Site Recap

In May 2016, we acquired the large image-sharing website for 23k.

The site was the ‘Pinterest’ of the late 2000s but had rapidly declining traffic and revenue. It hosted over 10 million images shared by hundreds of thousands of users and close to 1 million visitors per month.

It was earning only around 1k per month. 

After optimizing and renovating the site, as well as facing a few challenges, we resold the site for $62K in October 2016.

This case study will take you through how we did this, the methods we used and what we learned. 







Growth Potential and Risks

Declining Revenue 

As mentioned, this ‘Pinterest-style’ image-sharing website had previously been highly popular. It had fallen out of grace with its users when the actual became popular. 

At its peak, back in 2011, the site was generating over 1 million visitors per day. By 2016 it was down to under 20K visitors per day and earning only around $1k per month in revenue. 

Due to the declining revenue and minimal profits we were able to make a deal with the original owners to acquire it for a total of $23K in May 2016, after prolonged negotiations of over a year (their initial asking price was $200K!).

This meant that there was significant potential to make a profit should we be able to tackle the declining numbers.   

Low Profits 

As well as declining revenue, from what the site did bring in each month, very little of it was actually profit. This was due to the fact that the servers the site used were very costly.

Complicated to Manage 

The business was rather complicated to manage, with hundreds of pages of code barely stuck together. This could present difficult technical challenges in the future. 

What We Did to Grow it?

Immediately upon acquisition, we set out to reduce costs and increase profitability. However, our main objective was to stop and reverse the rapid decline in traffic.

Negotiate Better Affiliate Commissions 

Straight away we reached out to the affiliate ad provider and were able to negotiate a better revenue share. This helped us increase profit margins and slow the decline in revenue. 

Improve Google Ads Positioning

Another thing we tried was to improve the Google Ads positioning. We worked on improving the quality of our ads, landing page, and bids to optimize revenue and drive more traffic to the site. 

Diversify Revenue Sources

Another way we were able to boost the revenue of the website was by diversifying revenue streams and trying multiple other sources of income.

Fix Bugs 

We also fixed up some current bugs and improved some of the issues in the code. This was able to improve the user interface somewhat. 

However, while we managed to slow down the rapid downturn in traffic, that challenge was more complicated than expected. Therefore, we opted to sell it faster instead.

Sell Quickly 

With the technical complexity of managing the site, the code issues, and the difficulty of reversing the traffic downturn, we decided that the smartest plan was to improve and resell the website as soon as possible. This way we could avoid having to deal with the complicated technical challenges it may present in the future.

The Sale 

We listed the site for sale on Flippa.

The listing was unsuccessful at first, so we tried a different tack. 

After that, we were able to negotiate a private deal to sell the website for $62K in October 2016. 

The business was sold to a startup developing some image-processing and categorizing technology.

The Results 

During the 5 months of operations, the website earned around $12K turning this deal into a 220% return in 5 months.

What we Learned

We gained many important learnings from this transaction that we can take forward into future deals.

The main things we learned were: 

  • The difficulties of managing and improving a technically complicated business (with hundreds of pages of code)
  • The importance of optimizing monetization – in this case, it allowed us to triple the income within just a month
  • The value of finding a motivated buyer

Overall, we were able to improve and turn this site around in a short time for a significant profit. 

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.