Leonard Holmes of ParkQuick.com discusses domain parking arbitrage.
Arbitrage involves making money because of a price differential between two markets. These days some people seem to be making a lot of money buying ads and sending the traffic to higher-paying ads on their domains. Not everyone is happy with this. Google, in fact, canceled some AdSense accounts because of this practice several months ago (the same time that they canceled accounts for “made-for-AdSense” domains). Admittedly it’s not a great user experience to click on ads and land on a page that has more ads.
Why is arbitrage often frowned-upon? In addition to the generally poor user experience, some people don’t seem to be targeting their ads properly. If you do try arbitrage (where it is allowed) be sure that the ads you buy are clearly targeting the same subject area as the ads on your target site. This is important for two reasons.
1. You may get your ads shut down if you are buying ads that target a completely different area.
2. If your ads are off-target nobody is going to click on the PPC ads on your site anyway. You are paying for this traffic, so you certainly want it to convert.
Some domainers who practice arbitrage recommend buying ads on cheaper long-tail keywords (such as “Dallas Investment Brokers”) and sending the traffic to a site optimized for higher-paying keywords (such as “investments”). Others have recommended buying ads on second tier (cheaper) search engines, rather than mainstream engines.
If you are going to try arbitrage, then start small. Open an account at Parked and park some domains with natural traffic there first. Get accustomed to their tools and their control panel. Consider using their customization tools to build out your site with attractive and useful content; but be aware that too much content can distract people from clicking on the ads. Once you decide to direct some paid traffic to your site keep good records of what you are spending and what you are making. Start small and cancel paid ads that are not converting.
Thanks again, Andrew, for the opportunity to post here from time-to-time.