Pump and Dump - why 'traffic' is not a good gauge of domain value

[mole]

You've all probably heard about Overture score artificial juicing, here's another nice report from Sedo.

Sedo's Director of Customer Relations, Jay Finnan, offers advice on how to avoid bad traffic domains

Like any lucrative industry, the domain business has attracted its share of bad apples. Sadly, some people will do anything to make a quick buck—even if it’s illegal. One of the most popular scams right now is a form of traffic fraud called the “pump and dump”. It’s analogous to the form of stock fraud bearing the same name. However, by doing just a modest amount of research you can avoid falling into these snares altogether. Fortunately, Sedo now provides a tool to help make the process of researching traffic a lot less time intensive.

Click fraud and misrepresenting the value of traffic has been around for some time now. However, now that most pay-per-click companies have implemented new filtering methods and fraud detection programs, fewer scam artists are getting away with parking fraud and are instead turning to new forms of fraud including domain hijacking and sales fraud. The industry as a whole is concerned about these growing trends and has made it a focus of the last two T.R.A.F.F.I.C. industry conferences. Currently the best defense is to be aware of the scams that are out there and avoid the pitfalls altogether.

The “pump and dump” scam involves a fraudulent seller picking up an inexpensive domain and then proceeding to artificially inflate the traffic the domain receives by manufacturing it, either through link exchanges, promotional software, a pop up generating virus or other means. Once the domain has enough traffic to make it look tempting, that person then places it on the open market and sells it to the first bidder, usually for a price that makes it look like a real ‘steal’. However, don’t let the lure of easy money fool you. A little research goes a long way into filtering out these bad apples and their worthless domains.

 

[NosajiX]

interesting article by sedo, though they should be careful about associating link exchanges and the like with fraud! After all, where would sedo bee without it!

(link exchange, not fraud)

 

[Mr. Pim]

It's always a good idea to do a a traffic test of a few days so you can see the source of the traffic.

 

[Dale Hubbard]

I thought the title of the thread was referring to another of those 'rate my girlfriend'-type of sites. Maybe Sedo are just stating the obvious here?

 

[RatherGood]

Call me crazy but if you are buying a 'traffic domain' that has no other inherent value other than traffic, shouldn't your offer price be based on earnings?

 

[HHDomains]

Not necessarily.
Some people can generate a far higher traffic/earnings ratio than others.

 

[The Pain]

Not necessarily.
Some people can generate a far higher traffic/earnings ratio than others.

I would much rather buy domains based on their present income than the "pie in the sky" predictions of what a domain will make with a "little work" that you see so often from domain sellers on these forums. Present income is just one of many metrics that comes into play in purchasing a domain, but an important one.

The best thing for PPC in the past few months is companies switching to a "quality of traffic" model that rewards quality/converting traffic and punishes or eliminates junk and scam traffic. This will eliminate much of the present PPC click fraud.

The Pain