You can’t trust everything you see online. That should be the message potential business buyers take away from the revelation that the traffic numbers from online auction house Flippa aren’t always what they seem.
It’s possible for those selling websites and other assets on Flippa to manipulate website traffic to their sites in the months before putting the company up for sale. This can artificially inflate the company’s value and convince sellers to overpay. Flippa uses Google Analytics to measure this website traffic, but savvy sellers use relatively simple techniques to get around that technology.
Those looking for a shortcut as they get their cybersecurity startups off the ground might be tempted to purchase a website or software-as-a-service company already generating significant traffic, but you need to do your due diligence beforehand. This guide examines Flippa and the traffic manipulation techniques sellers use while looking at how this misrepresentation hurts anyone searching for a legitimate business opportunity.
What Is Flippa?
Flippa is an online auction house where interested parties can purchase domain names, websites, apps, and other assets from sellers. There’s a bidding process involved in acquiring a company in this manner, with sellers generally setting the starting bid based on the website’s monthly traffic and how much money the company generates.
Buyers can place bids on these companies, with the winning bidder assuming control of the website and other assets in an attempt to monetize them. Flippa verifies website traffic statistics using Google Analytics, which should offer the buyer peace of mind that the company has a following and is making money.
Some companies offer a Flippa alternative, too. These alternatives include organizations like Investors Club, Motion Invest, Empire Flippers, and MicroAquire Marketplace. Each auction site focuses on different bidders, some featuring high-value websites and some having less-expensive options for novice investors.
Startups sometimes seek domains and websites through Flippa because they feel they can take advantage of the company’s existing customer base to monetize a new product. This strategy can work, but startups need to be careful because the numbers might not be what they seem.
How Sellers Manipulate Traffic When Selling a Website
Google Analytics should be a trustworthy source for website traffic information. Fraudsters have developed ways to manipulate the system, though, by making a website seem more successful than it is in reality. Here’s how it works:
Automated Visitation Schemes
Fake website traffic is an issue all over the internet, and scammers use this technology in various ways. The gist is that the website owner will use bots to visit the website and mimic clicks to give the impression that a human is using the site. This inflated number then appears on the Flippa listing, leading buyers to believe a website is incredibly popular when very few humans are actually using it.
Inflated web traffic gives fraudsters the green light to increase the starting bid when selling a business on Flippa. A website with 100,000 unique monthly views will have significant value for the buyer, especially if they have a product they believe they can monetize on the site, so they’re willing to pay more. The problem is that bots won’t buy anything, so the money spent on the website is likely wasted.
Flippa likes to tell buyers that the traffic numbers it reports are legitimate and verified because they come from Google. It’s relatively easy to trick Google Analytics, though, so buyers should dig deeper before buying any online business.
Scammers spend fractions of pennies on each automated visitor and can increase their starting bids by thousands of dollars because of them. The result is an inflated marketplace that makes buying a legitimate website more challenging for startups.
Three Ways Manipulated Traffic Hurts Entrepreneurs
Learning about the potential for manipulating website traffic is essential for anyone considering the purchase of a company from an online auction house. These statistics can be incredibly harmful to anyone seeking a head start as a business owner. Some problems you could encounter include the following:
1. Buying a Poorly Performing Business
The most obvious issue you could run into because of manipulated web traffic is purchasing a company that isn’t generating much traffic or income. You’d be better off starting a website from scratch when launching a product than buying something without a following that you’ll have to build up anyway because it would cost less.
2. Failing to Build Your Own Company
Buying a website with inflated traffic numbers could also push you away from starting your own company. You might instead attempt to sell your product through the website you’ve purchased because it seems like a shortcut. This could prevent you from ever getting your product off the ground.
3. Adjusting Your Bids
A website with significant traffic is valuable, so you could end up changing your bid based on those numbers. This scenario may cause you to overpay for the business, however, making it more challenging to turn a profit.
The ongoing situation at Flippa should be enough to scare away entrepreneurs until the company figures out a new way to verify website traffic. Cybersecurity startups should be aware of this issue and seek the necessary funding to grow their business organically.
Get Funding for Your Cybersecurity Startup
Cybersecurity is becoming increasingly vital as the world relies more heavily on technology. There’s significant room for growth within the industry, so if you have a product or idea that will add value to the space, the next step is securing funding. You don’t have to take shortcuts like purchasing a potentially inflated domain because investors are waiting to help push your product to the next level.
Option3 brings investors together with cybersecurity startups. We can put you in touch with investors who understand the industry and what your product might offer to help aid your growth. Contact Option3 for more information on cybersecurity development and investing.