Is Domain Real Estate a Dying Investment – Pro’s and Con’s of Site Ownership
What is a domain and how can it become an important entity to your online business?
For some, this question is very elementary and the answer is quite obvious. But really, after being in this business for close to 10 years now, I truly believe the purpose of a website has shifted drastically and the way people build businesses online and the reasons have also taken a major shift.
A domain is becoming more and more a real estate.
The power of domains in Google
Although Matt Cutts, a software engineer at Google that relays a lot of information about the biggest algorithm changes (including the recent Panda update), states that domains do not play a significant role in the ranking algorithm, the results clearly state something completely different.
Before I share some results, let’s look at this from a “common sense” standpoint.
Say you have a brand, example, Walmart. If you type in the search term “walmart” into Google, you would hope that the specific brand Walmart would achieve the top rankings. It is their “branded” keyword and the keyword rich domain for that brand Walmart.com should take the #1 spot.
Sure enough, it is. If you look at some of the other top brands, you will see this as well.
Check out “street articles” or “wealthy affiliate”. Thess both hold the number one rankings, and why shouldn’t they, it is the keyword rich, branded URL.
Here is where it gets cool…
How can Google know what URL represents the brand, and which URL is simply a keyword rich domain. One that someone has bought with the attempt to “buy up the keyword”.
They typically don’t. So simply through buying a keyword rich domain, you can pretty much assure yourself a good positioning within the search engines.
I ran a couple of tests with a few silly domains:
I quickly set up a WordPress blog using WP Express at Wealthy Affiliate, and added a few simple pages of content to the homepage. I let them sit for a couple of weeks. Now if these get ranked without any work, then this proves that keyword rich domains have “pull” in Google, does it not?
Here are the search results in Google for “muppet babies song”:
Seriously. I spent less than 20 minutes from start to finish setting up this domain, and it has a #6 ranking in Google. Not bad and results that we as marketers should not overlook.
But how about good ol’ Dexter. Here are the Google search results for “dexter bobblehead”
Ah ha…a #5 ranking in Google. Again, little to no work. Just threw together a site in Wealthy Affiliate, put one page of content on there, and then let it MARINATE in Google. Two weeks later, it was ranked #5 overall.
Now although these are not #1 overall, they are rankings that many people would pay for. These are also sites that now carry real, tangible value. They get traffic (approximately 100 clicks per month on average each), and if I spent some time, I could easily generate some revenue from that.
I could also build on the traffic by writing and submitting a few relevant articles to StreetArticles.com or another authoring site. I could optimize my blog….
I am not going to get into the marketing side of things, I purely wanted to prove the benefit of buying domains with keywords…and the instant value that can be realized by throwing a quick website up on them.
Free Websites, a Thing of the Past
Yeah, cool….click a few buttons, choose a template, drag and drop a few things around, and BAM, you have a website.
Weebly, Blogger and WordPress are among the best free website builders out there. Here is what a website would look like that is created on these free website services:
The fact you can build a website is great. However, the fact that you don’t own this website and have very limited control of it, can present a bit of a problem.
Here is a just a quick list I put together of some major problems that CAN exist when you build a blog on another domain….
(1) It is very difficult to get ranked
(2) You have very little control of the ways you can optimize your site
(3) Any “free site” is a poor way of branding yourself as a business.
(4) These top level domains are riddled with poor content, hurting your own “free” site
The one positive, it is FREE.
In saying this though, the costs of building a site have come way down over the years. Space is cheap, bandwidth is cheap, and owning your own domain is a very small investment (about $10 per year).
Businesses and individuals no longer have to pay $1,000’s to put together a site nor do they need to be a “techie” to accomplish putting a site together.
Websites are now cheap, and in my opinion, a required aspect if you are looking to build any sort of business online. And this leads directly into my next discussion, site value.
How do you calculate the value of a Website?
If you are using a free site, you may be able to sell access to it based on a percentage of the revenue. The “value” model may look something like this:
Your sites earnings x 3 months
However, people will still be reluctant to buy a “free” site because you really are not the owner of it. It guess I would say that it is similar to subletting a home that you are renting for more than you are renting it for. You don’t really own it, but there is a slight chance you will be able to profit from it.
Whereas if you own your own website, people are much more willing to pay not only for the revenue, but the work you have invested in setting it up, building content, and getting rankings.
We are also in a day where we are seeing high valuations for websites with large user base or high earnings. Facebook is a pretty extreme example but it has been valued at 50 times its yearly earnings. A typical established website will typically fetch 3-7 times its yearly earnings.
So if you had a site that was generating you $100 per month in positive income on a consistent basis, your valuation may look something like this:
$100 x 12 x 3 = $3600
One thing that we all need to remember….
A domain is a $7 investment. SEVEN BUCKS!
There are now services available like WordPress Express that allow you to throw together as many sites as you’d like, and it only takes a few minutes to set-up a site. It is like being able to build a new house whenever you like, for $7.
Online real estate is very similar to plots of land in a way. They are not making more “desirable” land in the same way as they are not making any more .com domains. Once you buy it, the domain is yours and it will only go up in value.
Buying, holding, and selling domains is a huge business opportunity.
Two and Three Word Domains Bringing in the Cake
Historically, top level domains (.com) that were one word were the only ones fetching the large sums of money on domain auctioning sites. However, we are in a new age. Domains are in limited supply, thus two and three word domains are gaining more and more value.
In 2015, quality 4 word domains will be hard to find. The marketplace for 3 word domains is going to be depleted and people are going to be paying lots of money for 3 word domains and the buying frenzy is going to push many of the 4 and 5 word URL’s out of the market.
Here are some recent examples of sites that have sold for good money:
Undergraduate.com sold on SEDO for $22,000
iVideos.com sold on AternicDLS for $16,800
Cacao.org sold on MediaOptions for $15,000
Misjuegosdebobesponja.com (huh?) sold on Sedo for $14,000
Domains without a website are earning people considerable amounts of money. What a lot of people domaineers do is throw up a simple wordpress site and let it marinate… meanwhile Google and other search engines will see it, rank it, and it will further increase the value of the domain.
Want some examples?
Here are some “websites” that recently sold on Flippa:
OK, these sites are somewhat established. Some of them don’t earn revenue, but some of them have a decent monthly revenue. Maybe a fair-upside investment for the buyer.
What about those sites I mentioned that simply have been set-up and are “marinating” with a couple pages of content. Here is an example site that just sold for a good penny:
www.auditionofthedayclassifieds.net sold for $2,500 ($0 revenue, created in Feb 2011)
What about mobile? Is this going to have a negative impact on website ownership?
Yes and no.
Think of the way people search. Think of the way people will search a few years from now.
People are always going to be hungry for information. Information is going to always be delivered via websites, the only thing that may be different, is the way it is presented.
If anything, websites are heading in the direction of becoming “longer tailed”…meaning that the more niche and targeted the site is, the more relevance it is going to have.
The older generation for the most part still search regularly, even if it is from their smart phones. If someone is looking for a solution to their problem, then they are going to do a quick search in Google.
Data aggregating services may have an adverse impact in terms of people looking for news, but for people looking for a solution to their problem or looking to find something quickly (rather than it fall on their lap) they are going to continue using search platforms in one way or another.
And websites are not going anywhere. If anything, there is going to be an explosion of new traffic from developing countries and people without Internet in first world countries are going to continue to become more active users.
People are more connected than ever and INTERNET traffic is continuing to grow exponentially. Instead of people searching solely from their laptop or house, they are now searching via their tablet computer, the e-book reader, or their smartphone (or all of them).
People are also making more and more purchases via these devices. All advantageous for website owners.
Benefits of having your own website…
Outside of the “real estate” value that domain names have (and are only going to continue to appreciate),
having a domain is going to allow many advantages over not having a domain at all or utilizing a free website service.
There are FIVE major advantages to becoming a website owner:
(1) The power of self SEO – When you have your own website you have the ability to benefit from your search engine marketing efforts. This can include getting relevant back-links, writing relevant content, implementing ongoing dialogue via your visitors, and incurring social status and rankings. This is much more difficult to do if you are piggy-backing a free site as you are typically a sub-domain of the larger site which has likely been penalized in one way or another because of associated (other user) sites that have been doing erroneous SEO activities.
(2) Building your brand, building your purpose – A website is a brand. Once you create a brand, people will share your site, talk about your site, remember your site, and frequently visit it. Branding is powerful in any business, regardless of whether or not you are an affiliate based business, offline business, or offer your own online service.
(3) Improved analysis and testing - Analyzing website data and metrics can lead to improvements in the user experience and ultimately website revenue. By having full control over the website technologies you can use, it is very simple for you to incorporate various types of split testing, and services like Google Analytics which provide full data reporting.
(4) Integration and “shareability” of your website content – Like, Tweet, Share, and now Google +1. These are all social aspects that the search engines are now taking into consideration and can help improve your rankings. It is very easy to integrate these into your own website and can drastically increase the traffic and search engine visibility that you get.
(5) Ability to become a “source” - The more value you provide on your site, the greater respect you will earn as a “source” of information within than niche. A website creates that sense of legitimacy that visitors need to respect you as a subject matter expert. Provide regular quality content, and before you know it you will have a following.
As your website grows, so does your website value. One of the most critical aspects of any web success is traffic. Everything surrounds traffic, like an offline business, if you have no feet walking past your “space”, you have no revenue potential.
A high traffic website will also be worth significantly more.
What is the best way to get traffic? What is the quickest way to get it for free?
Utilizing StreetArticles.com to Increase your Domain Value
Street Articles is the latest “content authoring” spot on the Internet and is the latest brainchild by Carson and myself. Although at first glance, it may appear as just another place to put your articles, it is well on its way to becoming more than that.
Our goal with SA is to provide authors that write “quality” content a place to submit their unique articles and to quickly be rewarded for their hard work. It is also a place that you can build your brand, your following, your online credibility, and engage people in conversation. This will lead to your content getting shared, talked about, and increase traffic to your website.
It is a nice addition and very complimentary to writing on your website or blog.
Here are some reasons why YOU need to pay attention to what is going on at Street Articles and how it can benefit your business:
(1) Get a following – the following will continually be visiting your profile, your articles and ultimately your items
(2) Traffic generation - Article traffic will generate you website revenue and inflate the value of your site. For example, I currently have 56 articles within my account and have over 30,000 article views in the last 2.5 months. Pretty powerful for a limited amount of work. This traffic comes solely through search engine rankings and people sharing my articles. I could expect to pay close to $15,000 for this traffic if I was using PPC.
(3) Your work will be shared – This means your social value increased, and your voice will become a greater leveraging point. I have many articles that have shared in total 50+ times without a lot of effort (other than offering value to the reader). Quality content is king…and quality content gets shared in our social Internet age we are living in. Street Articles will continue to stay on top of the social trends and continue to provide features that benefit article shareability.
(4) Inbound links to your website (from author bio and right within your articles) – These will improve your website rankings. Relevant content leading to another relevant page counts as a quality back-link. Although not as critical as they once were, these can definitely make the difference between 1st page and 2nd page rankings.
(5) 15 Minute Rankings - If you want to take advantage of a timely news event or you simply want to get your articles indexed and ranked quickly, you can count on StreetArticles.com. You will typically find your site gets ranked within 15 minutes of approval, with our personal moderation being very quick.
(6) It is FREE. If you want to get your free StreetArticles.com account, you can do so here. See for yourself. Test a few articles and compare your results to other directories here.
Utilizing content authoring sites like ours to drive additional, free flowing traffic to your site will only increase the value of it. Traffic leads to revenue, revenue leads to higher “domain real estate value”.
These are my current thoughts on the domain industry. In my opinion, it is not going anywhere anytime soon. You may agree. You may disagree. Either way, I would love to hear your feedback and your own personal insights or story into this topic.
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