Can Backlinks Affect Your Business Valuation?

business valuation and backlinkingThe most loaded questions we receive have to do with online business valuation, and for good reason. There are a number of things that affect how much a business is worth, and when you consider the online nature of an enterprise, the list grows even longer.

Take, for instance, your SEO metrics. Checking Google Analytics might be the furthest thing from your mind on a day-to-day basis, but the quality of your traffic and backlinks can have a significant effect on your business valuation.

How can something so seemingly obscure affect such an important number? High quality and quantity (yes, both) of backlinks is a good indicator of how well your site and its pages address your users’ needs, which in turn is a good indicator of how useful your business is to the market.

Additionally, a solid backlink profile can tell a potential buyer that you have a good marketing strategy already implemented, which will be one less thing they’ll need to spend time on once the business has been acquired.

What is a backlink?

A backlink is any link to your site – whether it’s to your homepage or a piece of specific content. Google looks at the quantity and quality of your backlinks to determine your ranking and authority. Think of your backlinks the same way you would the people around you: You’re only as good as the company you keep.

That’s right, a backlink tells Google just how popular you are. How? For one, it’s easy for search engines to see links to your site because that information is publicly available, as opposed to metrics like traffic that can be stored in private server logs. This vast, reliable data not only lets search engines see who’s linking to you, it also indicates the quality – or lack thereof – and relevancy of the link through the referring domain’s authority and the link’s anchor text, respectively.

Search engines use link signals to assign value to links. Some are weighted more heavily than others, and it’s still not fully understood exactly how Google analyzes its proprietary metrics. However, it’s helpful to be aware of the following link signals:

  • Global popularity. A high-quality referral is a trusted referral, and search engines gauge trust based on the number of links back to that site.
  • Local and topical popularity. If you’re getting a lot of backlinks from sites related to your industry or businesses in your area, it confirms for Google that you’re doing legitimate business.
  • Anchor text. This can be difficult to control, but links going to your site with anchor text that matches your targeted keywords can go a long way in boosting your ranking.
  • Google has its ways of knowing what’s spam and what’s not, so earning links from sites with a high TrustRank – such as those with .edu, .org and .gov domains – tells the search engine you’re in good company.
  • Link neighborhood. Again, you’re being judged by the company you keep (i.e. if you have spam linking to you, search engines will think your site is spam, too).
  • Content gets stale quick in the digital age, so search engines regularly rank domains for freshness. A site that is regularly updated and maintains popularity is a quality referring domain.
  • Social sharing. As social media sites earn their seat at the big kids’ table, search engines more heavily weigh their influence on the value of a site, so that shares equal trust.

How can backlinks help my business valuation?

how backlinks affect business valuation

As we’ve mentioned, a solid backlink profile indicates that your site is useful and popular with your audience, and also shows that you’ve put some good thought into marketing your content.

On the other hand, a site that has a poor-quality link profile might be unsellable. A site with very few backlinks or – worse – backlinks from untrusted domains appears unpredictable to a buyer. It’s hard to say exactly to what extent a bad link profile could lower valuation, as some issues are much easier to remedy than others. However, a site with a high-quality backlink profile is worth about 1/3 more than a comparable site with a low-quality profile. That can amount to a significant sum of money, so it’s definitely something to consider when selling your website.

Of course, backlinks alone won’t pay the bills, but they can help significantly boost your organic traffic and conversion rates. Research by Backlinko suggests that backlinks are the single most important factor that Google considers in ranking.

(What else goes Google consider when ranking pages? Domain age and registration length, site authority, keyword use, tags, content length, images and multimedia optimization, site errors, URL structure, and a whole slew of other factors. This is why SEO needs to be a concerted, sustainable effort. It’s also why outsourcing your optimization tasks is well worth it, especially if you want to maintain a passive business model.)

Ranking on page one for relevant, competitive keywords gives you more visibility and makes your business more attractive to buyers, but you won’t jump to that level overnight by gaming the system. The quality of your backlinks tends to matter more than the quantity, so be choosy when it comes to outreach and make sure to check your backlink profile regularly to disavow anything that looks shady.

Just as high-quality backlinks can strengthen your website’s value, poor quality links can harm it. The internet is a deep, dark pool, and if a referring site contains illegal, spammy or private blog network (PBN) content, it could seriously damage your authority – not to mention make a prospective buyer think twice. Here’s how you can disavow any unwanted backlinks.

Additionally, it’s better to have backlinks from a number of domains than a number of links from the same domain. Having a large number of sites linking back to you is like social proof for search algorithms: If everyone’s talking about it, it must be good. (Conversely, if only one person is talking about it an inordinate amount, they’re probably being paid to do so.)

Finally, be mindful that having a focused theme to your content is going to help you attract high-quality backlinks, which can improve your domain authority and, therefore, search ranking. This means that even links to your homepage can improve an individual blog post’s search position, even if that page has no backlinks (though it definitely helps if it does). As such, don’t get too obsessed with one page in particular. Rather, have a holistic vision of your site’s content.

How do I gain high-quality backlinks?

First and foremost, bear in mind that even if you used every trick in the book and your page is optimized to the Nth degree, it’s not going to gain any natural (read: unpaid) backlinks if the content isn’t high quality. Developing an integrated plan for your content entails finding relevant topics, having internal and external links with smart anchor text, and doing your homework on keywords (yes, they still matter).

Once you have a content strategy in place, you can get to work building quality backlinks. For a search engine, that means links from a trusted site that’s relevant to your industry:
business valuation and backlinksOne way to do this is to look at who’s linking to your competitors. You can do this using a tool such as Ahrefs or Buzzsumo. Simply Google your target keyword(s) in incognito, see who’s ranking on page one, and run a search to get a backlink profile of that domain or page. From here, you can create similar or complementary content (ideally a post that offers something your competition does not), then reach out to individuals in charge of content or marketing for that site and promote your piece of content. This is known as the skyscraper technique, a term coined by Backlinko’s Brian Dean. It’s been proven effective, but it may take quite a bit of outreach to be effective – though your results will be worth the effort. Remember that you can always hire an agency or freelancer to do this for you.

Outreach is a great way to actively market your online business, but don’t ignore tried-and-true passive marketing techniques as well. Promoting your content through social media, industry forums and thoughtfully crafted email campaigns can help you gain backlinks naturally – the way Google intended. Additionally, having effective passive marketing in place will make your business more attractive to a buyer.

Following the same principles as the skyscraper technique, you should keep up with trends in content by seeing what’s getting a lot of shares and backlinks. There’s a lot to be learned from popular content, even if it’s not related to your industry, as it provides insight into how people like to consume their online media. Take, for example, the ‘listicle’ craze from a few years back. You can turn virtually any article into a listicle, making your content fresh and easy for readers to digest – in other words, the perfect link bait.

Interested in other link-building strategies? Quicksprout has a great guide to SEO, and chapter 7 gives some actionable advice on how to gain quality backlinks.

Final Thoughts

Your backlink profile is just one piece of the SEO puzzle that can indeed boost the value of your online business. It’s not something you’ll be able to build last-minute to impress prospective buyers, though, so get an early start, outsource the work when you can, and remember that quality is king.