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This post was recently added to the forums area by chris_c. I believe that it's an outstanding piece on domains and chris has captured the essence of what it means to run domains as a business rather than as a hobby in a beautiful way.
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I don't think there is such a black and white picture between development and parking, it's more of a continuum. You don't want to be in the business of developing domains, you want to be in the business of developing revenue streams.
To that extent, when you're optimizing a domain or network of domains, you're already developing it to some extent. Domainers are great at understanding macro mining patterns but pay little attention to micro variations or business niches in general. When we start optimizing income streams, we're looking at user behavior and trying to understand what people want. Beyond that, understanding what subset of those users can be converted into customers and where they should be converted. Is it homogeneous user intent where everyone is gravitating to a given site/product/niche or are people all over the place? Where people are focused, is there a clean method for conversion (generally within the context of savvy advertisers). There's nothing worse than pairing high quality conversion traffic with a lousy advertiser who cannot convert.
From our perspective, we dropped the mantra of "development" a long time ago. A domain is a segment in a conduit that matches user intention with advertisers. It's been spoken of for years that the goal of this conduit is to find 1:1 relationships between apprpriate advertisers and internet users. Today we use google/yahoo because they control the advertising base and ultimately we're designed to know very little about our traffic. (As very clearly illustrated by what whizzbang has been speaking about now for over a year). We send traffic to parking companies who send traffic to google/yahoo who sends traffic to advertisers. At each stage valuable information is lost if:
1) The advertiser doesn't inform google of what traffic converts. Google does gain some of this info from unsavvy advertisers but successful conversions are as valuable to advertisers as traffic is to domainers so it's typically kept close to home.
2) Google shares some information with parking companies based upon revenue of given traffic and/or clicks. I haven't actually seen an API yet so I'm not sure what exact information is being shared. I'd love to add our tech resources to pull apart and understand a feed however if someone's willing.
3) We all know what information a parking company shares with the domainer.
4) What kind of information do you share with a visitor to your domain?
At any rate, I guess what I'm saying is that from our perspective it's worthwhile to break the concept of development. We have "developed" a number of our domains where we've found great matching advertisers. In one case we're running a white label relationship where through non-comp agreements we have our own brand and control over pricing and customer base. Namely, right now we set our prices at 10-18% markup and find the typical visitor converts into 3 purchases on average. Is it a huge winfall over parking, actually it's not because the niche is so highly developed that advertisers are paying through the teeth to get those visitors. Do we make more money, yes definitely because we're:
1) Not sharing revenue with the Parking company.
2) Not sharing revenue with Google/Yahoo.
3) Earning based upon repeat conversions, not a metric that estimates conversions based upon IPs & timestamps.
That said, we're also not earning revenue anymore off of the non-targeted traffic so there is some balancing.
We've also torn down a development a few times and reverted to parking where the advertisers themselves couldn't convert on traffic and we made more forcing them to pay PPC. A little crazy considering how inefficient things are through conversions at each revenu sucking step.[/quote]
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