- October 7, 2021
- Posted by: CBGabriel
- Category: Business
In this article we will present information for your casino site business and see how to valuate your affiliate casino website. In order to receive a free valuation from our casino broker team, click here.
Content casino websites and blogs are popular among Internet business owners, can be very profitable, and it is an easy business to get started with. We saw in 2020, well-performing casino affiliate websites are in high-demand. We assume and expect this upward trend to continue along the years. These types of online websites rely on heavy SEO in order to drive organic traffic; Google’s algorithm can impact the revenue of such online sites. Affiliate site owners who update their websites constantly, remove content and add new pieces of informative content, will not be affected that much by Google algorithm updates.
How to Determine Affiliate Casino Site Worth
One of the ways to monetize a website properly is using the affiliate model. Leveraging affiliate marketing, the casino website owners will partner with an outside company, to feature links, banners, guest posts and use other means to showcase the company’s products on their affiliate casino content site.
To give you a proper example of how these affiliate model works, let’s assume we have one visitor navigating our casino website, he clicks on a link or banner and gets redirected to the casino company’s site, when he makes a purchase the affiliate site owner will receive a commission or will get compensated in a different way. There are factors which can determine the affiliate casino business site value. Allow me to provide an overview of the main valuation factors:
Affiliate sites need good strategies to lure in visitors with their content, as good quality and engaging content brings in visitors. Talking about content’s best practices, you’ll definitely see positive traffic and results when your affiliate site’s content addresses your audience’s needs and it is long-form content which is indexed in Google and other search engines.
Another factor to take into consideration, is your affiliate business site’s link-building profile, which is a big factor contributing to your casino website’s overall worth, and of course, valuation. After you have high-quality and long-form content which helps your visitors solve their problems, or answer their questions, you will need to make improvements to your website, in terms of SEO: modifying it accordingly with targeted keywords and natural link’s pointing to your affiliate casino site. Let’s not forget how important traffic is; I would say it is critical to the success of any affiliate site. It will lead to optimizing your online casino websites’ earnings. Keep reading as you will find more information about this topic later in our blog article.
Age of the Site
The age of an affiliate site is an important factor, which can determine a buyer’s decision to purchase it from you. When talking about the age of an online affiliate site, we’re referring to sustainability, long track record, and future profit predictions. The older the site, the more articles the website has, it ranks better on a number of organic keywords, and lastly it’s SEO and link-building profiles are strong.
The size of the partnership is important. It separates affiliate websites from strictly content websites. It is also a contributing factor to the affiliate site’s worth. Why is that? The longer the partnership between the casino affiliate site and company, the better – as it proves to have lower risk of failure in the future. If you have more partners to work with, it’s a positive sign as you are diversifying and reducing risks.
Let’s face it, if you put yourself in the shoes of a buyer, you wouldn’t like a full-time job, running an affiliate website. The beauty of passive income is to work less and still earn. Online casino businesses which require little time to manage, are attractive to any buyer, opposed to Internet casino businesses which require a ton of time and lots of work.
We will finally need to arrive at an accurate valuation of an online casino affiliate site. We need to take a look at the businesses financial statements, in order to determine the appropriate multiple. The Seller’s Discretionary Earnings (SDE) can be used to determine the accurate earnings of the website in question, or “net revenue”. Many investors and online site buyers have gone down this path, using multiple-based methodology as it’s simple to use and efficient.
The final buyer should arrive at a conclusion in regards to purchasing an online affiliate casino business, by multiplying the SDC (Seller’s Discretionary Cashflow), by the appropriate multiple for such business. The parties will eventually come to an agreement, for the “appropriate” multiple.
While the general valuation drivers are a key consideration, it’s important to note that every business is unique and there are several factors that impact the multiple along that range.
There will be several factors which can impact the multiple, as each and every business is unique. Nevertheless, the general valuation is key.
It depends on the above drivers strength, to determine an affiliate online business’ multiple’s, which can be expected to be in the range of 2.5x – 4.0x:
Below is what we came to understand during our time valuating online casino websites:
Having a single affiliate product to promote, presents a risk of losing revenue, and it has an impact on the valuation. There is a big chance the product will go away or change, or even not appeal with customers. You surely know about Amazon, which has demonstrated over the years it’s not good to just promote one single product. It is always a risk factor to rely on only one revenue source. The opposite of one revenue stream is having multiple offers or products to promote which generate revenue, are diversified and it can be sustained over time – this will increase the valuation of an affiliate business.
We should not forget about the overall growth patterns of an affiliate casino site business. Let’s take a few examples:
- How evergreen are the products which are promoted on the website?
- Will and can the terms of agreement be migrated to the new owner? Will the new owner of the affiliate content site need to negotiate on their own?
- For how long has the business been part of the casino affiliate program?
- Is the affiliate casino site growing or shrinking?
- How established and large is the affiliate program or affiliate partner? (the larger it is the lower the risk of failure)
The valuation multiple can be higher if the affiliate program is reliable and sustainable.
It’s important to note: the overall staying power of the affiliate products, product trends and seasonality – let’s not forget about the niche part of the business – as this will affect the decision of the potential buyer.
Even if trending niches are more appealing upfront, evergreen niches will always have a higher value. Let’s take “diapers” for example, as it will always be in high demand. An investor or buyer will assign a premium valuation to that evergreen product, which will constantly bring in profits and revenue, having more room for growth in the long-term.
If the website or the affiliate is promoting trending products, like fidget spinner or facemasks, the buyer has all the rights to question the products sustainability and the sustainability of the affiliate casino business. Fidget spinners are not here to stay, they are just trending and it is hard to predict the age of the niche, and of course the GEO of the customer.
Seasonality and Promotions
Seasonality will be profitable for the years to come, if it’s considered evergreen, and customers demand the product year after year. You will need to take into consideration the part when you’ll present your financials for valuation – an important step.
Take a look for example at electric fireplaces, where you’ll be more likely to make sales during the fall and winter (each year), and when it comes to spring and summer, naturally the sales will be much lower.
An excellent example which we will take now, is the revenue this business generates. It has to take into consideration the average monthly income for the year. Assuming this business makes $5,000 per month between October and March, and $500 per month in the other months. Then it would be taken into consideration, the average monthly income, like we mentioned above, which sums up to: $2,750.
On Black Friday, Cyber Monday and Christmas, the sales will go up even more, as it is lucrative this time of the year, for an affiliate website. Bottom line is: we need to consider the average year-round revenue, as there surely are spikes in revenue and commissions.
There are a ton of affiliate programs in the casino industry, which pay different commissions to their affiliates. The sale volume can change as well as the commission percentage – depending on the relationship between the webmaster and affiliate program.
SEO and Link Building for Valuation
Affiliate casino websites usually target people looking for reviews of casinos, from different GEO’s around the world. Or the visitors which are targeted are looking for “No deposit casinos” where people are not required to deposit anything, in terms of money. Terms and Conditions apply here, and of course, the visitors need to be at least 18 years old.
Most of the affiliate sites apply white-hat or black-hat SEO strategies, which will increase their rankings in Google, Yahoo and Bing. With black-hat SEO they need to be careful, as the possibility of getting manual penalty or de-indexing from Google – is real.
The best way to go when it comes to SEO, is to build links the natural way. Most buyers know what they are doing, and they are not at the first investment: they usually check the backlink profile, in terms of anchor text, backlink source, age of backlinks, and so on.
Natural link profiles have much more value than PBN (Private Blog Networks) or purchased backlinks. PBNs and purchased backlinks don’t have history, are not built naturally, and they present high risk of penalty from Google and other search engines – all of this will have an effect on the valuation of the affiliate casino website.
In order for an affiliate casino site to succeed we need to mention two factors which are essential in ranking the particular site in Google:
- Long-form content
- High-quality content
Both are very important in turning visitors or readers into buyers or players.
For a good stream of income, an affiliate website needs to have a lot of indexed pages in Google, as based on the above factors, we can determine how profitable one site is. Engaging the visitors with your content plays a vital role in the scheme.
How to determine the quality of your content? Simple: the webmaster or business owner needs to see if people actually engage with the casino reviews, posts or articles, updates and social media sharing of the content.
Long-form articles which are indexed properly in Google, are more likely to rank and are highly priorities for potential investors or buyers. While other sites can come along, rank higher than the online affiliate casino website, for a short period of time due to spam link building or other non-ethical methods of SEO; we need to mention a few words about Google: the biggest search engine in the world constantly invests money, resources and time into rewarding high-quality content sites which abide the rules of the big giant, making these type of websites prevail in the long run – an important factor for buyers which is reflected in a higher multiple.
Hiring a team of SEO freelancers or editors will surely help with a second opinion. The content quality of your online casino asset is highly important. You can definitely take a look at tools like Copyscape in order to confirm your content’s uniqueness.
Yet, another factor to take into consideration is content production for your site. Is it easy to produce and easy to transfer this process to the new owner (the buyer)? If you are hiring or working together with a content producer, copywriter, or even an agency, then your service reliability is a factor to consider in terms of site’s value. A problem or issue can arise when the buyer or the new owner will need to pay a higher rate for the content. It comes down to how the new owner will keep content flowing.
Email lists are very powerful when it comes to converting visitors or people into players for casino sites. This looks promising for every buyer, as email lists in the casino industry are not so different then other affiliate businesses. We need to remember, having a huge list of emails can’t really affect or improve the valuation of the affiliate business. The list needs to be active and driving conversions, thus generating revenue. You’ll need to present your email work-flow to investors, show how to improve it in the future and implement it.
Organic Traffic Health for Valuation
Most casino affiliate sites rely on organic traffic, due to the high-quality and long-form content combined with the natural link profile – all of this proves consistency and sustainability in the SERPs, showcasing a higher valuation in the end.
Investors use tools like Google Search Console, Ahrefs and SEMrush to assess keyword strength, find opportunities and areas of improvement in order to gain additional upside.
Diversity in keyword rankings is important when doing valuation of an affiliate site. Diversity reduces risks and it’s key when it comes to determining a website’s value.
An example of keyword diversification is shown below via SEMrush:
Example: if a keyword generates more than 50% of the website’s traffic, the online affiliate business may suffer when the valuation is in progress, as it consists of a high risk for the long term.
For a higher valuation, the traffic needs to be diversified – coming in from different sources, showing overall that the content is appreciated by the visitors and industry people, and it is often linked to it.
Another method to take into consideration, when looking and determining the organic health of any website is to view diversification of organic traffic by page, as shown in the screenshot below:
On “SEMrush” -> “Pages” you can see pages which receive the most traffic. Need to mention and remind you that the more diverse your traffic amongst the pages is, the better for the overall affiliate website.
A warning sign can be, like mentioned previously, 1 page receiving more than 50% of organic traffic. It is not smart to rely on a handful of keywords, or just one page to receive traffic isn’t good. Think about the following: if those keywords which receive 50% organic traffic were to be removed for any reason the website’s value would decline fast.
Worth noting is social media traffic, now that we’re at this chapter about traffic sources. Social media can drive good amounts of traffic, but it is difficult to sustain and more expensive than organic search, because you’ll need to constantly publish new posts/tweets/pins, etc. – depending on the social media platform which is used. To name a few: Twitter, Facebook, Pinterest, Reddit, and so on. Your content can be engaging and bring in strong results.
We mentioned affiliate partners, and how important they are. But these partner programs come with a risk on their own. Let’s assume one partner changes it’s policies, changing payouts or rules or strategy. There is a certain risk to consider, as affiliates are equal to a marketing agency for the affiliate program, owning the actual product or platform where the people play casino and spend money. At some point in time, the affiliate program may decide the arrangement between them and the affiliate no longer suits their needs, because they are not receiving enough return from the partnership. And they start cutting rates.
Standard Valuation Factors
So far we covered and highlighted the different valuation factors which are unique to the affiliate business model. View our checklist below to better understand all of the valuation drivers, which we consider when valuation an online casino site business or an online sports betting website asset.
Casino affiliate websites’ valuations can score well in all of the above-mentioned areas, having above-average earnings, longevity, and margins will surely prove attractive to buyers and investors.
Selling your casino affiliate site in a timely manner and maximizing profits will depend on an accurate valuation. Interested in having your online casino or sports betting business valuated? Please get in touch with us by filling in our form.