysts. The reader does not need to have a business school degree to grasp and learn from the contents of this website. Some basic math skills and a general idea of how to make money in the business world would be helpful.

What You Will Learn From This Website

The writing is aimed at establishing a solid foundation for how websites make money and create value through advertising. The concept of advertising arbitrage is discussed in detail to build a framework of thinking and analysis skills that can be used to build new successful moneymaking websites as well as improve the cash flows of existing websites. The basis for the advertising arbitrage section is to apply the financial basics of a real-world commodity market strategy to the online adverting market. It is a fresh approach to the Internet business world and aimed at providing the reader with a strategic view of the online advertising market.

Why do websites get involved in buying and selling advertising? To create value. Maybe that value is used simply to keep the website running, or more than likely, the owner is looking to increase that value as much as possible. In either case, a solid method of establishing the value of a website is critical to the owner’s success. The valuation section of this website discusses in detail professional valuation methods applied specifically to websites and website business. The skills learned can be used to value websites for the purpose of buying, selling, or measuring the success of a given website. The teachings in this website can be considered to be choice picks from various college business courses aimed at combining business finance and analytics with the website development and marketing world.

What this Website is Not

This is not a “get rich quick” website. The ideas presented within were developed and practiced over several years and are intended to be a true business methods and processes. Yes, one can make money by properly implementing the plan but it will not come over night. As with any real business, it will take dedication, smart thinking, and good old fashion hard work.

 

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