Value of domain traffic illustrated
Direct navigation or domain traffic is very high quality traffic and has shown in extensive research to be as effective as clicks generated through keyword advertising programs such as Google Adwords. The traffic generated by domain names through Adsense for domains or domain parking programs such as sedo.com are referred to as Google search partners.
The reason for this is that the domain name is typed into the address bar in much the same way as a user types a search query into a search box and these specific searches will produce highly targeted users. By way of example, if you type “foreign exchange” into the search box or you type foreignexchange.co.za in the address bar and are located in South Africa, the resulting ads displayed are very similar or in some cases identical. Parked domains as they are referred to, use for the most part, the same advertising feeds and will to a large extent provide the same or very similar set of paid advertising results.
This of course is the real value of descriptive keyword domain names, be they owned by investors who capitalize on the type in traffic to serve advertising and profit from each click he receives or the website owner who wishes to drive targeted traffic to his website to convert into paying customers.
Most prospective domain buyers seem shocked given the price being asked for a domain name they have an interest in owning and are using Google adwords paid advertising to drive traffic to their websites. Let us consider a real world example of situation which occurred last week.
The domain name in question, a 1 word, co.za domain name that receives between 90 and 110 unique visitors per month, perfectly describes the services offered by the company, the buyer is using Adwords paid search, average cost per click is R11.00 for the exact match search in Google and the asking price of the Domain is R22 000.
What does this mean if the domain name is simply redirected to the buyers developed website:
Year 1
Purchase price: R22 000.00
Annual visitors(minimum): 1080
Cost/visitor (year 1): R20.37
Year 2
Annual renewal fee: R50.00
Annual visitors(minimum): 1080
Cost/visitor (in year 2 and thereafter): R0.05
Combined cost/visitor after 2 years: R10.20
Combined cost/visitor over 3 years: R6.82
In less than 2 years by simply redirecting the domain name at the developed website of the buyer they are receiving the same quality and volume of traffic that they are paying for through Adsense and does not include the domain name as having a resale value.
Now lets take a look at the years ahead.
This is of course assuming that cost per click remains the constant and the traffic remains constant. What is likely to happen, is that the traffic will increase over time and the cost per click in this niche will increase as new competitors enter the market and bid for the keyword.
These figures are based on the minimum possible return on investment without any development or input. A pretty good investment wouldn’t you say?