Now in my opinion, the term “killed” is too strong but the image I’m about to share does make it clear that through changes such as spell corrections, Google Instant, search mutation, the notorious “Panda” update and so on, Google has made and will continue to make your life a lot harder if chasing after long tail organic traffic is an important part of your business model.

Alright then, here’s the SEOBook.com image I’m referring to:

So in most cases, their website has a weak backlink profile and all of a sudden, lots of links appear out of nowhere.

Does this look natural? Of course not.

Today’s piece of advice is especially important if your niche is not insanely competitive and you own the exact match domain: always go with a delayed link building approach.

So let’s assume you want 1,000 social bookmarking links.

Instead of generating all of them right away, why not limit yourself to 100 per week over a period of 10 weeks? Or 100 every two weeks and so on?

Most of you are domainers, so I’ll assume you own the exact match domain. This, corroborated with the fact that your niche is not insanely competitive, makes your situation one for which delayed link building is the best possible approach.

That’s it, have a pleasant Sunday

I wanted to comment on his blog initially but the comment ended up becoming a novel, so a blog post is more appropriate because I can format it better.

Alright, let’s start with two quotes from Rick’s blog post:

Our #1 common problem is we have great real estate and we have yet to have many ideas to turn that real estate into income producing businesses.

“Here are a couple of guidelines. The site should have a “Cash Register” and there can be no 3rd party PPC ads on the site. This MUST be a business.”

The concept is as follows:

1) you as a domainer, own some excellent Internet real estate [CORRECT]

2) you want to turn your domains into revenue streams [CORRECT]

3) why not do it by turning them into real businesses with actual products? [PROBLEMATIC]

#1 and #2 are obviously true, we own some impressive Internet real estate and, naturally, want to turn our domains into revenue streams.

But can we do it in a sustainable and scalable manner by turning them into businesses with actual products? In my opinion, that is not possible because this business model is unfortunately not scalable.

Let me explain why.

There are basically two approaches:

1) Turn it into a business yourself
2) Hire a development company

If you want to turn a domain into a business yourself, you have a lot of work ahead of you. Let me just give you one example, a business I personally own: DomainingServers.com.

Even though it’s a relatively new hosting company, there are a lot of variables which need to be taken into consideration. When people submit tickets, they expect answers within minutes, so I have staff on the call 24×7 to make sure that each ticket is answered in a timely manner. I hired people for level1 and level2 support (so support for relatively uncomplicated problems), I hired people for level 3 support (complex issues) and so on.

Then I have to market the site, manage my relationship with the datacenter, with the hardware providers etc.

You get the point.

The message that I’m trying to get across is that even if your business runs like a well oiled machine, you’ll have to invest quite a bit of time to make things happen and that brings us right back to my initial point:

The business model is not scalable.

Realistically speaking, you can definitely run a site like DomainingServers.com yourself without turning into a zombie. You can run two, three or even 5 – 10. But you’re only human, so there’s just no way to manage everything after a certain point and if you were to spread yourself too thin, there would be consequences: some of the businesses would turn into money pits, you’d lose focus and the list could go on and on.

Alright, so why not hire a company or several companies and let it/them take over?

You could. You can.

But would this approach be profitable? In my opinion, it would not.

Running a business and running a regular website are two different things and the level of involvement necessary to turn a project into a success varies accordingly.

Unfortunately, you can’t just hire a development company in a “set it and forget it” manner for a business as you would for an AdSense site (for example) because the process is fundamentally different.

Finding a reliable development company which works exclusively on revenue or profit percentages will be pretty much impossible because most serious companies (the overwhelming majority) want to be paid for their time/resources.

Kind of like an employee.

If you have a profitable month, the employee needs to be paid. If you lose money the next month, the employee still needs to be paid.

If you try finding companies which work exclusively on revenue or profit percentages, then you’ll probably end up attracting one of the following:

1) beginners who don’t know what they’re doing and will only waste your time

2) companies which, in order to make the deal worth it on their end as well, will want terms that are less than appealing for you as a domainer (domain ownership, an initial infusion of capital, subsequent infusions of capital and so on) and these terms will unfortunately make profitability a far away dream

I’m sure you guys get the point.

I like Rick’s partnership idea (selling the domain for cash + revenue/profit percentages) and I think that it’s an excellent way to establish a solid foundation. Scalability is not a problem in this case, you simply make this concept a part of your end user negotiation strategy, add a reliable lawyer to the equation and bam, you’re good to go.

But developing your own domains into businesses, totally different story. Why? It all boils down to scalability and, as I hope I’ve managed to explain through this blog post, the cash register approach is unfortunately not scalable because the fundamentals are just not there.

Is PR Important?

If you’re a link seller, yes.

Otherwise, no.

Was PR Important in the Past?

Yes but as Google’s algos started becoming more sophisticated, PR started to lose its importance.

A quote from the official Google blog (the blog post in question was written back in 2008):

“The most famous part of our ranking algorithm is PageRank. PageRank is still in use today, but it is now a part of a much larger system.”

As you can see, it was clear even in 2008 that the importance of PR is on a downward spiral. Important words from this statement:

“most famous” – they said “most famous” instead of “most important” in order to make it clear that even in 2008, there were other more important metrics out there which received less “coverage” than PR

“much larger system” – three words through which they explained that PR was less important in 2008 than back when the Web was still in its earlier stages. Add a bit of common sense to the mix and I’m sure you’ll understand how things stand in 2011 and beyond.

Why Is PR Important to Link Sellers?

Simply because lots of people make decisions based on PR when buying links. In my opinion, buying links purely for PR-related purposes is a mistake in 2011 but this doesn’t change the fact that most people do it and as a result, PR is an important part of your business model (… even if for the wrong reasons) if you’re selling links.

Case Studies?

Well, DomainingTips.com is one example. It’s a PR0 because the previous owner used to sell links a while back and it received a PR penalty, yet it has been ranking on page one for the term “domaining” for a very long time.

Feel free to perform searches for various niches and you’ll see countless examples of lower PR sites which outrank high PR ones.

But Lots of High PR Sites Have Great Rankings, Why?

“Correlation does not imply causation” or in other words:

- yes, the site in question has great rankings
- yes, the site in question has a high PR
- even though it has great rankings and a high PR, it does NOT have great rankings BECAUSE of its high PR

All in All

If you want to develop sites and chase after organic traffic, PR should not be on top of your priority list. If you’re selling links, PR will unfortunately be an important part of your business model but a few years from now, its importance to link sellers will decrease dramatically IMO.

Background

Sure, my company has also been offering banner design, logo design and theme/template design services before the official launch of Banners.biz/Logos.biz/Themes.biz but we only did it on a word of mouth basis.

When it comes to article writing services however, we have been offering them publicly since 2008 and have over 100 verifiable testimonials to show for it. Since I believe in full transparency, I published ‘em on our Testimonials page and as you can see, each comment is linked to a forum post so that visitors can verify each and every statement.

Why verifiable testimonials? Simply put, we’re sick and tired of seeing service providers use fake testimonials and are doing our best to take things to the next level transparency-wise.

Any service provider can simply publish a fake testimonial such as “Hi, I’m Bill Gates and just received the 100,000 articles I’ve ordered, great job guys” without proving a thing, so I decided to up my game as a company owner by linking each and every testimonial to the page it was posted on. You’ll see forum members with 5-10 posts as well as forum members with over 1,000 posts say great things about our articles and best of all, you can sleep well at night knowing for a fact that hundreds of people loved doing business with us.

Why Articles.biz?

As mentioned back when I published the first case study:

“Simply put, dot biz works GREAT for projects which are actually related to doing business online, just like dot org works great for charities and other organizations.”

Since I already put Banners.biz, Logos.biz and Themes.biz to good use, it’s a no-brainer

Why Just 2 Cents/Word

Some people focus on providing services at retail prices. I don’t, wholesale all the way!

My company is the place people who ultimately sell articles at retail prices buy from. They pay us 2 cents/word, receive kick-ass articles written by US writers exclusively and then sell them to other people at higher prices. I LOVE capitalism and only care about getting paid. If you want to buy articles from my company in order to sell them to your own clients at a higher price, no problem!

How to Order?

Simply visit Articles.biz and click on the Order Now button.

Next, fill it out the form you’ll see on that page and click on the “Submit” button. Or, if you don’t want to order through the form, simply email us (support@articles.biz) and we’ll usually be able to get back to you within 24 hours.

Great Domains + Solid Business Model + Determination

… there you have it, the “not so secret” formula.

I started earning a living online quite a while ago and got a chance to meet a lot of people who are smarter than me as well as a lot of people who are more talented than me at anything you can think of. But I never EVER met anyone even half as determined as I am and that’s why I’m able to build empires which I hope will help turn the Internet into a better place!

I’m not going to turn this post into a novel because I already explained everything from a to z here:

http://domainingtips.com/mass-domain-development.html
http://domainingtips.com/minisites-business-model.html

The bottom line:

1) Google hates sites which don’t add value to the Internet
2) No, the 500 sites with rehashed low quality content that you were planning to build will NOT add value to the Internet
3) As a result, Google hates YOU and by mass developing at this point, you’re basically relying on just one company for both most of your traffic (Google) and most of your revenue (AdSense)
4) To make matters worse, that one company you are relying on hates your guts

Not exactly rocket science, don’t you agree?

But hey, if you think that a business model which revolves around just one company (a company which, again, hates your guts) has long-term potential, feel free to invest lots of money money in 500 – 1,000 or more crappy sites and then write a guest post on DomainingTips.com 3-4 years from now to let us know how that worked out for ya

Revenue Multiples 101

Most of you probably don’t buy sites on a regular basis but those who do can confirm that there’s a HUGE discrepancy when it comes to revenue multiples. On the one hand, if you have a website which relies exclusively on search engine traffic and want to sell it at its market value, you shouldn’t expect more than 6x – 8x MONTHLY revenue. Yes, m-o-n-t-h-l-y!

Now, of course, a complex site with a consistent traffic/revenue track record as well as with plenty of room to grow and an actual business model (not just a traffic source or two, not just a monetization method or two etc.) can be sold for a lot more in terms of multiples but let’s face it, most websites developed by the average domainer do NOT belong in this category, as I’ve explained here and here

OK but What If I Only Sell the Domain Based on Its Inherent Value?

It should be clear that you shouldn’t expect more than 6x – 8x monthly rev based on the fundamentals of a mediocre website. But doesn’t having a premium domain help? Of course it can help but a lot of times, you are doing more harm than good by turning a good domain into a mediocre (at best) website.

If the domain is actually great, then a serious developer who has a respectable budget and wants to turn it into a website which actually provides value will think twice about buying it from you if it has been turned into a mediocre website.

Why? Because the average domainer who develops websites usually ends up screwing up royally by:

1) Building links too aggressively -> a Google penalty
2) Using too many ad units -> AdSense issues
3) Turning the domain into a thin site which didn’t pass a manual check -> a Google penalty

… and so on.

In other words, if I’m a serious developer and want to buy a domain from you, I’ll think twice about doing it if you turned it into something like a minisite for one simple reason: crappy development carries more risk than you imagine.

If the domain got banned by Google because the previous owner built links too aggressively (for example), I’ll have to work a lot harder and invest more money in order to fix everything.

If the AdSense account of the previous owner got closed because the domain was turned into a MFA (Made For AdSense) site, I might end up being in trouble.

The list could go on and on but since I don’t want to turn this post into a novel, I’ll stop here and make it clear one final time that:

Crappy development REDUCES the resale value of a domain!

Why Mass Development?

Nobody can deny the fact that parking is not what it used to be and let’s face it: it was good while it lasted! You were able to make some decent money by simply pointing a domain to a nameserver and doing a little bit of basic tweaking here and there. In other words, parking represented maybe the closest thing to online passive income.

But things have changed and not for the better. A great domain that made $1000 per year a few years ago can barely make $400 per year at this point.

But Hey, $400 Per Year Is Not Bad, Right?

Sure, you can look at it this way if you’re feeling optimistic today. As far as the domains that made 3-4 figures per year are concerned, this way of thinking is not entirely unreasonable.

But let’s face it, domains like those represent a minority. I’ve given the $1,000 to $400 per year drop as an example. But what about domains which were making not $1,000 but a mere $10 per year and are now making $4 instead?

From Asset to Liability

At $10 per year, the domain is at least an asset. It’s making more than regfee and if you own thousands of such domains, it adds up. But at $4 per year, things no longer stand that way and an asset turned into a liability just like that.

As a person who owns thousands or even hundreds of domains, you’re dealing with an extremely tricky situation and are naturally asking yourself what needs to be done next. The seemingly obvious solution:

Wait a Minute, Why Don’t You Develop Them?

Let’s assume that you don’t have a lot of experience as a developer and decide to turn 500 domains into websites, domains which were making about $5,000 per year together via parking back in 2007 and which are currently only making $2,000 or so per year.

You hire a few people to get the job done at let’s say $30 per very very small website. One of those 5 to 10-page minisites I’ve referred to yesterday. And as I’ve mentioned yesterday, you’ll observe a few things:

1) You’ve invested $15,000 and now have 500 5 to 10-page minisites

2) Without additional traffic from let’s say search engines (the #1 traffic source for minisites by far), in other words by simply monetizing the current type-in traffic of a website, you’re making considerably LESS than by parking the domain.

Let’s refer to the 500 domains which were only making $2,000 per year parked. Park pages have considerably higher CTRs and the 500 domains which were making $2,000 per year parked will probably barely make $600 – $700 or so as minisites without additional traffic.

3) OK, so you need more traffic. But in order to generate search engine traffic, you need to build links and that will cost you even more money. And again, as mentioned here, search engines hate you.

Your sites will receive penalties, your AdSense account might get banned and so on. After a minisite creation + SEO campaign, let’s say a year or so later, most of your sites will probably be penalized on Google or even de-listed (which will even affect the resale value of a domain) and in most cases, you won’t even break even. You’ll be back to square one, with 500 websites which have no additional traffic and are making less than what they would have earned parked.

On top of that, you will probably lose your AdSense account as well. “No big deal”, you might think, “I’ll just switch to CPA”. Oh really? Here are two important aspects worth taking into consideration:

1) You will not always earn more by monetizing your traffic via CPA, there are more than a few niches which simply don’t have a lot of advertisers which will accept you as an affiliate.

2) Even if we assume that CPA makes you more than AdSense, it is HIGHLY unlikely that it will make you more than parking as far as most niches are concerned. And with the 5 to 10-page minisites I have referred to, it’s only a matter of time until you end up being penalized by search engines and having to limit yourself to simply monetizing the type-in traffic of a domain (as explained previously).

Alright, so building 5 to 10-page minisites is not the way to go. A lot of you are probably thinking:

Then What About Larger Sites?

Let’s refer to our 500 domains again. Instead of paying $30 per 5 to 10-page minisite, you can pay $200 for a decent site with let’s say 40 unique articles, an investment of $100,000 for 500 sites.

As per our initial example, those 500 sites are currently making $2,000 per year parked combined at this point. You’d have to invest your yearly parking revenue * 50 (yes, 50 years) just so you can have 500 live sites.

Then you have to invest money each year in order to have a steady influx of fresh unique content for each site. Let’s say $100 per year per site, in other words $50,000 per year for your entire portfolio.

Then you have to invest in SEO services in order to make it to the 1st page and stay there (yes, rankings need to be MAINTAINED). Let’s assume that your average term has 500 exact match monthly searches, then be EXTREMELY optimistic and say that you can get away with paying $100 per year per site for SEO services (and that’s only because the terms are not very competitive). Basically $50,000 per year for your entire portfolio.

A short expense recap (to make calculations easier, we’ll ignore regfees):

$100,000 initially
$50,000 yearly for content
$50,000 yearly for SEO services

Now let’s see how much money you’ll be making. We have assumed that your average domain has 500 exact match monthly searches. Now let’s assume that you’ll make it to the first page with each site and have 10,000 pageviews per year per site as an average (a moderately optimistic scenario and I’m taking long tail searches into consideration as well).

As far as your earnings per thousand pageviews are concerned, let’s be EXTREMELY optimistic (again, EXTREMELY) and assume that you will make $20. In other words, you’ll make $200 per year per site ($100,000 per year for the 500 sites combined) if we’re extremely optimistic.

The Final Numbers

Initial investment: $100,000
Yearly expenses (content + SEO): $100,000
Yearly revenue: $100,000

After drawing the line, you’ll see that you’re basically in a yearly “break even” situation and you probably won’t be recouping your initial $100k investment anytime soon.

Does having a great domain help? Yes!
Is having a great domain enough? No!

But What If Your Numbers Are Way Off?

You know what? They probably are but only because I’ve been quite optimistic! Here’s why I think that I’ve been optimistic:

1) I have assumed that each and every site will make it to the 1st page and that each and every site will receive 10,000 yearly pageviews

2) I have assumed that all sites will earn a steady $20 per thousand pageviews

3) I have assumed that there will be SEO companies willing to work on each site for $100 per year. In other words, less than $10 per month per site

4) I have assumed that you will find a company willing to build you 500 non-spammy websites with 40 decent articles for $200 each

5) I have assumed that none of your sites will receive penalties, highly unlikely given the fact that search engine algos are as unpredictable as it gets and that, whether people want to admit it or not, Google hates SEO. In an ideal situation, they would want all links to be editorial.

Is Mass Development a Viable Long-Term Business Model

You’re all smart adults, what do you think?

First of all, let me define what most domainers consider a minisite and take it from there. According to most folks, a minisite is a website which has let’s say 5 – 10 pages of unique content, a custom header and is monetized via Google AdSense. That’s pretty much it, feel free to check out some of the various minisites domainers provide as examples on forums and you’ll see that my definition applies to most of them.

That being stated, here’s how an elementary school teacher would explain the way things stand with these minisites:

1) The guys who are running the Google search engine hate you. They do not want their listings polluted with sites which do not provide any real value. If you think that your 5 or 10-page minisite actually provides value, you couldn’t be more wrong.

2) The guys who are running AdSense hate you as well. Why? Because your average 5 or 10-page minisites represent MFA (Made For AdSense) websites in their eyes. In case you were wondering why so many people get banned from AdSense, the answer is simple: MFA sites are against their TOS.

3) Everyone knows that the folks who are running the Google search engine and those who are running AdSense all work for the same company. As a result, it’s safe to say that if you’re building minisites, Google hates your guts.

In other words, your business model is 100% dependent on a company which hates you.

You want Google to send traffic your way, yet they hate you.

You want Google to send money your way, yet they hate you.

Need I say more?

I’ve received quite a few emails from domainers who are thinking about developing at least a handful of domains and most of them have told me that there’s TOO MUCH information out there. Well, they’re right and here’s the thing:

You ARE Going to Screw Up Royally!

Remember the first domain you bought or registered? Did it end up representing a great investment? Probably not! In fact, most if not all domainers have started out by buying or hand regging crappy domains.

What happened afterwards? Well, there are two main types of people:

1) Folks who get discouraged and give up
2) Folks who see failure as something that teaches them valuable lessons and motivates them to become better and better

Why would things be any different when it comes to development? Go ahead and ask anyone who is currently making bank how things were back when he or she started out. Was that person’s first business model brilliant? Yeah right!

Reading is great and everything but it can only get you so far. On the one hand, it makes sense to dedicate at least a few minutes each day to reading, even if you are making some decent coin. On the other hand, all of the books in the world won’t help if you’re not willing to work your ass of.

I LOVE Failure, Don’t You?

People who come up with all sorts of excuses because they are afraid of failure will also end up hiding from success. Your comfort zone = your biggest enemy. No matter how much you read, you will still fail when starting out as a developer and that’s NOT a bad thing.

Fail, learn a few lessons, fail some more, make bank: rinse and repeat