DomainTools reports that Google is about to stop monetizing domains that are less than five days old, effectively killing the practice of “Domain Tasting“. There is a huge amount of money involved in domain tasting, where AdSense for Domains ads can be thrown up on domains during their free five-day grace period.
The Add Grace Period (AGP) is a time period when registrars can delete a domain at no cost, but in this time frame a registrant could register millions of these temporary domains and place Google Adsense for Domains on them. The result is the ability to produce millions of temporary websites that literally generate millions of dollars in income per week for Google. It was disclosed in court that one partner that Google had was generating as much as $3 million dollars a month from the practice and that was after Google’s revenue share. Oversee.net and other companies have been using this practice for years and it will have a direct impact on them. The gravy train of free money might be coming to a halt very fast. This policy change at Google should be announced to the channel partners soon and it will have a huge echoing impact on the Industry.
The Good news is that the Quantity of advertising will be spread among fewer domains now and so those domain owners that actually own real full domains should receive more money if bid prices start to rise as a result of this. However some advocates of Domain Tasting say that perhaps no one will be able to serve the niche for some ads and no one will make money on the unserved ads.
According to DomainTools, Google is taking action now not to get back to their “Don’t Do Evil” roots, but rather, to avoid potential future litigation that could cost them millions and tie them up in court for years. In their eyes, it’s better to get out while the getting is good.
Now, what’s Yahoo! thinking about, will they follow suit and block all advertising on domains less then 5 day old as well?
Barry explained, users who land on a parked domain with AdSense for Domains are often confused. They click on the ads, in my opinion, out of not knowing what else to do. Advertisers, from what I hear, are not happy with the conversions on those ads. To Google's credit, Google will allow advertisers to opt out of placing ads on domain park sites. However, this does not help with a searcher or user landing on these pages.
Domainers are not happy with this potential Google policy change (it has yet to be confirmed by Google). Check more discussion at Techmeme.
Postscript From Danny: To clarify on the "confusion" aspect, that's not applicable to all domain situations. Many people are interesting in a particular topic and for a variety of reasons will guess that by putting words together and slapping on a .com to the end, they'll end up some place relevant. And many parked domains indeed will have relevant ads. However, you can have people enter typos, where they are trying to reach a particular site and get to another one by mistake. In addition, you can have domains that are not using generic terms, not targeted to anything in particular, where someone may wind up on them not really sure where they've gotten to. The conversion aspect for an advertiser on such domains is much more an issue than with other types.SEL
Google sent this statement:
We have long discouraged domain kiting as a practice. In order to more effectively deter it, we are launching a new domain kiting detection system. If we determine that a domain is being kited, we will not allow Google ads to appear on the site. We believe that this policy will have a positive impact for users and domain purchasers across the web.
Domain kiting is when someone registers a domain but never pays for it, then keeps registering it. Google said the policy will only apply to kiting. Those doing domain tasting -- registering a site, trying it out with ads and then actually paying for it -- will not be impacted.
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