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Mass Domain Development, A Flawed Model

September 14th, 2010 Comments off

With Frank Schilling’s recent post predicting “most high quality name traffic will leave it’s present PPC deal looking for something better“ and a conference on domain development happening this week, we found the topic of our latest guest blogger perfectly fitting.   – Adam Strong , DNN editor

Mass development is the most recent trend in monetizing domain names, and it is being hailed as a successful, scalable alternative to parking. You are told that mass-developed sites will rank well in the search engines over the long term, driving more traffic and earning you more revenue. I am skeptical to say the least.

What exactly are we trying to solve here?

There are several fundamental problems with the parking model. The first is that parked pages offer no unique content, and search engines actively de-index them. It is also against the terms of service to build back links and drive traffic to a parked domain. Thus a parked page relies entirely on direct navigation traffic for visitors, and there is no way for you to increase traffic in an attempt to earn more money. Another issue with parking is that it relies entirely on PPC ads from upstream providers who are holding all the cards. They are consistently paying us less and less for our traffic, and there’s not a whole lot we can do about it.

As domain investors, our goals are to increase traffic through ranking in organic search results, and to change the way we monetize that traffic. Does mass development solve those problems?

Giving the search engines what they want.

There’s really no secret to ranking well in the search engines. Sure, there are a lot of black hat methods to help you rank higher than you deserve, but what it all boils down to is that the search engines want to provide their users with the best web sites for a search query. Google has been quite clear about the most important metrics it uses to measure the usefulness of a website; they are looking for quality, unique content and back links. Mass development solutions don’t provide either, and they can’t.

You need unique content, but that is something that requires human involvement, it can’t be generated by software. You need back links, but unless you have a really amazing site, people aren’t going to link to you very often and someone has to go out and build those back links. You live or die by these metrics, and it can’t be scaled because they are expensive services.

It amazes me that domain investors continue to believe they deserve top rankings in search engines for mass-developed sites that took minutes to create, and don’t give the search engines what they are looking for. How can you have the best site for a search query if no effort went into it?

The reverse sandbox, and fleeting results.

I can hear it now; you are saying to yourself that some of your mass-developed sites started ranking in the search engines fairly quickly after being launched. Search engines often promote new sites to the first page to keep the results fresh (this is called the “reverse sandbox” effect), but it won’t last if your site is built on a shaky foundation. You also run the risk of Google banning the footprint of your mass-development service provider. I believe this is inevitable.

Don’t believe me? It has happened in the past, and history has a funny way of repeating itself. I’m sure you are all familiar with Build a Nice Store (BANS), which got banned en masse from Google search results. The same thing happened with all the Amazon and eBay affiliate sites that had no unique content. It happened to all the MFA sites with spun or re-purposed content. Now think about it, how are the solutions I just mentioned fundamentally different from the mass-development solutions on the market today? You still have scraped, unoriginal content on sites that took minutes to set up and have no back links. Just because the solutions are backed by well-funded companies doesn’t mean they won’t meet the same fate of all the other automated solutions.

How much you earn per visitor.

Let’s work under the assumption that your mass-developed site either never ranked in the search engines, or has lost its ranking for the reasons mentioned above. What is that going to do to your earnings? What we have seen is that developed sites have a lower clickthrough rate (CTR) than parked pages. That makes sense if you think about it, on a parked page there is nothing to do but click a link that generates the domain owner money. On a developed, interactive site, you can read articles, watch videos, post comments, etc. None of these actions generate revenue for the site owner.

So if your domain is not getting any additional traffic because it doesn’t rank in the search engines, and you are still getting paid on a PPC model but your CTR is lower, that means you are making less money. The only way to earn more in this situation is by changing how much you get paid per visitor.

This is where mass-development solutions got it right, sort of.

A few providers are allowing domain investors to implement alternative monetization methods, including comparison shopping, paid business directories, and the ability to add affiliate programs. One is even exploring drop shipping for product domains; it will be interesting to see if they can profitably scale it. All of this is a major step in the right direction, and is great in theory.

I do have reservations about this strategy though. Take the paid business directory for example, in this model the domain owner receives a monthly fee from a business to be listed in a directory on the domain. But if you aren’t ranking well in the search engines and getting a lot of traffic, this method won’t generate much revenue. How much would a business owner be willing to pay if your domain gets 50 unique visitors a month? They won’t pay much, and they probably won’t renew their subscriptions. Who is going to sell the listings to business owners? Trust me; they won’t be knocking down your door. It’s one of those things that sounds great in theory, but once you implement it, you end up disappointed.

With comparison shopping, which in the case of both providers is based on the PPC model, you could still earn less money if you don’t have additional traffic, because the CTR will drop and the monetization method didn’t change.

The bottom line is that if you don’t rank well in the search engines, these alternative monetization solutions will only make you marginally better off in the best case scenario, and possibly even worse off.

The future of scalable domain monetization.

What parking does right is keeping it simple. The parked page is highly focused on sending visitors to the advertiser’s site and getting paid for it. On a mass-developed site, you lose that focus by giving the visitor a lot to do that doesn’t earn anybody any money. Instead of focusing on sending people to a destination, you become the destination. Only you’re not a business with something to sell, so there’s no money in keeping visitors on your site. Unless the interactivity is bringing in a lot of organic search traffic to offset the drop in CTR, you want visitors off your site as fast as possible.

I think what we will see in the near future, or at least what we need to see, is parking companies getting creative with monetization but still keeping it simple in terms of visitor interaction. They should develop functionality to allow for direct banner sales on parked pages. They should interface with affiliate networks like Commission Junction, feeding relevant CPA ads onto parked pages. They should have forms to collect email addresses and build mailing lists. They should work with lead generation networks. But they have to keep it simple. If you can’t scale the creation of an interactive site that does well in the search engines, then at least make sure the site is simple and converts well.

I don’t believe mass-development services, with duplicate content and no link building, will be used for very long because the model is flawed. If parking companies start pushing the envelope (SmartName Shops for example), I believe we’ll see the end of mass development. Then we’ll be left with Parking 2.0, and actual development that requires effort but has lasting results.


Opinions expressed by Michael are not necessarily those of DNN, Minisites.com, their founders or advertisers. Michael welcomes your feedback and comments.

Michael Sumner is the co-founder of DN Media Corp. and MiniSites.com. DN Media is a domain investment company that specializes in buying and selling short, generic domains. MiniSites.com provides mini site development services to the domain industry, and has developed properties such as Rate.com, Sample.com, Bicycle.com, Housekeeper.com, Beachwear.com, Motorsports.com, and more. Michael also works in web development and domain acquisitions at StateVentures, LLC and Telepathy, Inc. He lives in Maryland with his wife Stefania.

Domain Name News will be bringing more guest bloggers to the site in the coming weeks. We welcome your feedback and suggestions on topics. Feel free to email us at editor @ domainnamenews.com if you have an idea for a guest post.


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