I’ve made it clear that building 5 to 10-page minisites is NOT a viable long-term business model yesterday and I’m sure that most people who own hundreds or thousands of domanis are asking themselves: is mass development in general a viable business model? Let’s find out!
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):
$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?