Interview: How to Earn a 130% ROI on Content Businesses
There are many online marketplaces for buying and selling businesses—Flippa, Empire Flippers; you name it.
But one private equity firm, Domain Magnate, has earned a 130% ROI on content marketing.
He’s been killing it in 2020 with SaaS and content businesses despite the economic impacts of the COVID-19 pandemic and Amazon slashing commissions in their affiliate program.
Domain Magnate is different from other marketplaces in that they act as a buyer-side broker guiding first-time buyers through their first acquisition.
With their own fund, they buy directly, often closing deals in just a couple of days instead of a couple of months as with other marketplaces.
The CEO of Domain Magnate, Michael Bereslavsky, shares his story about earning a 130% return within one year on his first fund. He has been buying and selling online businesses for 15 years, using his first fund to acquire nine businesses for $456,550.
He generated $346,000 in revenue in those businesses before selling four of them for $494,000, of which two made up the biggest sale at $340,000:
If not for COVID-19 and the Amazon commission haircut, that 130% return might have been even higher.
Interview With Michael Bereslavsky About ROI on Content
Nabeel: Thanks for taking the time to talk, Michael! Since you’ve been in the content business for over 15 years, how has the content game changed in the last few years? Say, between 2015-ish till now?
Michael: High-quality content is more important than ever.
Back in 2005, you could rank in Google with auto-generated content.
In 2010, you could rank with poorly written articles by non-native speakers.
In 2015, you needed higher quality, more engaging and native-written content.
Now in 2020, this is even more so the case. Besides being high quality, content today now has to be more optimized for SEO. As competition grows, companies are investing more resources into creating top-notch content to stand out.
Nabeel: That’s really interesting, and those were the days. Now it seems we are locked into a race towards the top with respect to content. That’s why we hear of all these skyscraper strategies and the need for professional content services.
When comparing your best and worst-performing sites, did you find that the content quality was a factor in their performance? If so, how? What lessons can we draw from this?
Michael: There is certainly a correlation, and backlinks are also a major differentiating factor. We’ve had some risky small sites with very poor content that failed after we purchased them. Improving content is definitely helpful, and that’s one of the main things we do on new sites we acquire.
Nabeel: To keep a content site performing, how much fresh content should be produced and published? Is there a ceiling to this? Is there a diminishing point of returns when it comes to the amount of content?
Michael: It varies based on multiple factors. The key is to keep it natural. For example, if the site wasn’t updated for a year, publishing 20 articles a month may be excessive. So, we typically try to ease into it and start with smaller amounts of content. Once we see the new content ranking in Google and getting some traffic, we can increase the rate.
Additionally, it’s important to research the niche scope before acquiring a site to determine the growth potential. Some sites may already have enough articles to cover the entire niche. Therefore, you can only edit and improve existing content, not add more.
It also depends on the link base and SEO weight of the site, its current rankings and what the competitors are doing. So that’s another good estimate—looking at some of your top competitors and determining how often they update content.
Nabeel: That sounds reasonable. So tell me, what types of content should a well-performing content site have? And which types of content have been performing the best?
Michael: Long-form articles and case studies seem to perform the best lately. But infographics, white papers, videos and others also help add some variety. It often depends on the niche and what the readers expect to see on the site; so you have to give them that.
Nabeel: Yes, long-form articles seem to be dominating. And it’s absolutely important to give readers what they want. And which markets have the biggest need for content right now?
Michael: The U.S. is still the biggest market for content by far, but I think great opportunities are becoming available in the local languages of European countries as well.
From our perspective, we acquired our first deal with this fund in January 2019 with a content site monetized by Amazon affiliates. There were others from February to July 2019 that included some SaaS and software sites as well. Our most complex, yet one of the most profitable, happens to be a SaaS business.
Nabeel: Michael, that was great! I learned a lot from talking with you, and I think a lot of people will find value in this. I really appreciate you taking the time to answer my questions.
As Domain Magnate sets up a bigger fund in Q3 2020 to accommodate more investors and bigger deals up to $1 million, content marketing is going through a disruptive transformation.
As Bereslavsky said, the bar has never been higher for quality content. Besides raising the quality, content also needs to engage readers and spark conversations.
Domain Magnate demonstrated that it is possible to double the revenue and valuation of a business with a well-defined and well-executed content strategy by appointing professional writers and editors with subject-matter expertise to fulfill the content creation.