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about this book vertical black line choosing a domain name
choosing the right domain name: a marketing perspective
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book cover: choosing the right domain name

CHAPTER 1
the who, what, where and when of domain names

1.09 HOW CAN A DOMAIN NAME GENERATE INCOME?


Although I have included this section, it is not really what this book is about. Indeed, there are other books on this subject alone - you will find most of them under 'online get-rich-quick schemes'. Yes, some - a very few - people make money in the ways I am about to describe, but would I would advise it as a new business venture? Probably not. There are two distinct methods of generating incomes from domain names - domaining and trading - though, as you will see, the two are linked. Let's consider each in turn.

Domaining

This practice also goes by a number of other names, including domain name parking and domaineering - and is a descendant of an earlier incarnation, cybersquatting. Although still a popular term in the offline media, the original concept of cybersquatting was founded on registering names with a view to selling them to legitimate owners. As the courts got to grips with this practice it evolved into domaining, which can be divided into the legitimate and the not-so-legitimate. The success of early cybersquatting was based around the practice of 'direct navigation', but domaining has spun off into search engine optimization and pay per click (PPC) advertising - the latter being made possible by the emergence, and subsequent market dominance, of Google and its AdSense service.

Direct navigation is where a user types a web address directly into their browser - but doesn't get the spelling right. In the original - and not-so-legitimate - practice of taking advantage of this, practitioners register domain names which are similar to those of existing brands or websites. This might include such things as misspellings, typos, lookalikes, transposed letters, phonetic spellings and related stems - or even just a different suffix. Not that I am a famous brand, but for example, alancharlesworth could come out as: allancharlesworth, alancharlsworth, alancharlesw0rth or alancgarlesworth (try typing a few similar variations of well-known brands into your browser and see what you get). So now there are folk arriving on a fake site instead of their intended destination. As the early practitioners of the concept were usually in the adult industry, miss-typers were inevitably presented with pornography images and promotions.

DOMAIN NAMES IN PRACTICE :
the 'uk' can make all the difference
In the UK the .org.uk suffix is used almost exclusively by not-for-profit organizations. This means that hi-jackings on those domains have resulted in significant embarrassment for some organizations. What the hi-jackers do - and they are virtually all in the sex industry - is simply register the US .org version of the UK registration. The UK charity the National Deaf Children's Society, for example, found that when visitors to their domain - ndcs.org.uk - missed off the '.uk' they were taken to the nude dames chat sex website. Given the nature of the UK site, this hi-jacking was particularly distasteful.
Whilst this produced some income for the adult websites, most users simply clicked away as fast as they could. So the domainers moved with the times, and made the landing pages into sites that resembled the original destination domains - with content related to the mimicked site. However - and here is the money-maker - much of that content must be, or include, pay per click (PPC) ads. Effectively, each page is turned into what some describe as 'web billboards' - with the hope that each 'duped' visitor will click on at least one of those PPC ads before they go looking for the site they wanted in the first place. Just to make sure your have the gist of this concept, here's a scenario. I need to buy a birthday present for my young niece, and she has professed an interest in a figurine of a character from the latest Disney blockbuster. So I head for the Disney website, but type in disneu.com by mistake. Up comes a webpage with Disneyesque images and content and a banner that says 'buy your Disney movie character dolls online now'. The link may take me to the genuine Disney store or any other online retailer selling Disney character figures, but as I click on the link kerrrrching - the domainer has just added the clickthrough fee to their bank account.

OK, you say no harm, no foul - but there is. I've been conned, I wanted Disney, I got something else - and the Disney brand has lost out too. Also, the advertiser is paying for a clickthrough that was achieved in a dubious manner (though I might spend money on the site, I might also believe they were in on the con trick). Think of it as the guy selling knock-off branded goods from a suitcase in the mall - that is, the mall paid for by the rents of legitimate traders.

However, so successful - read profitable - were these 'direct navigation' sites that the domainers soon realised the value of generic domains in this application. They would register a generic phrase - let's say taxreturnadvice.com - then simply list a whole host of PPC ads on the page and wait for the PPC commissions to role in (many of these sites will take on the look - to the innocent user - of a shopping comparison site). Now this is where the search engines come into the equation. Without I go into too much detail on search engine optimization (it can get complicated) the content of these generic-word PPC-ad sites are attractive to the search engine algorithms, and so they appear at the top of the search engine results pages (SERPs). This means that if I typed "tax return advice" into Google, I could be presented with taxreturnadvice.com at the top of the list. Naturally, I go to the page, and ultimately click on at least one PPC ad.
DOMAIN NAMES IN PRACTICE :
evil domaining
A much more unsavoury method of making money by diverting 'innocent' surfers to a website they didn't intend to be on is where the pornography industry is involved. In March 2004 John Zuccarini, a notorious cybersquatter, received a 30 month jail sentence after becoming the first person to be found guilty of violating the US Truth in Domain Names Act. On several occasions, Zuccarini attempted to lure Internet users to a child pornography site through his use of misleading domain names. He used misspellings of domain names like Disneyland and Teletubbies to lure children to pornographic websites. Domain names that he registered included: dinseyland.com, bobthebiulder.com and teltubies.com, as well as 16 variations of the legitimate site operated by pop star Britney Spears.
So, where's the money in domaining? you might ask. Well, let's say 10% of visitors to my generic-domain website click on a single link, and each PPC averages ten cents. And let's suppose I get 100 visitors a day. That's a dollar a day. OK, Hardly retire-early-to-the-Bahamas income - but what if I had 1000 such sites? Or 10,000? Or 100,000? Or a million? - I'll let you do the math. A warning, however, before you place that order for a new Mercedes. I said earlier that this is often the model presented by dubious 'get-rich-quick' schemes - and here's why. Do you really think there are any 'good' misspelled or mistyped brand names out there that haven't yet been registered as domain names? I'm afraid you missed this particular gravy train by a number of years - unless you have a bank balance big enough to allow you to buy some good generic names.

Furthermore, the income stream might be drying up - the result of a paradoxical problem for Google. As the dominant player in both search and online advertising, Google makes money from the PPC ads on the domaining sites, but at the same time searchers are increasingly unhappy at finding domaining sites at the top of the SERPs. Google's business model is based on giving users the best search experience possible, and the domainers impinge on this. If I want advice on completing a tax return and I search on Google for that term, I want web pages that will meet my needs - not a page full of adverts. In other words, I am annoyed with Google for returning a page that does not meet my search needs. Ultimately, if the search engine does not filter out (or de-list) these sites, I will take my search business to an engine that has. Of course, Google has recognized this and is taking steps to render the practice pointless by de-listing domaining sites.

As I said at the beginning of this section, there are a small number of individuals that are thriving on domaining - many pursuing the 'legitimate' route of PPC ads. There are, undoubtedly, other folk who are generating some income from lesser domain names. There are also people who make money by selling domains to these people (see the next section). Indeed, given that there are websites devoted to domaining as well as those that sell domains, there is a reasonable argument that this is a bona fide industry. For those folk who believe their fortunes lie in this field then I hope this book helps you to register or buy the right domain names. (If you want to know more about this business, simply type "Kevin Ham" into a search engine.)

Domain name trading

If you bought my book for this section alone then consider its purchase price to be to be an investment in saving yourself a lot of time, effort and money. Why? Unless you can time-transport your way back to 1994, you have missed the boat - for that's when all the good domain names (read: valuable) were registered. Yes, that man/woman at the pub/club/water cooler will always know someone (who knows someone) who has made a fortune by registering a name for 10 dollars and selling in for millions. But in reality these people are very few and far between. Doubt my word? Take a look at some of the pages and pages of ads on the 'domains for sale' sites I mention in chapter one. Yes, they've all been registered to make a fast buck but they are all still listed up there for sale - putting their sellers in negative equity for each one that remains unsold. OK, I will accept that there may be that one-in-several-million chance that the domain name you registered years ago might just be chosen as the new name for a global corporation that is re-branding itself, and one day their lawyers ring you up and make you a life-changing offer. But then your lottery number might also come up - the odds are around the same.

However, if you have a domain name or two, or two hundred, or two thousand and you don't want to follow the domaining route (let's face it, the vast majority of domains would attract zero visitors) perhaps you could sell them on to domainers.

You might even speculate on the domain name market, buying names that you hope will rise in value for resale - or attract visitors - at a later date. Some might argue that you can try to stay one step ahead of the market by tracking the business environment and registering domain names that mean nothing now but might come into vogue in years to come. The whole 'green' environmental issue might be an example. Or more recently, the announcement by the governments of various countries that they would pay owners to trade in old cars for new meant that a domain name with the words 'car scrappage' in them may have presented opportunities for fast moving domainers. However, such speculative practice requires both time and resources, making buying-to-sell domains virtually a full-time occupation - and a couple of hundred dollars return here and there will not pay the mortgage.

So there you go. Like a lot of similar industries, a few make a fortune. Most don't. You pay your money, you take your chance.

Go to the next section, return to the contents page or visit the book's webpage for additions and updates.

Copyright copyright 2009 Alan Charlesworth. All rights reserved.
International Standard Book Number: 978-1-4452-0538-0
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