DomainTools Blog

We recently reached out to Elliot Silver of www.elliotsblog.com regarding his strategy behind which websites to develop and which ones to add to his portfolio. He had some great advice to share.

By Elliot Silver
Internet Entrepreneur and Domain Industry Veteran

When I purchase a domain name in the aftermarket, it’s because I can imagine it as a fully functioning website. I don’t buy brandable domain names that could be used by someone, but I prefer names that are intuitive and don’t require any explanation (for example a dog walker directory on DogWalker.com. As an individual domain investor, I don’t have the time to build each domain name I buy, as a majority of my business comes from re-selling domain names for revenue.

Developing a domain name can be a time consuming and costly experience, and just about every domain investor I know has contemplated it. Choosing the right domain name(s) to develop is an important process, and I want to share some of the considerations I make before deciding which domain names should be developed and which should be re-sold.

While some might tell you that the most important consideration is your level of interest in a particular topic, I think you really should focus on the monetization options before choosing a domain name to develop. Yes, it’s important to like a particular topic, as that will certainly help you stay interested in your website, but if the monetization options are limited, you may spend a lot of valuable time and effort building something where there won’t be a positive ROI. Sure, you can develop a website without making money, but I personally wouldn’t have the time to dedicate to building a website if I couldn’t monetize it eventually.

Three sources of revenue for my developed domain names include direct advertising sales, Adsense, and affiliate banners/links. I recommend that you look at developed websites that will be your competition and see how those are monetized. Consider whether you will have the ability to monetize in a similar fashion. You will probably want to connect with that website’s advertisers since you already know they are paying for Internet advertising in the field of your interest.

Another consideration that is important is how competitive the field is. High paying verticals may yield more money in the long run, but search engine competition is probably fierce, and it will be an expensive and time consuming task to compete with well funded companies. For instance, if you want to compete in the auto insurance vertical, you should know that Geico, State Farm, All State, and a variety of other high powered websites will all be your competition. Unless you spend a significant amount of money on web development and SEO, you may find it extremely tough to compete. If your site is on page 7 of Google for your competitive keywords, you probably won’t earn much revenue.

Consider your expected time commitment for a particular website. Think about how much time it will take to update the site you choose (content, upgrades, inventory…etc) and determine if you’ll be able to commit that amount of time. By default, some domain name topics may require you to commit more time, and others may be seasonal. For instance, if you are creating a website about new book reviews, you’ll have to continue to update the site in perpetuity, or it will go out of date. Conversely, a website about a breed of dog may not require frequent updates and may be less cumbersome to operate.

Along the same line, you’ll want to determine the size and scope of the website on a particular domain name. In the past, I’ve built large websites with significant amounts of unique content, while I’ve also built sites that contain just a few pages. You’ll want to consider the size and scope of the project before setting out to develop, as some domain names should be more comprehensive than others.

The current traffic levels isn’t a very critical consideration, but knowing that can be helpful in making a decision. If you have a great domain name that receives target type in traffic, or it has traffic from targeted inbound links (perhaps it had been developed previously), this can be helpful to know. Valuable incoming links can help with SEO, and the traffic can be helpful for testing as you develop. IMO, building a website that already receives traffic puts you one step ahead, and it shows that there is “life” in that domain name.

As I touched on in the beginning, a very important consideration is your interest in the topic. The more interested and knowledgeable you are, the better off your site will be in the long run. If you come across as an industry expert, people will cite your website, which will help increase your traffic, reach, and authority. Companies want to advertise on the leading expert websites, and being perceived as an expert will help drive revenue. Additionally, as the website grows, your interest is less likely to wane, and you’ll continue to want to innovate and improve it.

There are many personal and financial considerations to make before devoting time and money to building a website on a particular domain name. It is important to think about all of this before you dedicate your time and effort to a particular project. These are some of the considerations I personally make when considering development.

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It appears that all TrafficZ customers have received a notice by email today they may be the target of a phishing attack. This particular website was hosted in China (Beijing – Chinanet Jiangsu Province Network). I did some research on my own and it appears that not only are TrafficZ’s customers targets but so are GoldKey’s customers. A Registrant Search on the phisher quickly showed the other target was GoldKey customers. Below is a copy of the email I received from TrafficZ:

“Several of our clients have received emails spoofing the email address of TrafficZ personnel. The title of these emails usually read “TrafficZ | Domain Termination Notice”. The “notice” states that one of your domains has been deleted from your TrafficZ account and to visit Traffiz.com within 72 hours or your account will be blocked. The sender is listed as Deborah Amar, one of our Client Relations Specialist. If you click on the link to visit the TraffiZ.com, you will be directed to TrofficZ.com, which bears close resemblance to TrafficZ.com. This is a phishing attempt to try and capture the username and password of your TrafficZ account.

Please be assured that the TrafficZ attorneys are doing everything in their power to end these emails and disable TrofficZ.com. If you have mistakenly entered your username and password on this phishing site, please notify us immediately, change your password and re-verify your payment information. “

I think this marks the arrival of micro-phishing. We have reached a point where domains are valuable and so are the accounts that monetize them. I think phishers are getting more creative at how they operate and now look for wealthy targets. Paypal and Bank of America move over, micro-phishing has arrived the new targets are domain owners. When a phishing group can target individual customers they are more likely to be scammed into handing over credentials. For example, I keep getting phishing emails about accounts I don’t have, like my “Bank of Scotland” account. It is hard for me to be convinced to give up my username and password to a banking website I have never visited or even registered for. However Domains have DNS information and a phisher can see what customers to target for each parking company or registrar.

I get this questions a lot, “Does parking your domain hurt your domain’s resale value?” The answer, Yes. You will be hurting the Internal Search Engine scores attached to the domain. Search Engines are more temporal then you would imagine. It is not about having the best site right now, it is often about having a history of being the best site. Credibility doesn’t come overnight so don’t expect your search engine rankings to either. By parking a domain that you plan to develop you are really de-optimizing the domain for future development.

However, I want to stress there are ways to mitigate the damage that parking can cause. If you want to trick a search engine into indexing a parking page you might be messing with fire. These search engine are smart and can see when you are just serving ads. Robots.txt should be used to exclude the entire site or the parking portion of the site from the search engines. If a domain name is robots.txt’ed off from the world it if very unlikely it will get put on a blacklist.

The better your domain, the more likely it will be delisted when parked. If other SEO people out there want that first position they will report you to Google using the Google Spam Removal Tool.

A lot of developers don’t want to buy a domain for a new site that has been blacklisted at Google. I however see opportunity. If you want to build a company on the domain there is no problem doing it. Buy the domain, Take down the parking page, place some content on the site, build some value to visitors, and then finally submit a Reinclusion Request to Google. I did this with DomainTools.com, I bought the domain from a guy who had adult content on the old site.

When requesting reconsideration of a site that has violated the webmaster guidelines you will be asked to pledge no more violating the Google guidelines.

• Upon reviewing your site, you found that it violated our webmaster guidelines and you’ve made changes to your site so that it adheres to the guidelines. [?]

OR

• You recently acquired a domain which you suspect may have previously violated our webmaster guidelines.

Once it is done they advise that it may take several weeks for the re-evaluation process.

Specifically the guideline say, “If your site participates in an affiliate program, make sure that your site adds value. Provide unique and relevant content that gives users a reason to visit your site first.” In other words, if you just display ads there is no unique content. Google will remove your domain from its Search Engine and put you in the blacklist.

I saw this interesting Google Ad today. I saw the ad inside my gmail account, but the weird thing is that this ad was for a PPC page. The ad was for the domain name “V V hite House.com”, which looks like whitehouse.com. Is this an Ad designed to arbitrage Google traffic, or is the domain really being sold or leased? The ad took me to a PPC page over at Oversee with no ability to buy the domain or lease it. The only thing on the landing page was a bunch of PPC ads. Perhaps this ad is being shown on PPC pages as well, which would really complete the circle. When a parking page is being advertised, you know something odd is going on. I honestly thought the domain was being sold but it turned out to be an ad for a parking page.

Upon a deeper check I took a look at the whois record for vvhitehouse.com and it appears to be owned by Domainamania.com LLC, which is a snapnames company, which is an Oversee company, which is the company that actually parks the domain. The domain whois record said it was listed for sale at Sedo for $2500. So I visited the Sedo for sale page for the domain and it had this description:

The ClickAlike.com portfolio includes look-alikes for many of the highest priced generic domains ever sold, including some of this years top-selling domains. ClickAlikes are a whole new breed. Clickalikes can be a thrifty and clever fiat to enable otherwise unattainable marketability. Because ClickAlikes convey the same meaning as the actual generic domain, (for example, www.incorporation.com can be represented as www.lncorporation.com), they can be an extremely important asset in driving web traffic.

Which means Click-A-Like domains cost $6.42 to register and can be sold for $2500. That is a nice profit. I wonder if anyone is buying them? If so, I can see a bunch of domainers going out and registering these types of domains. I went over to the domain being advertised (ClickaLike.com) in the Sedo description and it was a parking page. Go figure.

UPDATE: My deeper check that showed the domain was for sale on Sedo was half correct. The previous owner had listed it for sale on Sedo and it is still listed. Sedo has no automated mechanism of removing the old listings, so there may be a lot of old listings that are not truly for sale. Snapnames and Oversee are not associated with ClickALike.com. That description must have been the previous owner. Snapnames registered the domain for $6.20 this summer on a drop. Snapnames claims no ownership of the Google Ad. So it appears on the surface that the old owner (JB of WirelessGarden.com) is still running advertising to sell or lease his old domain which he failed to renew in April of this year. Wow. You see something new everyday.

So there is this parking lot across the street from our office…

We have quietly launched a beta program that will rotate our customers’ domain traffic between different parking services. This should increase the revenue a domain makes. The program is in an early beta so don’t upload your entire portfolio or anything but throw a domain on our parking program and see how we do. We are operating it with a 100% revenue share and keeping nothing for ourselves while we work out the kinks. So a few test domains on the system would help us out. We launched with one provider so far, however we will be adding additional parking companies soon and then we will start the smart DNS traffic switching. Currently the beta is testing functionality and revenue reporting. If you have thoughts on what Parking companies we should add next let us know. They need to have an API.

Please send feedback and support issues to “parking <at> domaintools.com”.

I am not a fan of Domain Tasting, but the Coalition Against Domain Name Abuse (CADNA) has released a new report that aims to frighten and shock everyone. They cite that over 1 Million kited sites bring in $100-125 million in annual revenue for criminals and profiteers. Kiting is when an organization serially Domain Tastes for an extended period of time. They pick up, they let go, they pick up, they let go; all on the same domain name. CADNA’s claim is a bit overboard. I am not sure how they will convince people of their point if they make up facts and put them in press releases. The reason people Domain Taste is to find domains that generate more revenue then the registration cost. The wholesale cost is $6.20 so any name generating more then that would be a name they should keep. The claim would put the average revenue at $10.00 to $12.50 per kiting year. The revenue can’t be higher then $62 Million. So immediately they are off by a factor of two. I would estimate the revenue at between $5 Million to $20 Million a year. We also have previous coverage of CADNA.

They don’t cite where they numbers come from, they simply make them up. There is an old saying, 72% of all statistics are made up on the spot, 89% of statistics are word of month, and the remaining 32% of statistics are real. Add that up and think about it.

Fox News just reported that the whole Domain Industry is worth $2 Billion dollars a year. CADNA reports that over $1 Billion every year is diverted by cybersquatters that park on typos of Brand Owner’s domain names. Hmmm, so 50% of all domain registrations are cybersquatters?

Here is their full press release from today:

COALITION AGAINST DOMAIN NAME ABUSE TO COMBAT CYBERSQUATTING

WASHINGTON, July 24, 2007 – The Coalition Against Domain Name Abuse (CADNA) is announcing the launch of its national campaign against Internet fraud. A non-profit organization based in Washington D.C., CADNA is leading the way in confronting cybersquatting – the fraudulent abuse of domain name registration that threatens the future viability of Internet commerce.

Although the Anti-Cybersquatting Consumer Protection Act (ACPA) was introduced in 1999, cybersquatting remains an underestimated threat. The number of .com domain names alone has doubled since 2003, and the number of cybersquatting disputes being filed with the World Intellectual Property Organization (WIPO) is on the rise – up 25% in 2006 from 2005. According to a recent independent report, cybersquatting increased by 248% in the past year.

With growing ease and profitability, sophisticated cybersquatters are exploiting a flaw in the domain name registration process whereby domain names are registered and subsequently dropped, risk free, within an accepted 5-day grace period. By abusing this grace period, cybersquatters “taste” and “kite” domain names in order to test their profitability. According to a recent industry report, there are over 1 million kited sites re-registered daily, collectively bringing in $100-125 million in annual revenue for criminals and profiteers. On the whole, cybersquatting is costing brand owners worldwide well over $1 billion every year as a result of diverted sales, the loss of hard-earned trust and goodwill, and the increasing enforcement expense of protecting consumers from Internet-based fraud.

Cybersquatters’ increasing assault on intellectual property hurts everyone involved, including consumers and the Internet community at large. By registering domain names derived from famous brands, cybersquatters are able to successfully lure consumers into purchasing counterfeit products (including potentially harmful counterfeit prescription drugs), giving away their personal information (which could lead to further financial loss) and unwittingly exposing themselves to spyware deposits. According to the International AntiCounterfeiting Coalition (IACC), $600 billion was spent online for counterfeits in 2006. Phishing, a fraud enabled by cybersquatting, is also growing at an alarming rate. The Internet Crime Complaint Center, a partnership of the National White Collar Crime Center and the Federal Bureau of Investigation, found that consumers in the U.S. reported personal losses of $198.44 million to phishing in 2006.

To effectively combat cybersquatting, CADNA will work at the federal and international levels to make these fraudulent practices difficult to establish and unprofitable to maintain. Among the coalition’s goals are to pursue congressional legislation that would increase the statutory damages set forth by the existing Anti-Cybersquatting Consumer Protection Act, and to work with World Intellectual Property Organization (WIPO) to introduce an international anti-cybersquatting treaty. CADNA will place pressure on ICANN to take decisive action on abuses by domain name registrars and registrants and close the loophole that affords criminals the opportunity to “kite” and “taste” domain names.

“As a result of the automation of the registration process and the monetization of domain name portfolios, the policing burden placed on brand owners has become almost insurmountable,” said Susan Crane, Group Vice President of Intellectual Property of Wyndham Worldwide. “We have joined CADNA in this fight because we believe a coalition of companies from across multiple industries will be a more effective voice to address this issue than any one company or industry standing alone.”

“The countermeasures available to brand owners are too slow and ineffective to respond to this trend and often too late to prevent damage to the brands and consumers,” said Martin Sutton, Manager of Fraud Risk & Intelligence at HSBC Holdings plc. “CADNA brings together brand owners that are concerned with the lack of preventative measures in place to deter these cybersquatting activities and want to make effective changes in order to safeguard their IP and protect consumers.”

CADNA’s membership includes such leading brands as AIG, Dell, Eli Lilly, Hilton, HSBC, Marriott, Richemont, Verizon, Wyndham, and Yahoo!. “Our 10 charter members alone spend millions of dollars annually to combat cybersquatting,” said Josh Bourne, President of CADNA.

CADNA welcomes leading brand owners to join in the coalition’s efforts to protect against trademark dilution and extortion, and consumer harms that cybersquatting affords and enables. “This coalition is organizing to combat not only domain name tasting, but whatever the next iteration of cybersquatting turns out to be. CADNA’s goals align with all trademark owners who feel like domain name abuses are spiraling out of control,” said Allison McDade, Trademark Counsel of Dell Inc. With the help of current and new members, CADNA will raise public awareness and inform policy makers in Washington and across the United States about the new threats posed by cybersquatting and the need for decisive action. CADNA will propose practical solutions to legislators and regulators, and promote the global harmonization of regulations to make the Internet a less confusing and safer place for consumers and businesses alike.

Domain registration patterns can tell a lot about the world and what news is breaking. The number of IPhone domains skyrocketed on January 11th 2007 when the official announcement came out from Apple. 453 domains with the word “Iphone” were registered that first day and the explosion of Iphone domain names have been steady since that day. The initial spike was a lot of people going after domains so they could have the best domain for marketing purposes.

After the earth shattering announcement and the huge spike in registrations the amount of people registering IPHone type of domains names each day cooled off to a simmering registration rate that was steadily averaging a health 25 domains a day. A lot of people still feel they are clever because they have registered a good IPhone website domain prior to the launch of the product and the demand will only get better after the launch of the device.

A month before the official launch of the Apple IPhone, Apple began TV commercials which show how cool the phone is. This is definitely increasing the demand for the Phone because we see the registration volume is increasing again. In this last month prior to the launch the registration volume has been getting stronger and more pronounced.

The quality of IPhone names has been dropping, a lot of the good ones were taken on the day of the announcement by the first people that heard the name. They rushed out and got great names like IPhone Jewelery.com, but the really great names like IPhone Games.com were taken by almost psychic people over a year ago. They had the ability to guess Apple would come out with an Iphone and also that people would want games for that phone.

There are still some good names left, IPhone Web.com for example was registered in May. We expect more domains to get registered in the coming months but for those that register now they have a better chance of getting a good name then the people that wait until after Launch. There is going to be a healthy aftermarket in IPhone domain names. There are more then four thousand new IPhone domain names floating around now and we expect another four thousand by the end of the year.

Apple might have a different take on all this. They may say people are registering their trademark and they don’t deserve these domain names but we have seen that Apple has not been on the ball and even failed to secure the rights to IPhone.com so they are doing a poor job in the Domain game. When Microsoft announced the Surface Computer we saw that they had already beat the market and registered a lot of generic domains. Apple needs a good domain registration team that can rush the market and pickup good domain names prior to world wide announcements.

There was an panel of speakers talking about Domain Tasting yesterday. The ICANN ALAC is debating whether to ask for a PDP (Policy Development Process) paper. The first step in the ICANN process to solve a problem is defining the issue. The ALAC is trying to figure out all the issues that surround domain tasting before it calls for the PDP process. Everyone on the stage showed us their power point slides and talked about how domain tasting affected them. David Maher of PIR talked about how they solved the problem already. PIR raised the keep ratio in .ORG to higher than 90% and made it cost 5 cents to throw a domain back if the ratio was lower then that. I congratulate PIR for figuring out how to solve the problem, but is it a problem? According to Verisign it is not an operational problem for them and they make money doing it. So from Verisign’s perspective Domain Tasting is fine.

It is clear that the losers in Domain Tasting are the trademark owners that have their domain names typo-ed against. John Kane of eNom pointed out that it is fine to take something like boating and register 100 domain names with boating in the title and look for boating domains that would bring traffic but that registering 100 domain names that look like VerizonWireless.com would be illegal.

From a registrar perspective, it is a huge liability to not have a refund period. Perhaps a hacker registers garbage at your registrar with a stolen credit card and you only catch it the next day. The 5 day period can be used to delete the domain names and get a full refund for the hack.

Personally I think Domain Tasting should be stopped. I see collateral damage and lawsuits everywhere. I like PIR’s solution rather then just closing the grace period. The systematic harvesting of typos is the worse offense. I have no problem with tasting of generic stings but typos that are not in the dictionary are a loaded gun of problems. I would advise domain tasters to use a dictionary when hunting for traffic.

Marilyn Cade did the most injustice to the whole debate. Her presentation was about Unethical Domain Parking and not Domain Tasting. She was basically saying that parking pages are the sickness of the Internet. Here is a quote from Marilyn:

“This, in fact, is the first meeting at which we have discussed a key aspect of Monetization, and that is the harmful aspect, The Dark Side, when it is not just a monetization scheme, but it is a scheme of monetization that is involving the abusive registration and exploitation of the rights of others.

I by no means mean to imply that the secondary market is all bad. But what I’m here today to do is show you some examples of experiences that people are doing.

Put pans under the Drips, eventually I’m going to see a significant increased cost in maintenance and repairs, but more that that, ugly molds are going to grow in the attic and in the walls. They won’t be discernible initially, but eventually there will be major structural problems.“

She then showed slides of unethical parking pages. While some of what she showed was unethical, she was confusing the issues and taking people off the debate over Domain Tasting. To the non technical people in the room she made a good argument. I think that is exactly why what she did was so dangerous, she was giving examples of bad things that happen and then tried to tie that in to Domain Tasting. She needs to confine her attacks to be more targeted or she will accomplish nothing.

I am not supporting unethical Domain Tasting or Abusive Registrations. In fact I am very against them. I do however support the rights of people to Park their domain names. So Marilyn, please don’t confuse the audience. Parking is a legitimate and ethical business and you should figure that out really quick. An entire industry hates you when you try to pull us into something else which is unrelated. There are always people that use tools in the wrong way but please don’t attack everyone that uses those tools. There are people parking domain names ethically. When some of them do it in an unethical way, that does not make domain parking unethical in general. That only makes those people unethical.

Marilyn, Please give clear examples of Domain Tasting abuse. Let’s solve that problem. But don’t sling mud about other issues and expect us to rally behind you on a completely different issue. This is not capital hill and you can’t confuse the audience into doing something. We are too smart for that.

Universal Tube the manufacturer of tubes sued Google because of the amount of traffic they had coming to their site. They said these “nuisance Internet visitors” have caused their server to crash many times, which lead them to sue Google. The UTube company could not figure out why there was so much traffic but they finally figured it out. People heard about YouTube and so they went to a computer and typed in “U Tube”.

To a Domainer this is Internet Gold. To a pipe company this is “nuisance Internet Visitors”, but wait. They had someone from SearchFeed.com contact them and offer them a way to make money off of the traffic. Turns out they could make a lot of money off the traffic by selling advertising for Ringtones and other Pay-Per-Click advertising at the top of the page.

Estimates by Compete.com say 1 Million people a month visit the UTube.com site. However we have calculated that the visitors are actually much higher. Which could be as high as 6 Million visitors because Compete only measures US traffic.

We estimate that UTube is making $8,000 a day on the traffic or $2,920,000 a year. The domain is now easily worth 10 years revenue which comes out to a cool $29 Million if they wanted to sell. Else they can sit back and collect the free money from the YouTube monster typo.

Owning a domain is like buying a lottery ticket, you never know who your neighbor will be or how popular. A good example is Disney Internet Group. They own DIG.com, but someone else registered DIGG.com. Now Disney enjoys free traffic.

There is a new group that is pushing for legislative change regarding Domain Name Abuse. I am not sure what they mean by Domain Name Abuse but I think they mean Domain Tasting. On the whois it says that Joshua Bourne from Washington DC registerd the domain. I am not sure who started the group but it looks like they will be lobbing congress. It must be funded by Verizon or someone like that. Their website is at cadna.org. I think a more natural website would have been CADNS.org, DNA vs DNS. But then their acromyn would have made them the Coalitition Against DNS instead the Coalition Against DNA. I think while I am at it I will register and setup a Coalition Against DNS just for the fun of it and get an Amish army to rally against DNS with me. Anyway, back to the story, I have emailed them and asked to sign me up for a newsletter if they have one. I will keep everyone updated on what this group is doing on the belt way if they do have a newsletter.

CADNS’s Purpose:

The Coalition Against Domain Name Abuse (CADNA) is a registered 501(c)(6) non-profit organization dedicated to facilitating dialogue, affecting change, and spurring action on the part of policymakers to close a loophole that enables massive domain name abuse and to decrease occurrences of cybersquatting in all of its forms through the revision of current anti-cybersquatting legislation.

With pro-abuse groups already organized in Washington and the recent election of new leadership in both houses of Congress, the time to act is now.

CADNS’s proposed Solution:

So what is being done to stop tasting and to slow the growth of cybersquatting? At this point, not a great deal. Although cybersquatting has been around from the start and the tasting tactic in one form or another has been around for at least five years, the issues have grown over the past year and awareness that collective action is required is slowly spreading throughout the trademark community. To date, ICANN has not taken action to eliminate the exploitation of the grace period and it has not protected the interests of trademark owners and consumers. Lawmakers have overlooked their oversight responsibilities and have done little to curb brand abuses in all forms on the Internet, thereby failing to protect both consumers and the intellectual property community.

Given recent lawsuits filed by high-profile trademark owners against cybersquatters, the new Congress, and a strong pro-abuse opposition formed in Washington, CADNA believes that the time to act is now. By educating the public and policy makers and proposing practical solutions to Congress to address these growing problems, CADNA hopes to make the Internet a better place for consumers and businesses alike.

Does anyone know who is responsible for this group and who they are backed by?