How do I find out if a content website’s income depends on one advertiser?
Ask for income broken down by source for every month, then look at the share from the biggest single advertiser or ad partner. If one name supplies most of it, ask to see what is in writing about how it can end, and whether the seller has lost an advertiser before and how income held up.
The income statement is the place to begin, but a total tells you little. Ask for a monthly report that splits income by payer: each direct advertiser, each sponsorship, each ad network and any affiliate programs. Work out what share the largest one holds and how that share has moved over recent months.
Then look at how the relationship is set up. Is it written down or a handshake? Can it be ended on short notice by either side? Does it depend on one person at the advertiser who may leave? Ask to read the emails and any agreement, and ask your lawyer to explain what they mean for a new owner, including whether a change of owner affects them.
Think about the content as well. If one advertiser pays for one section of the site, or one topic page produces most of the income, the dependence is on that page. Ask what happened the last time an advertiser left, how quickly it was replaced, and how many advertisers have approached the site without being chased. Your accountant can help you model a month without the largest source, so you can see what you would still carry.
Key takeaways
- Request income split by payer for every month, not only totals.
- Read the actual agreement or emails with the largest advertiser.
- Ask what happened the last time an advertiser left.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat is an income statement?
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 03Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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