But it is a sentiment that will fall on deaf ears, I’m afraid.

Schwartz says that for long-term sustainability, every business needs to own the best dot com it can possibly afford. It’s a fact I can rally behind. After all, most startups, once they get big enough, invariably purchase their company-name dotcom: Box.net bought Box.com, TheFacebook.com bought Facebook.com, and GetFoursquare.com bought Foursquare.com.

Unfortunately, these startups are few and far in-between.

$0 to $1Bn in Two Years: Lessons from Instagram

Mark Zuckerberg (Facebook), Naveen Selvadurai and Dennis Crowley (Foursquare), and Drew Huston (Dropbox) are rare among entrepreneurs; they actually want to build billion dollar companies that thrive for years and years.

The average startup founder, on the other hand, is more than happy to cash out for a few million bucks as soon as an enticing offer comes along.

Browse through the Crunchbase list of acquisitions and you’ll see startups on mediocre domain names selling for a few million to bigger competitors barely an year or two after launch.

In such a scenario, Rick’s entire argument on building for the long-term and owning dot coms falls flat. If you could buy a cheap ccTLD, get into Y Combinator or TechStars, raise a million dollars in venture capital, and then cash out within two years for $10M, why would you even bother buying your company’s dot com?

In other words: most entrepreneurs would rather be Instagram than Google. Few founders have the stomach or the ambition to turn $10M companies in to $10 billion companies. They don’t care about long-term profits and 20 year plans. The vision of the average entrepreneur barely stretches past 3-5 years, and the subsequent exit. Peddling the virtues of owning the relevant dot coms to these entrepreneurs would be like throwing pearls before swine; you’re only going to get confused looks and unintelligible noises.

As unfortunate as it may be, on the internet, as in real life, people don’t care about the long term. We want instant gratification, and that precludes planning 20 years into the future. Most entrepreneurs would like to own a great dot com, but since they are going to chase an exit in 2 years anyway, they’d much rather save the cash and just buy a .co or .me.

You can preach to them the value of type-ins and traffic leaking to the dot coms, but unless the founders are enthusiastic about long-term plans, you’ll see little response.

This is a reality all domainers must grasp.

It’s hyperbole, of course, since almost no registrant will apply for 50 TLDs, and there will also be significant number of applicants for the same TLDs. But it just goes to show the sheer number of TLDs the market could be flooded with within an year should the gTLD program be stretched to its maximum possible limit (plus, it makes a very catchy headline).

What  $6,340,000 Buys You

The registration cost for the ICANN TLD Application System (TAS) is $5,000. With 1,268 registrants, the revenue from the TAS registration alone comes out to $6.34M. With a further $180,000 required for completing the application, ICANN’s coffers will be richer by hundreds of millions of dollars.

And yet, $6.34M can’t buy you a secure and stable application system.

If I was the development firm handling the TAS system, I’d be very worried for the future of my  business. Not many clients would show faith in a system that under-delivered when it was supposed to be under intense scrutiny.

I’d also be very bummed if I was one of the registrants. A $5,000 upfront payment should atleast guarantee a stable application environment and privacy protection. ICANN, of course, can provide neither of these. I would be seriously reconsidering the decision to invest in a gTLD, seeing how even a month after the gaffe, ICANN hasn’t been able to get the system back up and running.

The domain world is often called the ‘wild-west’ of the internet. With at least 1,268 new TLDs in the fray, this world is about to get a whole lot wilder.

As I’ve become more involved with the tech-startup scene over the past two years, though, I’ve come to realize that 5L dot coms were as much of a fad among startups as they were among domainers.

Those web 2.0 startups with crazy names that bagged all the headlines on TechCrunch? Don’t exist anymore! Barring a few – Flickr and Reddit.com being the most famous and obvious examples – most of those web 2.0 companies are today as dead as the term web 2.0 itself. And along with it died the web 2.0 naming trend.

Startups today seek stronger, more traditional brand names. Oyogi.com is out; Hunch.com is in.

To verify the veracity of my claim, I decided to dig through the Crunchbase database of acquisitions from 2011 to see how startups running on 5L names had actually fared.

There were a total of 39 startups with successful exits that used 5L domain names (the list isn’t limited to dot coms, though the domain itself had to have 5 letters to qualify). This is a very low number, by all means, since there are literally hundreds of exits in a single month, thousands in an year. The biggest among these was, of course, Skype’s monster $8.5Bn acquisition by Microsoft.

Here’s the full list for illustrative purposes:

Since most of these were private transactions, the purchase price wasn’t available for most of these sales. Nevertheless, the total value of all reported transactions amounted to an impressive $11.79Bn, boosted by the $8.5Bn sale of Skype and the $1.9Bn sale of Taleo to Oracle.

These startups had collective raised $258.11 million in funding. The largest funding amount was raised by TxVia.com – $55.4M – which was acquired by Google this month to bolster its Google Checkout efforts.

What I find interesting to note is that there is no preponderance of ridiculous made-up names (the kind that flooded the forums and TechCrunch/Mashable between 2006-09). Instead, I see a lot of strong dictionary dot coms: Flock.com, Cloud.com, Where.com, Quark.com, Hunch.com, Roost.com, Chomp.com.

There are also a bunch of ccTLDs thrown in for good measure – Blaze.io (the .io extension is fast becoming the TLD of choice for data related startups), Ikeda.com.br, and Point.se.

But the writing is on the wall: the time for investing in made up 5-6 letter dot coms is over. Startups aren’t buying them anymore. And the ones that actually used them haven’t met with much success.

The internet has woken up from its web 2.0 hangover and is finally maturing to adopt smarter brands. That means you, dear domainer, will have to start offering smarter, stronger domain names. Forget those fantasies of buying Ixijo.com for $9 and flipping to an unsuspecting startup for $900. Invest in solid brand names that actually make sense. And skip the rest.

And yet, it is a tiny country across the Atlantic that is slowly emerging as one of the world’s hottest startup destination.

Estonia is the 132nd largest country in the world – an area roughly the size of Pennsylvania – and boasts of a population of a mere 1.34 million.  95% of the readers of this site won’t be able to locate it on a map (I certainly couldn’t).  It was a part of the former Soviet Republic and broke free only upon the former’s collapse in 1991. And despite these handicaps, the startup economy in Estonia is soaring to stratospheric heights.

Limited company registrations is one of the most obvious indicators of an economy’s entrepreneurial growth. According to world bank, registrations for new limited companies was down by 12.9% in the entire European Union in 2009. A dismal figure, save for one bright spot: Estonia. In 2009, Estonia added a whopping 14,000 new limited companies to its rosters – a jump of 40% over 2008.

Despite its Soviet past, Estonia has pushed itself to number 16 on the Index of Economic Freedom – the highest of any former Soviet countries, and several spots ahead of Germany, Japan, Sweden and Finland. It had a real GDP growth rate of 8% – one of the highest in the world.

And perhaps most importantly: Estonia waded through the 2008 recession and actually decreased unemployment by 4.2% by aggressively courting startups.

How?

Skype.

The world’s favorite VoIP service houses 44% of its development team in the Estonian capital of Tallinn. It’s original software was written by four guys from Estonia. Among Estonian coders, Skype and its massive international success (the company was sold late last year for $8.5Bn to Microsoft) is looked upon reverentially in the tiny country, attracting a hoard of talent.

Bolstered by Skype’s success, many coders and marketers jumped into the startup-fray when the economy soured in 2008, leading to an entrepreneurship boom.

The presence of incubators such as Garage48 helps as well. The Garage48 team hosts several hackathons throughout the country and helps would be-entrepreneurs make the leap to actual CEOs. A co-working space attached to the Garage48 (the ‘Hub’) has become the breeding ground for ideas that often germinate into full-fledged startups.

From an outsider’s perspective, it is nothing short of miraculous. They even have a name for it: the Baltic Tiger.

Here’s just a short selection of international startups based out of Estonia, or founded by Estonians:

1. TransferWise

2. Fits.me

3. GuardTime.com

4. PipeDrive.com

5. PixTape.com

6. 300.mg

7. Zerply.com

8. Sportlyzer.com

Perhaps a few lessons to be learned here for entrepreneurs and governments alike: startups can spring anywhere; complaining about infrastructure and the lack of congenial environments shouldn’t really deter your entrepreneurship ambitions. And governments can help too by creating policies that facilitate investment and entrepreneurship. Estonia, for instance, was among the first countries to introduce a flat-rate tax (which is now down to 21%) regardless of income.

Oh, and if you are wondering, this story was inspired after I read about the .EE (Estonian ccTLD)  Registry reducing .ee domain registration costs by 6.5%!

If you weren’t pecked by the Penguin, congrats – you are among the lucky few!

But most did. And that is making many question the merits of SEO.

Put simply: is SEO financially feasible anymore? And do the dwindling returns of SEO make it worth dabbling in anymore?

Old Rules in a New Game

Most of the sites that got hit by the Penguin update did every single thing SEOs have been preaching since the turn of the century: on-page keyword titles, well formatted article titles, exact match domain names, keyword optimized content, the works.

And yet, these sites got hit the hardest.

Not that SEOs were pulling facts out of thin air – the above SEO tactics had proven successful through a decade of real-world tests. Google used to reward SEO-optimized sites. It was the foundation of virtually every internet marketing business everywhere.

And yet, with the Penguin update, that decade of trial and error has been made irrelevant. Talk about throwing the baby out with the bathwater!

After the over-optimization penalty kicked in, sites that pursued SEO-optimization as preached by industry ‘experts’ suffered the most. Don’t blame Google – blame unscrupulous internet marketers who’d been stuffing the SERPs with badly formatted, poorly written content shilling dubious products which, nevertheless, practiced perfect SEO. Google had to take this step; it was only but fair to more legitimate sites (that lacked an in-house SEO expert), and to its own search product.

With the Penguin update, Google has changed the game completely. Any blog or site – including this one – that tells you to include the keyword x number of times in an article, submit articles to directories, and include your target keyword in the title ought to be promptly added to your block list.

In this new game, the old rules just don’t apply anymore.

So that begs the question: do you learn the new rules, or do you simply quit playing the game?

Is SEO Worth it Anymore?

This isn’t the first time in the past 2 years that Google has changed its search algorithm completely. The earlier Panda update was met with similar disillusionment and indignation from marketers. “How could Google do this to us?” was the constant refrain, no matter which forum you landed on.

It isn’t any different this time.

Many businesses affected by Panda never really bounced back. For them, the Panda update was the last straw that broke the camel’s back.

It seems, the Penguin update will do the same to thousands of others.

This has caused many marketers to ask out loud: is SEO worth the effort anymore?

I can’t help but answer in the affirmative. It’s getting tougher for smaller players with limited resources to compete with the likes of Amazon and Demand Media and HuffPo. Any business that depends on SEO faces a great deal of uncertainty and instability. An algorithm change could land your business in the red overnight.

Are you really willing to deal with that risk, that anxiety, and the sheer stress of knowing your business could collapse at any moment?

Analyze, Interpret, Understand

You can’t possibly abandon SEO completely as a traffic strategy. But perhaps time has come to shift some of your attention from SEO to social media (which, conversely, will also help your SEO).

Practice selective amnesia with SEO: forget everything experts have taught you in the past 10 years. Start afresh. Follow Google’s new rules and start building sites for real people. My previous article should serve as a good starting point. This article from SearchEngineLand.com is a good resource as well.

Allocate a greater proportion of your marketing dollars to social media. Tweet, pin, stumble, and share. Skip spamming and start building something substantial. That will invite shares by itself.

The shortcuts won’t work anymore; why waste time with them only to be slapped by Google?

There are no two ways to say it: the returns on SEO will continue to diminish as Google tilts its algorithm in favor of big brands, and social media eats up a greater proportion of end-user eyeballs. But it isn’t time to ditch it as a traffic strategy completely yet. Rather, sit down and analyze your site(s) traffic and potential growth opportunities. If you feel your niche might be better served with a social media campaign, then by all means, don’t hesitate to allocate greater resources to social media over SEO.

The Moniker ‘Premium’ Spring auction is well-underway, but the line-up leaves a lot to be desired. I’ve noticed a gradual decline in the quality of names being put up for sale at these supposed premium auctions (including Sedo’s Great Domains auctions) – cannibalized, no doubt, by Schilling’s DNS – with stratospherically high reserves and names that make a mockery of the word ‘premium’.

The reserves on many names at Moniker’s auction are a little too optimistic considering that the market hasn’t really bounced back to its 2008 high. A reserve between $1-$5MM is a little too aspirational, as is $250k-$500k for ‘MovingCompany.com’.

Some names, on the other hand, simply don’t belong in this list. I wouldn’t expect ‘Wyvn.com’, MakeAnOffer.net’, ‘Nxmd.com’ and ‘Vco.net’ (which has a reserve between $1001 to $2500, by the way) to be grouped in the same auction as Platinum.com and Security.com. The selection of names in the forums are often better.

Yet there are a few good names to be had for cheap if you know how to pick right:

1. HomeMortgageLoans.com (Reserve: $5,001 – $10,000)

Don’t let the $5,000+ reserve intimidate you. This is a very strong keyword that gets over 165,000 broad and 1,000 exact searches each month. When you consider that the average mortgage loan value is in low to mid six figures, the $5,000+ reserve seems paltry. Each lead in this keyword can fetch hundreds of dollars, more if you partner with an actual loan agent.

2. VegasFlights.com (Reserve: $5,001-$10,000)

301,000 broad and 3,600 exact searches means that you’ll get plenty of traffic if you top the SERPs. Flights to the world’s favorite party spot will always be in demand – recession or not. This is the perfect domain to tap this market.

3. MensProducts.com (Reserve: $1,001-$2,500)

A single domain that targets a multi-billion dollar industry: the development opportunities are enormous. Set up a drop-shipping business, or go the ManPacks route and sell subscriptions for everything from shaving cream to socks.

4. Grilled.net (No reserve)

A solid .net name for a site on America’s favorite hobby. The no reserve makes it even more attractive.

5. JoggingShorts.com (No reserve)

This is the ideal domain to tap into this hyper niche vertical. I must’ve bought at least a dozen pairs of workout/jogging shorts last year, so you’ll always get repeat buyers.

6. Obese.net (No reserve)

This is an obvious choice, especially with the lack of a reserve price.

In the earnings call, Neustar CFO Paul S. Lalljie reported that the registry business had witnessed an 8% increase in revenue, courtesy of a 12% increase in domain names under management. The company now manages a total of 5.7M domains across its several TLD offerings.

In response to a question about the new TLDs and possible growth opportunities, CEO Lisa Hook said that the company will only provide back-end registry services for the new TLDs and is not looking to invest in front-end services in order to maintain its ‘neutral’ stance:

“As you know, our preference is to maintain our reputation and our standing in the community as neutral players. So we believe that competing for the front end was really, at some level, in competition with providing those appropriate neutral services as a back-end registry provider.”

 

Neustar recently launched a new campaign – “Kickstart America” to promote the long-ignored .us TLD. It would be interesting to see if the campaign succeeds in wiping away the years of accumulated cobwebs from the TLD.

.IE domains have been on something of a roll of late, which registrations topping 175,000, thanks to a 12% increase in domain registrations in the first three months of 2012, compared with the same period in 2011. Ireland is quickly growing as a startup-hub, with Dublin as the center of a thriving entrepreneurial community that has embraced the .ie TLD wholeheartedly.

According to the Irish Times, the IEDR might put up all two letter .ie domains up for auction in order to raise money for charity, as well as showcase the popularity of the TLD. This is the first time .ie domains will be offered for sale. The registry is waiting for approval from representatives of the local industry before proceeding with the auction.

Two letter domain names are available in only a few ccTLDs because of the possibility of confusing them with other ccTLDs (eg: es.ie, us.ie, etc. can cause confusion among actual users). Perhaps this will change if IEDR has a successful auction.

Domainers looking to jump into the fray will be disappointed as the TLD is available only to Irish residents and businesses.

1. Write For People, Not Robots

In my (short) career as a writer and internet marketer, I’ve lost track of the number of times I’ve advised clients to ‘write for people, not robots’. More often than not, my words fall on deaf ears. I continue to get requests for blog posts where the client wants the article to start with their target keyword, and to ensure a keyword density of 5%.

The problem is: none of that works anymore. None of that should’ve worked in the first place.

I’m a little tired of telling people this, but let me repeat it one final time: your audience isn’t Google; your audience is made up of actual people.

Google before 2011’s Panda update liked articles that used keywords in sub-titles and at the beginning of paragraphs. That became less true Post-Panda, and completely fallacious after this update.

Your content must now read like it was written for people. That means: no keyword stuffing, no artificial keywords, and no keyword based subtitles. If it makes you squirm after reading it, it’s probably not good enough for Google.

Take time to create content your audience actually likes, and you just might find friends in social media willing to share it.

2. Rework Your Titles

Say, you are creating an Amazon affiliate site to sell dog leashes. Do all your article titles look like they’ve been pulled straight from the Google Keywords suggestion tool? I’m talking about titles like:

Cheap dog leashes

Fancy dog collars and leashes

Plaid dog collars and leashes

Leather dog leashes

If yes, you are staring at big trouble.

First of all – these horribly dull titles won’t invite in any actual visitors. And they certainly won’t incite any sharing.

Secondly – Google will sniff out the overt-optimization and take you to task in the SERPs. I can say this because I was stupid enough to use titles like these on some of my mini-sites, all of which dropped anywhere from 20 to 200 places in the SERPs.

Instead, use titles that sound more natural – like something a legitimate industry blog would use:

Fancy dog collars for the Fashion Forward Pooch!

Dog Leashes that won’t break the bank

Shopping for your dog leashes, on a budget

You don’t have to go all New-Yorker on the titles, but you’ll do well to better the eHows and eZineArticles of the world.

3. Check Your Internal Links

SEOs have long heralded the benefits of dropping keyword stuffed internal links across the site. Guess what? The same SEOs are now running for cover as Google takes its giant brush and paints them all with the webspam penalty.

If you manually, or through automated plugins, pepper each article with internal links pointing to other pages on your site (‘something something cheap dog leashes something something”), you will get hit by the over-optimization penalty.

Why?

Because it isn’t authentic. Dropping a link to previously published content is well and fine, but doing so across the site with keywords as anchor text smells ever so suspiciously of webspam and over-optimization.

4. Forget About Anchor Text

A cardinal virtue of every SEO worth his salt is to leave no opportunity to drop a keyword stuffed anchor text to his website. The same SEOs are now looking at their sites sitting on page #20 in the SERPs.

Google has been steadily downplaying the importance of keywords in anchor texts. The earlier avatar of Google (the pre-Panda Google) valued anchor text as an important ranking signal in its algorithm. Panda equalized the field somewhat and degraded anchor text as a contributing factor in the algorithm.

This update is out to make anchor text redundant.

The reason? Authenticity.

In the real world, no one uses exact keywords in the anchor text. You don’t link to an article on dog leashes in the NYT by writing, “Hey, I read an article about fancy dog leashes and collars in NYTimes.com!”; you use something more natural sounding like, “Hey, I just read an interesting article on NYTimes.com”.

The former reeks of a SEO optimized site; the latter is a genuine link to a solid resource on a subject. Guess which one Google will favor after this update?

5. Where do Your Backlinks Come From?

A constant among all the complaints about the new update crowding the forums is that Google is coming down really hard on sites that gathered links from dubious sources.

And what are these dubious sources?

Article directories. Link networks. Free directories. Web 2.0 sites with low spam tolerance. Forum profile backlinks.

Basically, any site that touts its SEO benefits in exchange for participation is a worthy contender for being considered a ‘dubious’ source.

Basically, if it didn’t take actual effort to get a link, it probably isn’t worth it. Now, more than ever, it is about quality and not quantity when it comes to backlinks. An in-content link from HuffPo will outweight 10,000 links from article directories.

If you’ve already abused these link sources heavily, it might be in your best interests to start over again from a fresh domain; your sites have already been tainted and it’ll take a lot of convincing before Google will allow it up in the SERPs again.

How have your sites fared after the update? Tell us in the comments below!

The Association of National Advertisers (ANA) has written to the U.S. Department of Commerce, seeking an independent probe into the security breach at ICANN, according to MediaPost.

ANA CEO and president, Bob Liodice, wrote, “the marketing and internet communities are concerned about ICANN’s vulnerability” – a sentiment echoed by domainers and all parties invested in the new TLDs. – in the letter addressed Lawrence Strickling, assistant secretary for communications and information at the Department of Commerce.

The letter goes on to question ICANN’s abilities to protect the interests of all invested parties, and even lambasts it for trying to meet ‘artificial deadlines’ that resulted in “inevitable system errors”.

Far from being a ‘disruptive’ move, the new TLD program has become the laughing stock around the internet with ICANN being the butt of all jokes. Despite the hefty registration fees of $185,000, ICANN’s failure to ensure a glitch-free application environment has shaken the faith of marketers and internet companies worldwide. This was ICANN’s moment in the spotlight – the bugle call for ushering in a new era on the internet – but ended up being a public embarrassment it is still trying hard to rectify.

The ANA is an organization with considerable clout, made up of over 400 companies and 9,000 brands that collectively spend over a hundred billion dollars in advertising and marketing worldwide each year. So when a public plea for a probe comes from the ANA president himself, you can be assured that the U.S. Department of Commerce will lend a helpful ear.