Part of the bad news for domainer-developers is simple math.
In my experience a well optimized domain name lander or “domain parking page” can generate a click-through rate (CTR) of twenty to twenty-five (20% – 25%) or higher.
By “well optimized” I mean a domain parking page that is hand crafted with human intelligence. The links on the lander consist of keyword phrases targeted to the meaning or intent of the root domain. The root of the domain forms one of the anchor words in the links. For example, if the domain is “widgets.tld” then the domain lander is populated with keyword phrases such as “blue widgets”, “cheap widgets”, “wholesale widgets”, etc. The phrases should be picked according to their search popularity and advertiser competition.
So, a well optimized lander is build using keyword phrases that become links that trigger advertisements that are paid for by companies that want to target traffic that is searching using those keywords. It can all work rather nicely for certain domains, such as domains with significant natural type-in traffic, which domains have a high commercial intent, i.e., “hotels” versus “galaxy 233-M”.
So what’s the simple math?
Sites populated with contextual ads, such as Adsense or Kontera, tend to generate CTRs or click through rates, in the one percent (1%) range and slightly up from there. It’s possible to create sites with higher rates but they tend to be “thin content sites” with little useful content and a high density of ad blocks. Not sites destined to rank naturally in any search engine for a long period of time.
Let’s assume you have a modest am0unt of type-in traffic for a highly commercial domain in the legal, investing, insurance or other competitive market. Let’s say you get 5 type-ins a week and 3 of those are people shopping for domains. So, in theory you are getting 2 “really interested type-ins” a week. That’s a 100 type-ins a year for a highly commercial, highly competitive domain. That’s not all that bad if the PPC clicks are paying $2-$3.00 or more.
Do the math: 100 type-ins a year X 20% CTR on ads = $40.00-$60.00+ a year on an $8.00 domain. That’s profitable.
Now, develop that same domain. What do you get?
Let’s assume that search engines are “long term stupid”, so that whatever advantage an “exact match domain” has, for ranking purposes, that advantage may not last forever. It will likely always remain one important variable in ranking but its ranking weight or up-thrust won’t cause the same domain to crush the SERPs. So, for the sake of a durable analysis let’s assume that the traffic the domain gets will remain fairly constant with the pre-development traffic, at least until such time as you domain a bood bit more work to develop a site, gather links, etc.
So, developed the domain that got 20 clicks or a 20% CTR will now, as a small or early developed site, will get one percent (1%) CTR, effectively reducing the PPC income from $40-$60.00 to $2-$3.00.
So, what you end up having to do is to increase traffic 10-20 times.
You think it’s easy to generate targeted traffic via search engines in competitive markets? You KNOW it’s easy?
It’s not. Anyone who tells you that it is tends to be selling something that isn’t worth the price you paid.
So, the bad news is that by developing parked domains the domainer tends to suffer an immediate loss of income.
Call it the development disincentive.
And get used to it. It’s the price you will pay, as a domainer-developer, for avoiding the train wreck that may await domain parking as a model of monetization or monetizing domain portfolios.
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