DomainTools Blog

A new domain media company seems to have emerged out of Vancouver Canada. They just launched their website and their is a lot of interesting information on it. After reading through the website, it is clear that this new media company has been in stealth mode for a while and that they are on the same scale as other Industry Giants. They own some killer domain names like Attorney.com, Cheap Travel.com, Laptop.com, Digital Camera.com, Hot Springs.com, HD TV.com, Cellular Phones.com, Religion.com, Beat.com, and Venture.com. The company does not list all their domain names they own, but we assume they have other great names as well.

On their management page they list two co-founders (Kevin Ham, Colin Yu), and as you would expect from a Media company in the Direct Navigation space, they both own their own their .COM personal names. The two co-founders were high school friends and then later both attended the University of British Columbia. Later, after college, they started this company together.

Reinvent’s mission statement page is littered with awesome domain names that act as the title of each section, Mission Plan.com, Vision Statements.com, The History.com, Great Corp.com, Innovations.com, Team Building Exercises.com, Enjoying.com, Community Outlook.com

Reinvent Technology, Inc. was formally named Host Start, but the Host Start domain still does not redirect to Reinvent yet. Some background information was provided about their stealth mode operations on one of their pages:

Our humble beginnings, in 1999, started much like many internet startups, in the living room, as opposed to the garage. Founded by a family doctor who wanted to base his medical practice on his patients and not on time or money, he started an internet business during his residency in order to build a passive income. By the time his residency was completed, the business was doing so well that he decided to run the business for another year and then go back to medicine. That has yet to happen, seven years after the fact.

He was joined in late 2000 by his long-time high school friend, who had a background in banking. The company continues to grow and all their waking hours were spent building the business, all with specific goals in mind.

With the quantity and quality of domains in their portfolio this has to be considerable and formidable company to Name Media, Demand Media, Marchex, Name Administration Media, and Internet REIT.

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I was talking with Frank Schilling of Name Administration earlier this month and he reported an odd behavior of Google. If a user types his domain Personal Loans.com directly into Google, it will not even show one result for his website PersonalLoans.com. I can understand if he had typed the keywords for the domain, but he used no spaces and completed it with a .COM at the end. So there should only be one match for his domain, right? Nope. Instead the user will see an Australian website Personal Loans.com.au as the first result. This other site shows up because it has the same string as him but has the .AU on the end.

I decided to study the situation more. I have a good background in SEO but I never consulted for another company. This analyzation is purely for fun and Mr Shilling doesn’t know I am doing it. Shilling is doing alright with type-in traffic, however he is loosing eyeballs when it comes to the search engines – they pretend he doesn’t exist. You know you are blacklisted when a user types your domain name into Google and nothing about it appears.

Here is a screenshot of the Google results:

PersonalLoans.com can’t be found at all since it is blacklisted at the moment. I am less concerned about the blacklist status and more concerned about the health of his organic traffic. Lets talk about getting the domain back into Google, but not just in – in the first ten results for Shilling’s keywords “Personal Loans”. Type-in traffic is alright but organic traffic is Gold.

• First, I would move the domain away from the group of 44,555 other domains sitting on the same server.
• Second, I would concentrate on content. He has done a good job at building out the site with useful information, however it looks like a parking wolf in website’s clothing. Can Google see that? Yes. We need to add more content and decrease the ads. Less ads can actually result in more income.
• Third, after the content is added, the hard job is getting some links to the site. Perhaps he could start a Personal Loans blog and talk about the personal loans process. The blog could interview authors of books and other blogs on the loan process. By actively engaging the readers of the site, it would draw in those much needed links.
• Fourth, Google is temporal. Sites that never change or get all their links at once don’t do very well. A site needs a track record of growth. Devote a few hours a week to looking at the site and figuring out ways to improving it.
• Fifth, link bait with some features. Offer charts, graphs or interactive calculators. People bookmark these and come back, so also add social network bookmarking widgets to each page. This enables users without websites or blogs to create backward links to the site.

A website is like a person- you know if they have a good soul in the first 2 seconds you meet them. I would say Google is very good at judging the character of a site and knows if it should be included. Google will continue to keep judging a site and will change its view over time. For example, DomainTools two years ago was a PR0 (the lowest page rank possible) and pointed to a porn site. I bought the domain and turned it around. Before beginning the project, Shilling needs to examine what makes the other sites in the top results rank so well. What are they doing that he could be doing better. The best way to beat the competition is to chart them out and see how beatable they are.

PersonalLoans.com has a lot of potential and it needs more inbound links and more attention. I like that it is two words – generic one word domains are often harder to help. The more words in the domain name and the most specific the phrase is, the easier it is to help a site.

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Search Engine Arbitrage is defined as buying ads from a search engine and then selling ads at a higher price. For example the arbitrager buys the term “rare dirty coin” at Google and pays $0.05 for the ad because no one else is advertising on that term. Once the user clicks on the arbitrager’s ad he is taken to a page about “gold coins”. Let’s say the term “gold coins” makes $0.70 per click. The Arbitrager would need to convert 1 in 13 people to make a profit or 1 in 14 people to break even. We can think about Arbitrage as a keyword funnel, collect a lot of small terms and lead them into a big term. I think search engine arbitrage is another brilliant way of Mining the Longtail. There are drawbacks to arbitrage though, the market can only support so many of them. Geosign just announced they raised $160 Million from American Capital. With big announcements like this there is a lot of attention being focused on the keyword arbitrage market.

Let’s say there are 50 companies engage in large scale keyword arbitrage right now, they all make a return on their investment of 400%. If the market had 2,000 arbitrage companies I know the return would be much lower for all. I see algorithms getting smarter and machine evaluation processes getting faster, in short, to survive long term companies will need to have smarter machines then the next guy. The beauty of the longtail is that it can support a lot of companies. So it may take 30,000 arbitragers to drive average profit to 5%. The Fat Front of the Longtail will be eaten up very quickly and arbitrages that try to survive there will die, only 10 companies can show up for a term. So if 30 companies rule this industry we can see that there will be a collapse at some point and rest of the companies will fold or be bought out. However, reselling a poorly preforming arbitrage company will be harder then selling sand to an Egyptian.

Frank Schilling has a good perspective on how search engine arbitrage compares to domain arbitrage. He point out that only one company controls a domain, meanwhile anyone can bid on a search engine term. Traffic on a domain will never go away and a competitor will never drive costs up for owning the domain. For the king of domains it is easy, he can focus on domains and weather the arbitrage storm. Even if he enters the arbitrage business he has a safety net of 300,000+ generic domains with tons of type-in traffic. In Franks own words, “Homer Simpson himself could not kill Name Administration“.

My take on all this is that search engine arbitrage is here to stay but the margins will get thinner in the future. We can expect the leaders of today’s pure arbitrage business to get tossed out. Historically, the first to market in a highly competitive environment will lose their lunches to the next smartest company. Mosaic and Netscape are prime examples but I am sure there are more. Margins will compress rather quickly and the smart guys will be left. For the companies that want a re-do, they will need to have a back up plan. Marchex is a good example of a company with backup plan. They have a huge domain portfolio that has natural traffic.

There is a clear evolution for domain owners to play in this space: (Domainer > Registrar > Media Company) Once a domainer has hit the Media Company phase they can start playing in arbitrage. There are more direct routes to becoming an arbitrage company, start as an SEM company. But SEM companies are more pure play and don’t have backup plans, so I predict will be the ones that get squeezed out as margins compress.