Racing to the bottom — SEM Seagulls

I was approached by a headhunter two weeks ago recruiting an “editorial” manager for a venture backed company that had accumulated a large pile of domain names. The business plan was this: take advantage of the eight to ten percent of internet searches that occur not in the search box at Google, Yahoo, Ask or MSN, but directly in the URL bar of the browser and deliver a page with some “lite” editorial and a ton of links purchased by small businesses seeking people associated with the typed in term.

We’ve all hit them, especially when mis-typing a URL. The domain squatters and “seagulls” that collect domains build pages that either offer the domain for sale or cover it with links as part of an affiliate marketing program or existing paid search inclusion such as AdSense. This, to my thinking, is the bottom of the barrel in online marketing, similar to the bandits who played the 900 number game in the 90’s.
Now, according to today’s New York Times, the model has grown up thanks to the likes of Demand Media (founded by the ex-CEO of MySpace) and Oversee.net (the subject of the Times article), and Marchex’s purchase of the Name Development Company. Given the ease of scooping up expired domain names from the registrars, it’s a minor investment to accumulate a portfolio of domains, map them to loosely related editorial, and then plaster the pages with paid links.

This strategy works on a couple levels. First, it works on an SEO basis by creating link farms within a network, juicing the page rank of the network as long as the engines don’t catch on and penalize it. Second, “lite” editorial models are cheap. Splogs are the extreme side of this game, scraping other bloggers’ content and passing it off as their own.

The downside is this plays to the absolute bottom of the foodchain in terms of user intelligence. It assumes that one out of ten users are too ignorant or rushed to be bothered with a Google search and will use the address slot in their browser to type in “www.dogshampoo.com” or “www.beachvacation.com” in the hopes of satisfying their desires. It’s not dumb business to play on people’s natural proclivity to take a shortcut, nor did anyone go broke underestimating consumer intelligence, but …

As the Times point out, this is the direct mail business grown up and gone digital. Instead of hoping one out of a hundred envelopes will get ripped open and acted on, this hopes that one search out of a gazillion is an address typed into the right domain at the right time. I suppose it’s great for small businesses, but it smacks of domain squatting and pop-ups without the pop-up.

The only rational comment in the Times article (which is pretty naive in my opinion), was this:

“A longtime player in online commerce sees an evolutionary pattern. “The world of search engine optimization and marketing is very crowded, with players big and small looking for revenue opportunities,” said Ian Chaplin, of Galloway & Chaplin Capital, a founder of several businesses including Red Envelope, a gift site, and BidShift, a hiring exchange for hospitals and nurses and other medical personnel. Ultimately, Mr. Chaplin says, the “only sure winners will be Google and Yahoo and other major search engines.” “

I agree the engines are the ultimate winners, and, in theory, the biggest threat to the gulls should they decide to change the rules.

Author: David Churbuck

Cape Codder with an itch to write

0 thoughts on “Racing to the bottom — SEM Seagulls”

  1. Mark,
    These guys aren’t playing the “misspell” game, they are basically conducting risk arbitrage on domain purchases, rolling them up into a network, and leveraging “found” traffic into an SEM/SEO play.

    the misspell swine are in a different league.

  2. Right – I forgot to get to that point…the other issue I’ve seen with my kids is that they definitely will try “www.ballet.com” or “www.ilikehorses.com” – and I’ve got to redirect them to google and be sure that they are 100% supervised when they’re searching. They don’t click a link unless I read the description and approve it.

    When I got home from Indianapolis last week, their machine was blue screened. Turns out Mommy thinks supervising them can be done from the backyard while doing garden chores. I have yet to convince her otherwise, so now the machine is simply locked while I’m not sitting next to it.

    Rob – right on the money – content is king (again) – I tell customers all the time they’ve got to give people a reason to come back, and the best way to do that is to provide new and compelling content on a regular basis. Not everyone is capable of writing good content at the drop of a hat though…

  3. that is a good post from McAllister. I hate to agree, but quality content isn’t enough to pay the bills. I do think the pendulum will swing back at some point, when readers get so overwhelmed with unfiltered junk that they migrate back to trusted sources.

  4. My sense is that these new “souped-up link farms” are playing on a behaviorial pattern from the first generation of power-web users, who were conditioned to just type in whatever.com when they were looking for something, and they would find it. Everyone I know used to do that all the time, until Google made search more efficient. It’s a combination of behavioral psychology, targeted content and working the current SEO algorythmic weaknesses, where computer engines are not able to discern “quality” content and actual reputable brands.

    As a revenue model, it’s a crafty and somewhat applausable way to work the current systems and online atmosphere, no matter how despicable it may seem. As an editorial brand or an ethical way to make money, it’s certainly questionable. Then again, making scads of money often crosses the ethics line.

    I’m certainly interested in seeing how the Internet evolves and balances the new generation of pure revenue models and those who continue to maintain an atmosphere of editorial and participant integrity.

    This is an issue that those mad-caps in the Gillmor gang are constantly debating. Is it about the user or the corporate strategy? Who will reign?

    If I had my drothers and ran a Web site, but was also trying to make some schwam, I’d have to agree that it’s about the content. But you damn well better have SEO-savvy writers and editors, and an online sales person who “gets” how online revenue works.

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