After another year, where the world has adjusted to the new normal of the COVID-19 pandemic, the content and affiliate marketing space is flourishing. There are several places still on lockdown and much of the world has restrictions that have forced both businesses and consumers to adjust accordingly. A benefactor of these global challenges has been the content and affiliate industry.
COVID-19 related trends adopted by consumers during times of lockdown are sticking as 2022 is unfolding. The thriving e-commerce market has carried over into the content and marketing arena, as many e-commerce brands have begun purchasing content businesses, which they use to increase market share and reduce long-term customer acquisition costs. Content site owners are also seeing increased traffic as people have shifted to online shopping. Hobbies adopted by consumers during periods of lockdown are staying and this, in turn, benefits content site owners as traffic is trending upwards.
However, business owners have always had to be conscious of both macro- and micro-economic factors when planning. With inflationary pressures and increased national debt across most developed nations, many will be making more conservative decisions throughout 2022 as they expect to bear some of that burden from the government, such as through higher taxes.
In mid-2021, we noted that the US could raise federal tax rates for wealthy investors to as much as 43.4%. While an increase is still likely to happen, offsetting measures like an increase in the SALT cap for US taxpayers in high income-tax states such as California and New York should help ease some of the burden.
In this report, we will explore the content business acquisition landscape, the state of the industry and how you can make your content site stronger and more profitable in 2022 and beyond.
Buyers in our network represented nearly $39 billion in capital at the end of 2021, with many expressing interest in multiple business models.
FE Data on Content and Affiliate Deals in 2021
Taking a closer look at deals we closed in 2021, we see deals by sector spread across B2B Services/Products/Reviews, education and health and fitness, each with 14% of the deals. Outdoors/Recreation, Home and Garden, Graphic Design Services/Reviews and Consumer Products each comprised 11% of deals. Finally, the sectors Gaming & Entertainment and finance made up 7% of the deals we closed.
The chart below shows the volume of deals by revenue model in 2021. Looking at different businesses we sold last year, 50% were affiliate, 29% were digital products/services and 21% were display/direct advertising.
Data from Google’s 2021 Google Search data insights underscores that new hobbies and consumer habits adopted during the pandemic are persisting, with a 50% increase YoY in searches containing “painting for beginners,” and a 60% increase YoY on the search term “how to invest.” Working from home also led to a 100% increase YoY in searches containing “yard landscaping ideas.”
Like many industries in the US, the content and affiliate marketing space is also experiencing the benefits of a shift from in-store to online shopping. This migration has been accelerated by the COVID-19 pandemic, with tailwinds expected to persist for the foreseeable future.
More businesses than ever are using affiliate marketing as a cost-effective way to reach targeted audiences. Annual spending in this industry is projected to reach $8.2 billion by 2022 in the US alone. Globally, predictions suggest that affiliate marketing will be a $12 billion industry by 2022, with an approximate 10% growth every year. By building a content business, you’re creating a valuable piece of online property.
At FE International, we’ve helped over 1,200 founders divest of their businesses. In this post, you’ll gain insight into the types of businesses we’ve valued and sold. We present you with unique data from deals closed in 2021; what we’ve learned will help you grow your business and give you insight into what a strong content and affiliate business looks like.
Featured Deal: Newor Media
Founded by Ted Mikulski in 2018, Newor Media provides publishers with optimized ad monetization technology.
As a market-leading programmatic ad-management company, the business offers insightful reporting and analytics and a team of Ad Ops experts ready to help.
FE International acted as the sole sell-side advisor to Newor Media on the acquisition. Newor Media set itself apart from its competition by working proactively with all publishers to maximize their revenue – something you would not experience with a larger company offering like Google AdSense. Their team of professionals works with its clients personally to make the most out of their banner ads.
FE International ran a competitive process, secured multiple qualified offers from various strategic and private equity acquirers, and closed the deal above asking price. This deal helps demonstrate FE’s ability to close deals across multiple business models – the ad-tech space has elements of both content and SaaS to understand. While technically not falling under either category, FE was able to get a deal done.
“When we partnered with FE, they got us in front of leading private equity firms and strategics,” Ted Mikulski, the founder of Newor Media, said. “I am super proud of what we’ve built with Newor Media. The business grew rapidly alongside partner Megan Rafferty, far quicker than I could have imagined. We started getting approached by interested buyers about a year before we exited, unsolicited. It was overwhelming, and that’s when I knew I needed to work with a professional brokerage. When we partnered with FE, they got us in front of leading private equity firms and strategics and ran a smooth M&A process from start to finish. I look forward to Newor Media’s continued success under the new ownership of LTV.”
Content and Affiliate Marketing Trends
Strong Evergreen Niches
When building a sellable content business, there are certain niches that will pique the interest of investors looking to buy your site. If you’re thinking about selling your website, you should evaluate your niche, its lasting power and how you stand out among the competition. This will prepare you for an eventual sale and act as a powerful selling point that may increase the valuation of your online business.
Niches with evergreen demand are usually going to be the most beneficial for affiliate and content site owners as they have long-term potential for profit. For content owners, their success hinges on finding these profitable niches.
The evergreen niches we’ve seen with strong interest include outdoor activities, arts and crafts, DIY, B2B services/products/reviews, education and health and fitness-related products.
There is a broad range of unique content that is difficult to place in a niche, but some of the most common niches are represented in the graph below, along with the average multiple for each one. Evergreen niches do typically demand a higher multiple, but all sites are capable of finding an audience that will connect with their content. From a sample of content sites that were sold in 2021, we established a base sale multiple and set it to 100 to demonstrate the relative multiples we saw for each niche.
The education niche has also proven evergreen over the years. E-Learning is a flourishing niche that has become an important part of the modern education system and COVID-19 has further catapulted growth. According to a Global Industry Analysts report, the global e-Learning market is projected to reach a revised size of $457.8 billion by 2026, growing at a CAGR of 10.3% over the analysis period.
Academic, one of the segments analyzed in the report, is projected to record 10.2% CAGR and reach $314 billion by the end of the analysis period.
Another niche worth noting is the automotive space. By 2022, the global automotive accessories market is expected to reach about $522 billion. Both the education and the automotive niches present major opportunities for content and affiliate owners in proven markets as the demands for products remain strong with expected growth.
Diversify Traffic Sources and Focus on SEO
In March of 2021, Google announced they will chart a course toward a more privacy-first web. Already last year Chrome announced its intent to remove support for third-party cookies. It’s evident that the online playing field continues to shift, especially if your business relies on third-party data to understand and track online user behavior.
Substantial changes like Google’s happen on other platforms as well. Social media channels like Facebook can change their algorithm at any time, which in turn impacts the visibility of targeted ads and how content is presented to its users. As a content site owner, you should avoid relying on a single source of traffic to your site for those reasons.
Keeping in mind the importance of diversifying traffic sources, most of the traffic will still come through organic and paid search from Google.
Content and Affiliate Quick Tips
With 81% of shoppers doing research online before making a purchase, it’s crucial for affiliate marketers to increase visibility in search results. With a strong purchase intent, these visitors are valuable potential customers that you’ll want to drive to your site.
Google plays a substantial role in product discovery, and search intent on the user end will inform which sites rank highest in the SERP.
This is a key metric to keep in mind for content and affiliate site owners as it underscores the importance of SEO. Keyword ranking and thorough research could elevate your site and increase traffic to your content-focused site. Are you offering an answer to what consumers are looking for?
When looking to optimize your site for search engines, your content should have descriptive and accurate titles on your pages. Google likes fresh content as it makes your site seem relevant.
It’s crucial to update your content to cater to different trends and seasons. This will signal to the algorithm that your content is essential and up to date. You’ll want to highlight what people are looking for in that specific season.
Optimize for Crawling
For SEO purposes, you should make it as easy as possible for search engine crawlers to discover your page. You can take several steps to ensure this, some of them being acquiring backlinks, using an XML sitemap, and manually requesting the indexing of your URLs via Google Search Console.
Google also highlights the importance of sitemaps as they show which pages are essential to your site and provide information on how often the site is updated. Sitemaps are also crucial for crawling non-textual content like videos or images.
Although Google won’t limit crawling to pages listed in your sitemaps, it will prioritize crawling these pages. This is especially important for sites with rapidly changing content or pages that might not be discovered through links. Using sitemaps helps Google discover and prioritize which pages to crawl on your site.
Monetize Your Content and Diversify Revenue Streams
There are several alternatives when it comes to monetizing your content – display advertising, affiliate programs, repurposing content into e-books and email solus campaigns.
Many content owners have large email lists that they can monetize. Solus emails are sent from a third-party advertiser to a list of email subscribers marketing to their customers through a third-party email list. This is what differentiates solus emails from regular email campaigns. These types of campaigns combine the benefits of email marketing with a typically large customer base that doesn’t need to be grown by the advertiser.
Diversified revenue streams can also mean utilizing a mix of affiliate and display ads. You should also diversify by looking into different affiliate programs compared to solely relying on Amazon’s affiliate program. AvantLink and ShareASale are excellent options and can be great additional revenue streams.
For more useful tips to apply to your content business, read our post on how to succeed at affiliate marketing.
Featured Deal: Webretailer
FE International served as the sole sell-side M&A advisor on the acquisition of Webretailer.
Launched in 2003, Webretailer.com is the world’s leading resource for businesses selling through online marketplaces like Amazon, eBay, and more. Over the years, the site has built incredible trust with its audience. The business boasts 18 years of operational history, with strong net margins. This content site helps more than a million yearly visitors with guides, news, ratings and reviews of everything related to selling on online marketplaces. After 18 years of running Webretailer, founder Andy Geldman will now focus his extensive experience on assisting other businesses in the content and e-commerce space.
The business was acquired by Adventrum, a subsidiary of Marketzoo International. Adventrum was founded through a series of ambitious acquisitions in late 2020. The company owns and operates a variety of digital companies aimed at the B2B performance marketing space.
Adventrum CEO Kristoffer Lindström said, “Webretailer will be a splendid addition to our growing B2B lead-performance sites portfolio here at Adventrum. It has a clear focus on the e-commerce niche, which we find highly interesting. The previous owner has done tremendous work growing the site into a leading resource for online business selling, and we are now excited to bring our expertise to grow and expand the site further.” Lindström was pleased to partner with FE International again as this is their second acquisition through the advisory firm.
“We are very satisfied with the process and the work FE has put into the process of closing this deal. The partnership with FE is much appreciated as they show great professionalism every step of the way.”
Summary and 2022 Outlook
Affiliate marketing takes time and requires continuous effort. For those looking to grow their sites throughout 2022 with an exit in mind, the important factors to focus on will be diversifying revenue streams and traffic sources.
Understanding the financials of your online business from the outset is also vital to the successful sale of your business. Before you initiate the process of selling your business, you should be clear on every aspect of your site, including all sources of revenue, cost(s) of sales and operating expenses. You need to be able to compile an accurate profit and loss statement for your online business, as this will form the basis of prospective buyers’ valuation methodology and due diligence. The valuation of your business will be calculated after reviewing various factors specific to your type of business.
Here are some things to think about. Note that some of the following may not be relevant to your site:
- Sources of revenue – Annual recurring revenues, AdSense, Affiliate programs, Direct ads, Direct sales, Monthly recurring revenues, etc.
- Cost of sales – Advertising & promotion, COGS, Credit card processing fees, Outside services, Shipping & delivery, etc.
- Operating expenses – Content creation, Employees, Hosting, Outsourcing, Refunds/Chargebacks, Subscriptions, etc.
Learn more about the process of valuing a content business by checking out our post on affiliate website valuation.
As you prepare your content business for sale, you should gather all relevant metrics and other important information. A key component of your business’s success relates to its website traffic, so tracking this is of utmost importance. Using Google Analytics is a wise step to take since it is widely used and user-friendly.
Quality content is fundamental to a content business and utilizing someone else’s content (including images) without permission is not acceptable. Be sure you abide by the Digital Millennium Copyright Act (DMCA) and follow through on any takedown requests. Copyright infringement is a serious offense, and potential buyers will not want to get involved with a business that does not take this seriously. Additionally, if your website features affiliate links, be sure to include an affiliate disclaimer on each page containing these links.
For more information related to pre-sale preparation, we recommend reading our post on preparing your affiliate business for sale.
For each business we sell at FE International, we evaluate the sustainability of the business model as well as the specific industry so that buyers can acquire a real investment. Content and affiliate marketing will only continue to grow as the world keeps shifting from brick and mortar to online shopping and therefore, content and affiliate business owners are in an excellent position for potentially divesting in 2022.
If you’re considering starting out in affiliate marketing, you will be well-positioned for a potential exit down the line if you build with the end in mind. Choose a niche that interests you and become an expert. Choose a focus for your site and develop a solid SEO strategy that you continually adjust based on insights around site traffic, search ranking and engagement. Analytics around your visitors, pages, where you’re converting, and links should inform your decisions and what actions you take to create content based on data