Google To Allow Adsense On Undeveloped Domain Names – But Watch Out For Smart Pricing

I received an email from Google yesterday announcing Adsense For Domains.

Basically anyone with a domain name that’s currently doing little more than gather dust can now earn money by placing Google ads on it. Or at least you can if you are in North America – it’s yet to roll out to the rest of the world, but expect it to hit the UK early next year.

Previously Google only allowed Adsense to be placed on developed sites with relevant content. Anyone with undeveloped names could still make money from them through Adsense, but only by parking them with the likes of Namedrive (who I use) and Sedo who split any ad revenue generated with the domain name owner. Now of course domain name owners will be able to cut out the middle man, work directly with Google and presumably earn more per click.

If you want to participate in Adsense For Domains you will need to find your own hosting for your domains (the parking companies provide this for you in return for a share of revenue generated). Not a big deal really, but that will involve a small cost. If you have a large portfolio and you get yourself a reseller hosting account where you can host multiple websites, you will be able to spread that cost across enough domains to make the cost per domain name almost negligible.

I know there will be those who see Adsense For Domains as the closest thing to alchemy known to man. In fact I imagine there are internet gurus rushing to complete e-books on this very subject as I type. And at first glance it certainly does look like good news. But there could be a hidden danger here for those who do have developed quality sites that already display Google Adsense.

The reason? Smart pricing.

When it comes to Adsense, there is no doubt that Google rewards quality. The better your sites, the more you make per click. And the more you improve your sites, the more you make per click. Content as always is king.

Google employs what it calls “smart pricing” to reduce the price an advertiser pays for a click that is less likely to turn into an online sale or another call to action such as a newsletter sign up. The details of how smart pricing works are not publicly known, but what is known is that smart pricing doesn’t just affect a page or even a website, but your entire Google account. Which means one poorly converting website can affect the revenue of every other website in your Google Account.

So my concern is this. What would happen to your Google Adsense revenue if one of your undeveloped domains was hit by smart pricing and that smart pricing was then applied to your entire account?

I know of several publishers who, in a bid to boost their Google Adsense revenue, developed one or two page “mini-sites” – and have since regretted it. The theory being – and I’ve seen in enthusiastically endorsed by people who should know better on forums and in e-books – that if a hundred websites can earn just a dollar a day that’s $100 a day for next to no work.

Like most get rich quick schemes however the reality is somewhat different and earning that $100 from 100 mini-sites proves much harder than expected.

Not only do these mini-sites risk falling foul of Google’s dislike of MFA websites (Made For Adsense websites), but smart pricing means that revenue from any genuine content based sites that you have will almost certainly be negatively affected by any smart pricing applied to one or more of the mini-sites.

In short those “money for nothing” mini-sites often end up costing you not earning you money. And the same could be true for Adsense For Domains sites.

Just as you would be better off devoting your time and energy to developing one quality 100 page website than 100 poor quality one page websites, it might be better to continue parking undeveloped domain names with a third party until you are ready to develop them.

The proof as always is in the pudding and I’ll definitely be testing Adsense For Domains as soon as it is available to UK publishers, but the real money remains in development as far as I’m concerned and so that’s where my focus will remain.