Our friends over at Moniker are managing the auction for the WiFi.com website. WiFi.com has 30,000 monthly unique visitors for a keyword with a healthy CPC. While there are a number of ways to value a website, the most obvious is to put a value on the traffic that it already gets. This post shares how we did it, and also offers a free spreadsheet which you can use to do it too.
The Valuation Model for WiFi.com
The tool we developed for valuing a website with traffic is pretty straight forward. It looks at monthly traffic from Google. The WiFi.com domain is #3 on Google for “WiFi” and #4 on Google for “Wi-Fi”. As it result, it gets a fairly steady stream of organic traffic for people looking for WiFi. The average cost for a traffic buyer is believed to be about $1.41 for the “Wi-Fi” term.
A 5-year discounted cash flow (DCF) model can be used to value in present dollars what the cost would be for that traffic stream for the next 5 years. We can then add to that, the “salvage value” of the residual asset, which continues to have value beyond the value of the traffic. When you add those 2 primary sources of value, you get a reasonable present-day value for a site with traffic. Here is a snapshot:
My personal view is that WiFi.com is capable of tremendous traffic growth. So, if we don’t sell the site at auction this month, we’ll complete development of a next-generation WiFi.com portal that is currently in development. The explosive growth of the Product Portal platform has caused us to put some developments on the back burner temporarily. We remain highly enthusiastic about the category and look forward to staying involved with whoever acquires the site.
Try the valuation model out yourself
The model also has the ability to allow you to model out various growth scenarios. You can download the valuation model for free here: Wifi.com Purchase ROI