Supernatural Agency: Online business tales

This afternoon I looked a new loft development in a small 19th century warehouse in our formerly industrial downtown area. The building has eleven lofts and some commercial space. It required extensive renovation and the lofts will be rentals in the $1500/month range (you get a lot of for 1500 bucks in Rochester). By my calculations the annual revenue from the building will be about $360,000 per year before expenses. Assuming they have $1.5 million into it, and leaving out tax considerations, they’re getting something like 24% return on their money. This is an extremely simplified example that leaves out expenses, equity growth, etc.

Let’s say I have $1.5 million to put into domains. I buy 50 good domains for an average of $1000 each. I spend the remaining money building content on them, buying PPC and doing SEO to increase traffic. When I’m done with my build-out I have 50 sites generating $1000/month each or $600,000 annually (a very conservative estimate). I also have an asset that has grown dramatically in value. The building above might be worth twice what they have invested once its fully rented. My 50 domains are conservatively worth ten times annual revenues or 4x my investment. And I have no renters, complaints, management costs, etc.

This comparison tells me something. The prices of even long tail type-in domains are going to go through the roof as ordinary people start playing the game. Once this bubble begins it will already be too late to get in. It will expand and explode. The real game will be deciding when to get out.

We live in interesting times.

Our business doesn’t really have a web site. Yes you can visit www.supernaturalagency.com but all that’s there is a little text about what we do and a link to this blog. And we don’t intend to build a corporate site. Why should we? Anyone interested in us is going to learn a lot more about the business here and we can always add web pages to our sidebar content if need something more fixed, content-wise, like a privacy statement or contact info.

As we develop our site templates for our media sites it is becoming increasingly apparent that many of them will work better as blogs. We use contributing editors to provide content and with WordPress they can log in and contribute from anywhere without programming skills. We can use our admin controls to manage the content and control what it is- and when and where it appears.

We’re spending a lot of time on developing search optimization techniques specific to these blog templates. The intent is not to ‘game’ the system but to ensure that the information indexed by the engines is correctly identified as highly relevant to their searchers’ intent. Because blog software has its own automated ways of handling things like links and URLs, it requires a different approach to SEO.

The beautiful thing about a blog as a platform is that it practically demands fresh and up-to-date content. With most affiliate sites and parked domains the opposite is true- content is very static or non-existent. We believe that the algorithms are going to add freshness into their ranking systems. This makes sense in a world where they are indexing sites much faster and more frequently. Why wouldn’t they added a recently changed attribute to a content index? Mix it in with relevancy of the new content to create an additional ranking factor for the site.

In a fascinating interview on behavioral marketing within a site Offermatica CEO Matt Roche talks about increasing the effectiveness of behavioral marketing within a site by tracking keywords used to get to the site and serving up specific homepage content that targets those keywords:

“So with MusiciansFriend.com, [when] someone comes to the home page we know nothing about them, so they get the home page. What if we repeat the keyword that they searched on to get there, just show similar information? That increased the conversions. We repeat your keyword so you have a connection.”

That’s the first step. Then they look at the behavior within the site and retarget the message when they return to the home page:

“Then we install affinity targeting that says when you go to the drums section and come back to the home page it will show you more drum offers. It increased the conversion rate in double digits on all the categories where we did category affinity”

Here’s where the real payoff for the merchant comes in:

“What was more important, in my opinion, was that the guy who was running the category for drums has never had his stuff on the front page. The front page is reserved for those departments inside a company that have the power. But if you suddenly say that the front page visitor is not just a MusiciansFriend front page visitor but a MusiciansFriend drummer, then you say, Mr. Head of Drum Merchandise, you tell me what I should show them. In the past you sat back and prayed people get to the drum section. Now he is leaning forward and saying, I know they are a drummer, [so] what should I be showing them? When the marketer becomes engaged, when they do something and see the result of it, then they do things that are in the end more engaging for the consumer.”

This is incredibly powerful stuff that is not technologically beyond the range of most serious site marketers because, unlike behavioral retargeted ad campaigns, it would not require sophisticated third-party server solutions. Anyone with a serious shopping or informational affiliate site should be thinking in these terms because this could greatly increase conversions and improve customer/visitor loyalty.