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Unread 22nd Feb 2013, 02:31 PM   #1
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Default How much is this link worth?

My company recently got a link from the top web forum in our niche. This forum has a stickied post discussing all the products in our niche. They have a no-follow link to our site, a discussion of our product, and one of our discount codes.

We don't pay them for the link. Since it went up four months ago, the discount code has generated about $1700 in revenue per month, which is $1100 in profit.

For internal reasons, we wanted to place a value on this link. We expect it to persist for a while, this stickied post has been around for over two years and doesn't change.

How much would you say such a link is worth, given the revenue it's been generating?
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Unread 22nd Feb 2013, 03:07 PM   #2
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Default Re: How much is this link worth?

Estimate the future earnings it will bring in and then discount that amount to present dollars... wallah.

http://www.investopedia.com/terms/n/...#axzz2LfFz2miv


Or maybe treat it like an annuity and calculate the present value using annuity equations

http://www.investopedia.com/terms/p/...ue-annuity.asp

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Unread 22nd Feb 2013, 03:10 PM   #3
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Default Re: How much is this link worth?

Or, take the revenue generated in the last year and multiply by 1 - 2; estimating the value of a business or revenue producing link can be tricky - but whatever math you use, be consistent across all links to keep from comparing apples to oranges.

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Unread 22nd Feb 2013, 03:53 PM   #4
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Default Re: How much is this link worth?

I was going to say something like Gail, above.

I have no idea, really, but was thinking that as website-based businesses commonly sell for about 10-12 months profits, that puts it at about $11k - $13k, but maybe that was conservative? On the other hand, SEO-based income-sources are intrinsically kind of "risky"/"precarious", so maybe not so conservative? :confused:

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Unread 22nd Feb 2013, 06:08 PM   #5
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Default Re: How much is this link worth?

Quote:
Originally Posted by LillySage View Post
Estimate the future earnings it will bring in and then discount that amount to present dollars... wallah.

Net Present Value (NPV) Definition | Investopedia


Or maybe treat it like an annuity and calculate the present value using annuity equations

Present Value Of An Annuity Definition | Investopedia
I'd use one of these valuation methods, but would heavily discount it by at least 50% due to the risk the link could be removed at some point in the future and/or forum activity slows. Any number of events could occur to end that revenue stream, hence it steep discount should be applied.

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Unread 22nd Feb 2013, 06:14 PM   #6
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Default Re: How much is this link worth?

Can't sell it 10 fold because it's not a business or website making money. It's just a link that brings in traffic, and your site and product does the converting. It's a discount to your product, so if you were to sell it would be worthless as a link...

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Unread 22nd Feb 2013, 06:25 PM   #7
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Default Re: How much is this link worth?

Thanks guys. To be clear, it's merely an internal valuation. We also know we can't count on it.

I'm actually asking in order to make a better argument to the business owners. For some reason, they think this sort of thing is useless. One of them said he thought it might be worth a few hundred dollars to have such a link(!).

They seem to think that almost all of those people would have bought even if the link wasn't there, even though we get little other mention on this forum. We have a very small market share, so I can't see much basis for that belief.

I figured it might be reasonable to assume that the link would stay there for an additional 1-2 years. That's how long the stickied post has been there, and there have been almost no deletions once something is added.

Anyway, I think this sort of thing is valuable and we should pursue similar links elsewhere, so I want to convince them to treat this as a valuable, recurring asset.
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