Understanding The Value of Expired Domains
I would like to explain a few things related to expired domains in a definition format, which should make it easy to understand.
What are expired domains?
What is a typein domain name?
What is the wayback archive?
What is linkpop?
What is overture with the extension?
What is overture without the extension?
What is google pr or google pagerank?
What are alexa ratings?
There are thousands of domains expiring each and every day. Many of these domains were purchased which the plan for future development, but were never developed. Even if a domain was never developed, it could still hold some value, based on weather it recieves typein traffic. Some domains were developed, but never became popular, and yet a small percent of expiring domains, were once developed websites recieving hundreds or even thousands of daily visitors. These domains could be expiring due to many different reasons. Some may not be renewed intentionally because the previous owner did not comprehend the value of the traffic, some may have been owned by an incarcerated or deceased individual, some may have been owned by a defunct company, some may have had invalid or outdated contact information. But just because a domain is expiring does not mean that it is worthless. You should fully research these domains either manually by checking the wayback archive to see what the domain was previously used for. Resources that can be beneficial when researching domains are alexa which cannot be relied on by itself, but chances are good that if a domain has overture with the extension, a little linkpop, and an alexa ranking under 500,000, that it should have decent traffic (but we must also remember that not all web surfers have the alexa toolbar installed). Judging the value of expired domains that you plan on registering or bidding for at domain auctions, can be a guessing game. But if you understand the basics of how to the internet works, how sites pass on traffic, and which tools can be used to estimate traffic, and how much advertisers are willing to pay for related targetted traffic, then you can get a pretty good idea of what kind of value to put on a domain prior to owning it.
These tools can all be used to improve your estimate of expected traffic. After using all of the above to research the domain, you should check the accuracy of the linkpop, and also check the estimated traffic of websites that are linking to the expired domain. Once you have made your guess at estimated number of visitors per day the domain should recieve, and figured out what products the visitors are targetted towards, you should then use the Overture Bid Tool to see what advertisers are paying for targetted traffic. Although some traffic converts a lot better than others, until you own the domain, you will never know for sure how many visitors will actually convert to clicks. I normally lowball my estimated click through percentage to 5%.
So let's say you figure domain1.com recieves 100 unique visitors per day, using an estimated 5% clickthrough rate, gives you 5 clicks per day. The top 3 paying advertisers are paying overture an average of $1.00 per click Most PPC's recieve 50% of the advertising bid, and split 50% of that with you. Paying you $0.25 per click for this keyword. Here is the most important part of judging the value of a domain. Is the expired domain recieving traffic from mostly incoming links from other websites or mostly from people typing the domain into their browser in search of products. If the domain in question is recieving traffic from mostly links, search engines, and bookmarks, then the traffic could conceivably dry up in a shorter period of time than typein domains. Linkpop domains (previously developed sites) are generally valued at between 18-24 months revenue, and typein domains are generally values at between 36-60 months revenue. The example domain(domain1.com) would then have the following estimated value according to my formula. If it is a linkpop domain: $135-180 If it is a typein domain: $270-450
The above example is based on using a major ppc provider such as domain sponsor or fabulous, but if you have a direct pertnership with google or overture, the domain could yeild a better return and be worth more to you.
All of the above referenced tools and resources are fully explained and discussed
at my Deleted Domains Blog
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