Millions of Addresses, Thousands of Sites, One Business

An anonymous reader writes "A New York Times piece looks at a rising power in the 'new internet bubble' that you may not have heard of before. The business, an outfit called NameMedia, has made a concerted effort to quietly purchase vast tracts of 'real estate' on the internet. The ultimate goal is to provide additional advertising and page views for content sites. 'Behind this suddenly active business category -- which includes companies like iREIT in Houston, Marchex in Seattle, and Demand Media in Santa Monica, Calif. -- is the recognition that not all Internet users turn to a search engine when they are confused about where to find something online. Rather, 5 percent to 10 percent of people will simply type in a name that sounds as if it might suit their needs. The so-called direct search or direct navigation approach is seldom fruitful for users, nor has it been particularly profitable for owners of the sites that they visit. An obscure Web address may have four or so visitors a month, and perhaps half will click on an ad.'"

Comments

Uhmm....

[suv4x4]

I think I speak of everyone, when I say: WTF

Re:Namespace clutter

[spottedkangaroo]

Report those pages to google. Supposedly, pages that link to pages with only google ads are against the adwords rules.

Nice business model...

[Simon]

...it would be a shame if anything were to happened to it.

--
Simon

Re:zlitch content

[QuickFox]

They really show Google ads on these pointless pages?
If I did that my adsense account would be terminated. On the contrary, Google encourages domain squatting.

A bit hopefull

[mcfedr]

and perhaps half will click on an ad. no no no...perhaps none of them will click an ad...not only do i know i have never clicked on an ad, nor have most people i know, i have also tried putting ad's on websites with not many visiters, you never get hits

Financial details of a domain farmer

[Animats]

If you want to see the details of that business model, read the 10-K filing of Marchex, the publicly traded domain farmer.

Some highlights:

• "Our proprietary network is comprised of more than 200,000 Web sites."
• We deliver pay-per-click advertising listings that are reflective of our merchant advertisers' products and services to online users in response to their keyword search queries, and in response to their typing of specific Web Sites into their browser (direct navigation). These pay-per-click listings are generally ordered in the search results based on the amount our merchant advertisers choose to pay for a targeted placement."
• "We optimize key attributes of merchant advertiser Web sites to ensure the greatest opportunity for proper indexing, listing and inclusion in the editorial results of algorithmic search engines."
• "We believe we are among the leaders in the direct navigation market due to our proprietary ownership of online user traffic, which totaled more than 31 million unique visitors in the month of December 2006."
• "Online users can navigate the Web sites through a number of ways. For example, an online user who is specifically interested in traveling to Beijing may enter www.beijing.com directly into the Web address or URL box of their Internet browser. Once the user has arrived at the Web site they will find listings and information related to Beijing. As the user finds relevant information and clicks on a particular listing, we receive a pay-per-click fee."
• "We expect new laws and regulations directly applicable to our business practices to be adopted in the near future. "
• "We have largely incurred net losses since our inception, and we may incur net losses in the foreseeable future."
• "A significant amount of revenue attributed to our domain name assets comes through our agreement with Yahoo! and its subsidiaries."
• "Name Development acquired previously-owned Internet domain names that had expired and had been offered for sale by Internet domain name registrars following the period of permitted reclamation by their prior owners."
• "The Federal Trade Commission, or FTC, has recently reviewed the way in which search engines disclose paid placements or paid inclusion practices to Internet users. In 2002, the FTC issued guidance recommending that all search engine companies ensure that all paid search results are clearly distinguished from non-paid results, that the use of paid inclusion is clearly and conspicuously explained and disclosed and that other disclosures are made to avoid misleading users about the possible effects of paid placement or paid inclusion listings on search results. Such disclosures if ultimately mandated by the FTC or voluntarily made by us may reduce the desirability of our paid placement and paid inclusion services. We believe that some users will conclude that paid search results are not subject to the same relevancy requirements as non-paid search results, and will view paid search results less favorably. If such FTC disclosure reduces the desirability of our paid placement and paid inclusion services, and "click-throughs" of our paid search results decrease, our business could be adversely affected."

It's not a very profitable business. You'd think that, given how little they actually do, they'd be making sizable amounts of money, but they're not. They have substantial revenue ($127 million), but their operating costs and compensation eat up almost all of that.