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09|14|2010 04:57 am EDT

Mass Domain Development, A Flawed Model

by Michael Sumner in Categories: Domain Development, Featured

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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  • http://www.3ac.co.uk Gary Taylor

    Great article Michael

    I am not one for using mass development solutions / services of other companies for the sole principle that you cannot guarantee the quality nor uniqueness of the content they put on your domains

    I develop a lot of mini sites myself, but always using my own templates and have a big focus on unique content typing with my own hand

    I still rate Amazon A-store for monetising some of my domains but domainers do really need to come up with more refreshing ideas for their mass development projects

    Those who pay mass development companies to “develop” their domains are playing the game wrong and I think the model will be short lived. Sometimes too much automation is a bad thing

    It will be interesting to see other peoples views on this

    Best

    Gary

  • http://www.sellmeone.com Greg

    I have had quite a few debates with domainers on this subject over the last weeks. Many domainers are trying to trun developers with little knowledge. I am a developer turning domainer. Even a totally unique mini site needs feeding to stay in serps, they just do not want to believe it.

  • Sisyphus

    Great post, have exactly same opinion, had to mention your post on facingtheabsurd.com as well…

  • Deke

    That nagging little footprint issue has always kept me away from these services.

    You’d think Epik, WhyPark, and such would know this, and I’m sure they do, but I suppose there is still money to be made before they get crushed by the G Monster.

  • http://www.ComprarDominio.com Leonard Britt

    Yes, the challenge with directory listings is that the relevant businesses likely won’t even know your site exists unless an effort is made to contact those businesses or your site ranks very well for their business-related search terms. Then, how is Google going to rank your site if the only “content” is listings. One can look to what Elliot has done with DogWalker.com as an example but one should note that was not a mass-developed site and I am still amazed at what he has done with a fairly simple service that I would never have tried to develop.

  • Elliot

    @ Leonard

    DogWalker.com is actively promoted and I probably spend a couple of hours per week marketing it in various channels. It’s done well, but it wasn’t as easy as building a nice site and collecting a check. Conversely, CatSitter.com isn’t as actively promoted, and the site hasn’t done nearly as well, despite being nearly identical in setup to DogWalker.com.

    My model is somewhat scalable for my own business, but it wouldn’t be very easy to scale it in a big way.

    FYI, Michael Sumner was very helpful in solving some of the back end issues we faced with DogWalker.com.

  • http://www.customerhook.com Adam T

    As a mass development company, I look at the situation a bit differently. I stick to only certain categories of domains (finance, health, real estate) because I CAN get unique content in mass for those categories because markets are always generating new data on all sorts of subtopics. Perhaps you’ve heard of the sports blog that gets it’s ‘unique’ content purely from stats. That’s a model I use very often in conjunction with SEO and lead gen that works very well. Just a humble opinion however, if you’re doing something that works for you, don’t stop by any means.

  • Adam

    @adamT do you have examples of your mass development and what revenue model do they use ?

  • http://www.filecuval.net çuval

    It happened to all the MFA sites with spun or re-purposed content.

  • http://DirectNavigation.com larry fischer

    Adam,

    You must have been the kid in 3rd grade that let everyone know that Santa Claus was not real. Well written article.

    larry

  • http://www.irishdomainer.com irishDomainer

    Great article Michael, Im in the same predicament having tried a few mass domain/parking companies with no success. I am back to parking domains a just hand developing the best domains but would love a way of monetizing the 1000+ left over.

    Anyone tried the WP Mage system? You can create unique content from tranlations EN/FR/EN but dont know if Google would see if it as spun content so dont really want to risk it.

    On my fully developed sites its unique content all the way but takes up a lot of time OR money if you outsource copy creation.

    There is no easy or cheap way by the looks of it!

    Cheers,

    iD

  • http://www.namepursuit.com Steve

    Great article.

  • http://www.domainanimal.com/blog Mike Curving

    parking is for domains that get direct navigation. since most dont, thats where we look for alternatives. if you own a large portfolio there’s virtually no way to scale any kind of serious development. so for example if you have a generic .net with heavy search volume, you’re likely getting little to no type-in traffic, whereas with development you can at least leverage the exact-match domain to outrank better sites for the same keyword term. In a nutshell, the formula which expresses the driving factor behind mass development is: Lower CTR x some traffic > Higher CTR x no traffic. This is not to say its the ideal solution, for many of the reasons you mention. When you boil it down its more or less another form of arbitrage. The question being can a mass developed site earn more than it cost to be developed? As long as the answer is yes, there will be some money in it, although it must be balanced with the risk factor of having the footprint banned. Just my thoughts. I completely agree about your vision for the evolution of domain parking, however any new form of monetization x no traffic still = 0

  • http://www.david-carter.com/wp David Carter

    Interesting article and spot-on in terms of where we are now in terms of development.

    Mass development by software or by template cannot possibly work in the long term if history does repeat itself.

    At the moment, services like Epik have it part-right, but look at the sites and you see the same shopping network affiliate program and some Adwords, along with some dubious quality articles, or search engine bait.

    Well, I blogged about this very subject myself today. As a domainer, I have always erred on the side of development and have varying degrees of success.

    I think I have a solution, but it’s certainly not a “mass” solution.

    It’s time for domainers to get selective about their holdings and a lot fussier about their sponsors for want of a better term.

    Put simply, if you’re relying on Adsense, affiliate programs and article regurgitation, you’re in trouble.

  • http://www.BrandDomainName.com/ Chris Nielsen

    “…search engines actively de-index them.”
    That has not been our experience and it would be helpful to have some data to back that up. Of course, we highly optimize our dmains so maybe that is why ours are not being removed…?

    As a domainer with about 1,100 parked domains and 100 developed domains, I think I see the problem clearly: Domainers want to get more traffic to more domains and get more money. But there is a problem with parked domains as was mentioned, and the trend (WhyPark.com, Noomle,com, minisites, etc.) may colapse under it’s own weight.

    It’s one thing to have a parking page that most people can recognize and understand, despite what opinion they have of such pages. But when you “develop” a domain and make it into something more like a valid site, you muddy the waters and fewer people can tell that they are on an advertising property. The main problem with this is that as developed domains get better, they are going to be the “Asian Carp” of the web and kill off the native species (real sites), or at least hurt them quite a bit.

    I don’t expect this to be a popular idea, but I would like to see an industry group for parked domains that could set standards and work with search engines to establish a reasonable place for parked domains as advertising platforms.

    Failure to not do something like this may result in search engines removing all parked domains and “developed” domains. It is not that hard to identify developed domains if the search engines wanted to. We are pretty luckly that have done little or none of that at this point.

  • http://surgemarketing.com Surge Marketing

    Spot on post. You accurately identified the major flaw of these mass development platforms–lack of unique content. Without unique content it is unlikely a website can sustain high search engine rankings in the long term. It is very difficult to scale by producing unique content because it cannot be automated. Beneficial SEO requires some good old fashion time and attention from an actual human being.

  • http://drinkrecipe.mobi Drink Recipes

    Even unique content is not enough if similar content elsewhere is more linked to, so it is content + links = traffic = work input required, which may be greater than the return from the effort.

  • Chris

    Mass Domain Development works. You just need to start with the right domains! = Vertical market domains. If your portfolio is just a hodge podge of different names, it’s going to be a challenge to get them developed adequately. Take a look at Saltwater Dreams, Inc. (As reported: http://www.domainconsultant.com/?p=670)

    I agree with most of the comments above. Quit fussing over your portfolio size and start focusing on acquiring/owning specific product categories.

    Better yet, grab product domains that represent items that you can manufacture yourself locally and free yourself from being the middle-middle-middleman from this lowest price commodity pricing gulag most retailers and all domainers find themselves in.

    Domain names represent a sign post to the product. The money to be made is in the product, not in the sign post.

  • https://www.directbusinesslending.com/ Business Lines of credit

    Im in the aforementioned asperity accepting approved a few accumulation domain/parking companies with no success. I am aback to parking domains a aloof duke developing the best domains but would adulation a way of monetizing the 1000+ larboard over.

    Anyone approved the WP Mage system? You can actualize different agreeable from tranlations EN/FR/EN but dont apperceive if Google would see if it as spun agreeable so dont absolutely appetite to accident it.

    On my absolutely developed sites its different agreeable all the way but takes up a lot of time OR money if you outsource archetype creation.

    There is no accessible or bargain way by the looks of it!

  • Philip

    Chris @ September 17, 2010 @ 4:23 pm EDT
    Agree with the comment Chris ref: Vertical market domains. Financial / Insurance as long as the 5 / 12 keywords are related to one area of commerce.
    In the case of local services one good domain e.g. Local Tradesman – Local Trades Local whatever with keywords carpenter New York, Plumber Detroit, Roofer whatever state town names.

  • http://www.firstdomainer.com Lev Pershin

    Thanks for the great post and the incredibly valuable information.

  • http://www.ourereplicawatches.com/breitling-watches-c-906.html Breitling replica

    they are expensive services.