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I've heard many people talk about certain domains as having good traffic while others have bad traffic. What does this mean and is there any such thing as bad traffic? After all, isn't more better?
 Let me state from the outset that other than deliberately fraudulent traffic or bot traffic I do not believe that there is any such thing as bad traffic. I do believe that there is traffic that hasn't been correctly matched to advertisers therefore it performs poorly.
The whole concept of good and bad traffic stemmed largely from Google's smart pricing system. Several Traffic conferences ago I talked with a number of people from Google and outlined the following scenario to show how defining traffic as good or bad was potentially flawed.
Let's imagine that you went and purchased pizza.com. When asked as to what sort of advertising should be displayed on the domain I was told that it clearly should have links selling the delights of pizzas. I then indicated that after a little bit of research pizza.com was formerly used as a promotional website for financing pizza franchises, therefore the keyword should have nothing to do with pizzas and more do to with financing. Now here's the problem. Google, who pays the advertising dollars would smart price down the owner of pizza.com for sending a keyword of "financing" rather than "pizzas".
So what is good or bad traffic? It's whatever Google/Yahoo says it is. Herein lies the challenge. Good traffic is matching more closely what Google/Yahoo thinks the domain's traffic is. This means that every time that you hear a person say that a particular domain has "crap" traffic then what they are really saying is that they haven't worked out how to match the traffic up with Google/Yahoo.
Here's the problem for domain name owners. We aren't told which domains are smart priced downwards, we can only make guesses and keep on trying to work out the Google/Yahoo black box. I believe that this is one of the reasons why a domain may be getting paid 80 cents per click one day and 3 cents the next. The smart pricing algorithm is changed and whammo welcome to a brave new world. Let's face it, no ongoing auction system bahaves in such an irrational manner for highly trafficed standard keywords. For niche markets you may get swings but not for mainstream keywords, the odds of this occurring are extremely small.
This means that all domainers will face the issue and have the problem of "bad" traffic, it is inevitable. It also means that unless you have setup alarms in some fairly complex systems you're probably not going to pick up your drops in revenue quickly enough prior to losing a lot of money.
What would be really interesting would be if a parking company provided us (ParkLogic) with direct access to some of the Google/Yahoo data that they are receiving so that we could run our analytical engines across the top of them. If any parking company is interested in some insights into their own data then drop me a line. For now I'll just keep on focusing on turning the bad into good.
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