Search Engine Watch breaks down the potential value to a company of choosing to acquire a domain rather than build one up from scratch. When confronted with a $20,000 price tag for a domain acquisition, most clients would balk. However, Mark Jackson notes that based on a $2.50 cost per click (CPC) and a 10% click-thru rate for a keyword that generates 180,000 hits, AdWords for that same keyword phrase as the domain would cost a company $45,000.
Search engine optimization (SEO) is still scoffed at in many circles, but virtually every blog, media, and retailing Web site knows that a great deal of traffic comes from search engines. As the marketplace grows more crowded, a company's positioning in search engine results can make the difference between success and failure. However, domain squatters realize that domain acquisition may be cheaper for a company than an AdWords campaign, so the cost of acquiring domains from them may rise as well.
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10% click through rate -- this has to be bogus clicks. Average CTR from real users (not botnets) is around 0.5%. Also, $2.5 CPC is much above average. You might be able to sell your domain for $20K, but you are likely to be hit by a lawsuit, unless the buyer is an idiot.
I agree.
NOBODY gets a 10% CTR (Click-through-rate) these days. $2.50 per click? I have financial sites, real estate sites, telecom sites and only once did I get a $2.50 click!
Depending upon the keyword, you can get pennies (or a single cent) or a few dollars.
So if the site is getting 180,000 hits/month; and it can get 0.5% CTR, AND each and every click is worth at least $1.00.... THEN the monthly income is only $900.
Annual income would be about $10,800.00 making this a good deal - you would be buying the site for 2X income.
That is, unless the site is high maintenance... say, you need to write articles each day and spend hours each day working on it. Unless you are willing to do that for $10,800 per year, it's a bad deal.
I think what the article was alluding to was using a domain purchase to replace a PPC program, in which case it makes more and immediate sense... but again, the math is highly suspect and overly optimistic. NOBODY gets 10%CTRs at those kind of volumes except liars.
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