Direct Navigation Market

The Uses of Direct Navigation Traffic

The two prevalent business models for portfolio owners who monetize their direct navigation traffic are the PPC Model and the Development Model.

There are many, many variations of these two business models; however, we'll simply explain the basic concepts to provide an overall understanding of current market practices. Most often, large domain portfolios are a mixture of both.

The PPC Business Model for Your Portfolio

At present, this is the most often followed business model for domain portfolio owners in the direct navigation industry. For the average portfolio owner who controls 1,000 to 10,000 domains, it is the easiest to operate because no hosting servers need to be leased or purchased, no web designers, copyrighters, developers, programmers, network engineers, or security specialists need to be paid, because none need to be hired.

When registering a domain, or shortly thereafter, you set the nameservers (NS1.SOMETHING.COM, NS2.SOMETHING.COM) to point to a company's DNS, like Dark Blue Sea, SEDO, Domain Sponsor, Google, Yahoo! Direct, or one of the many other companies that specialize in monetizing parked domains.

The company you contract with, in turn, designs a landing page for your domain, handles the hosting, and contracts with advertisers (directly or indirectly), then pays you for web surfers coming from your domain and clicking through to their advertisers sites.

Sounds simple, doesn't it? It is simple to operate, but it's not as easy to enter this market now as it was years ago. The chances of getting your hands on generic terms that define an industry, a product, or a place are fairly slim, unless you've got a lot of money to invest. Domains like shoes.com, computers.com, windows.com, cars.com, and miami.com were likely registered and monetized or branded long ago. There are, however, still opportunities to register or purchase longer domains that are or will become type-ins at some point, and these domains can provide a continual stream of targeted traffic.

The PPC model is also excellent for determining current estimated worth of a domain or a portfolio. For our example, we'll use imaginary traffic and revenue statistics for "domain.com" simply to illustrate the concept of parked domain monetization in this PPC model. In reality, we don't own domain.com and don't know how much natural traffic it has nor how much it would earn utilizing the PPC model.

But as an example, using the PPC model as described above, let's estimate "domain.com" gets 40 natural type-ins per day. If 50% of the web surfers per day click through to advertisers (that's why it's called targeted traffic; it's very potent), and the domain owner gets 5 cents per click from the company he contracts with, then "domain.com" earns him $1 per day (50% of 40 visitors clicking = 20 visitors x 5 cents per click = $1). And in earning $1 per day, then this domain's annual gross profit is $365 ($1 x 365 days). Notice this isn't a Monday through Friday, 9 to 5 equation. Every day of the year counts on the Internet.

One Domain to a Portfolio of Domains

Having one domain that makes $1 per day is great. But by registering or buying additional type-in domains, income streams multiply. What if you had 10 domains making $1 per day? That's $3,650 per year. What if you had 1,000? If each of your 1,000 domains is making just $1 per day, then you've got income streams bringing in $365,000 per year.

Development Business Model for Your Portfolio

The Development Model differs greatly from the PPC model above, in that the portfolio owner spends a great deal of time and expense - and usually both - to create useful web sites for a variety of purposes, profiting only once the revenue streams are higher than the cost of building and operating his sites.