Valuation of an online business can be a tricky task. The essential motive for purchase is the expected revenue or profit from the online business. The nature of the business – whether it is an online services business, a software business etc. s– is also important. While an online business offers several advantages such as high margins, it also helps avoid the problem faced by a regular company. These include inventory stocks that need to be maintained, costs of running the office, rigidity of location etc. However, estimating how much to pay for an online business is no small task.

To value an online business it is essential to take into consideration the cost of maintaining the business online. A solid number here reassures the buyer and brings a sense of security. This shall help the buyer estimate his/her strategies about adding value to the business. This figure is also compared against how much would it cost the buyers to create the online business completely from the start.

Potential profits – based on certain reliable parameters – are also a useful figure to look at. However, owing to the level of approximation involve, this number cannot be a sole parameter. Often historical figures are used as a base and to calculate average earnings over the years. Buyers tend to be stringent about historical figures as they feel that projections may have a level of inflation in them. The multiple of earnings is a bone of contention between the buyer and the seller. For most online businesses this is generally low and begins at 1-1.5 times the average earnings of the business.

If the business has recurring revenues arising from its transactions and the cost of managing these transactions is affordable, it would be able to command a higher premium from the buyer.

Another factor most buyers give importance to is the daily unique of the website. But here also the buyer needs to be careful as a higher number does not necessarily imply increased profitability. Take the example of a website that offers several links for free downloadable software. The unique clicks (number of visitors) per day here would be on the higher side as would be the bandwidth cost. But to value the site based on these unique clicks is a faulty and loop-sided decision. So while the number of unique visitors is a fine statistic, most buyers would often prefer to have details on actual earnings. More than web site visitors, it’s the revenue that already is or potentially could be generated from them, which is important.

If there are several sources of revenue for the website, then the buyer has a sense of security. If most of the website’s revenues are generated through one program – say a Pay per Click program – then the risk being undertaken is much higher as the basket is not diversified.

Risks for the buyer include a sudden decline in the value of the website, negative marking by search engines, the domain name coming up on a spam list etc.

Pay per Click is an online technique for advertising utilized by search engines, blogs etc. In this the advertisement is placed on these webpages; however, the advertiser only pays the owner of the webpage when a user clicks on the placed advertisement and some user traffic is generated. In the case of search engines, advertisers compete to be placed on the webpage, when certain keywords relevant to their advertisement, are searched for. When an internet user is looking for any of the matching keyword or viewing relevant content, the advertisements would come up on the webpage. These are sponsored advertisements and this is generally specified on the webpage. They appear alongside the organic search results, which are free of cost. The positioning of an advertisement can be changed according to the preferences of the owner. It is more typical for content-based websites to have a standard rate per click instead of auctioning the advertisement space.
Pay per Click mechanisms are largely easy to set up. They are advantageous for the host as they lead to revenue generation irrespective of whether they lead to a purchase. They are also able to target a wide audience, increasing the expected exposure for the advertiser. However this can also work against the advertiser if the target audience is specified. Also the revenues from Pay per Click programs are less as compared to those being generated by affiliate programs.
While the idea of Pay per Click largely attracts most people to this program, it must be noted that most programs are organized to pay a single time for a click generated by a distinctive IP address in a 24 hour or longer time frame.
The most dominant Pay Per Click providers are Google Ad Words, Yahoo! Search Marketing, and Microsoft ad Center. There is a certain minimum amount charged per advertisement clicked – Costs per Click (CPC). These vary for different search engines and competitiveness of the keywords.
A loophole in the Pay per Click model is when people opt for click fraud, leading to an increase in number of clicks. The search engines have placed automatic systems trying to prevent this fraud in place.
Among the most widely used models of Pay per Click model are the keyword based model and the product based model. Advertisers who opt for the model based on keyword based searches to advertise, have their advertisement links appear whenever these keywords are searched for by people. Keywords base advertising is fairly important and there is a fair amount of secrecy around keywords. There are several firms, which offer their services in assisting companies or people in refining their keywords, so that their relevance increases.
Advertisers who opt for the product based model, have their advertisement links come up when people search for their products. Product engines may also follow the Pay per Click model. Some like the Google Base do not cost anything but need the product feed to be functioning on a regular basis.

Search engine optimization (SEO), simply explained, is the process of arranging a webpage’s content in a manner to enhance its chances of being identified by search engines. For this the content can be reworded and its location on the webpage rearranged. Each search engine has specific keywords that it uses for locating websites and by ensuring that the webpage has a higher number of these relevant words, the webpage increases its chances of coming up in the search engine’s search. The entire aim of search engine optimization is to improve a webpage’s listing and to leverage this to have a greater flow of traffic via the search engines.

There are several kind of searches such as for web pages, images, documents, etc. Ensuring that your website is well structured according to the search engine requirements is a task best undertaken while it is being designed as it helps make the website search engine-friendly. Going back and altering the structure according to the relevant requirements is a more expensive, longer and more tedious process.

Crawlers are used by engines such as Google, Yahoo etc. These crawlers have different criteria when they search for web pages. While coding and restructuring will increase a webpage’s visibility on a search engine, certain methods are considered negative by these search engines and they attempt to block them or at the least reduce their effect on a webpage’s’ hierarchy.

For instance spamdexing, which involves various means to increase the relevant content of a webpage, is considered to be harmful and may lead to temporary blocking of the webpage. For the people searching for a webpage, the results at the top of the page and starting from the left are seen to receive maximum attention.
Certain useful techniques include avoiding using Flash as it is difficult for search engines to index Flash pages. Keywords tags are also not given much relevance by search engines as this was one of the methods employed to increase a webpage’s relevance. The title tag is crucial and is key in making the webpage relevant during the search engine’s trawling.
Regularly updating the website’s content is a good way to pop up in the search result. This is because search engines are regularly trawling the Internet for new content. Short and relevant URLs for the website are great as is not having several URLs for the same website – something that confuses the search engines.
Google, the dominant search engine worldwide, does not accept payments to include webpage’s in the results of its search. Its organic search results are free of cost for the webpages. Certain search engines such as Yahoo! Guarantee crawling by their search engine for either a fixed fee or based on cost per click.
While search engine optimization is a critical online marketing tool, it cannot be completely relied upon owing to the fact that organic searches are free and the algorithms used to crawl through webpages change.

E-mail marketing is one of the direct tools used in Internet marketing wherein an email is used to communicate with the target or potential audience through a marketing message. While e-mail marketing is a rather broad and extensive term, it encompasses e-mails sent to foster customer loyalty and repeat business by reminding the customer of an existing or previous relationship. E-mails sent with the purpose of targeting new customers or to encourage customers to purchase the product also fall within this category.

E-mail marketing as a core marketing tool is widely appreciated and used both by online based businesses and those offline. The ability to keep costs under control while having a substantial list of customers to whom marketing information and product messages can be conveyed usually is the best way to go especially for small businesses, who can ill afford the much more expensive but otherwise conventional marketing tools such as newsletters, TV/Radio Ads, individually addressed mail etc. With email marketing, it’s now possible – and let’s not forget financially comfortable- to follow up and establish the exact return on investment – known as ‘track to basket’.

Delivering an email is quite easy and quick compared to posting a marketing message to recipients on your list. While click-based advertising on websites needs a potential customer to show an initial interest (by clicking on such ads), e-mail marketing allows the marketer to direct the message at the customer who hasn’t heard of the product or service. This falls under the category of push-based marketing. E-mails also allow the option of being tracked through means such as notifications for bounced or failed messages, auto responders, read receipts, and rates of click through.

E-mail marketing allows generation of repeat business without much hassle. Several people may also opt for e-mail messages to reach them, thus providing room for a wider base of targeted subscribers. The prevalence of e-mail and its popularity has also driven growth in this marketing tool segment. Receivers have an option of customizing the messages received according to their taste or personal interests. By being paper-free, e-mail marketing appeals to the environmentally conscious consumers as well.

However a widespread problem of spamming also dampens the consumers’ interest in e-mail messages and adversely affects the impact a marketer could have attracting customers on a marketing campaign. Messages risk being lost in the sea of spam. People often tend to ignore unsolicited emails as it is hard for them to differentiate between legitimate e-mail and spam. Spammers represent themselves as legitimate businesses thus impacting the reputation of real businesses.

Opt-in e-mail advertising is when the receiver gives consent to receive the marketing messages. This helps overcome the hurdle posed by spam and spam filters. This establishes a trust based interaction between the marketer and the potential customer. As the message is anticipated, its reception will be better as will be the response to it. Businesses now exercise the “double opt-in” option, wherein the receiver must confirm their request for receipt of marketing messages by following a unique link and entering special codes – This ensures reliability in the process as spam filters often block e-mail messages from even from the legitimate commercial businesses.