I learned about harvest strategy years ago from stories about a man by the name of Paul Kalmanovitz. Kalmanovitz, through his holding company S&P, bought many of the old-line regional brewing firms that had financial difficulties during the 50’s, 60’s and 70’s including Pearl, Pabst, Olympia, General and Falstaff.
He would purchase a faltering brewery through leveraged buy-out, then overnight, slash all the budgets and overhead to zero. Any cash flow that was generated by the brewery was pocketed and not reinvested back into the company.
He shut down inefficient plants, closed marketing and advertising departments, fired all but the essential technical staff, raided pension plans, and cut prices to appeal to price conscious customers.
The Harvest Strategy Works For A Short Time
This strategy may work for a little while, and Kalmanovitz would eventually make back his initial investments, but it only postponed the inevitable. Sooner or later, the brewery’s would have to shut down. Production would just be shifted to another plant.
Once each of the brewery’s were finally shuttered, everything was stripped out – brewing kettles, machinery, canning and bottling lines, all of it – and sold off to China (you know, where they make everything and where the most valuable domains are going right now).
In fact, production equipment from three Pabst breweries including the original brewery in Milwaukee was sent to China back in the 90’s under a licensing agreement between S&P and the Zhaoqing Brewery to brew and sell Pabst Blue Ribbon.
And, once everything was dismantled and demolished, the real estate would then be sold off to the highest bidder.
His actions are the reason Pabst no longer brews its own beer. Pabst is a brewer by name only – I call it a virtual brewer. Nowadays, MillerCoors and others brew Pabst brands on a contract basis.
The Harvest Strategy with Domain Names
What does all this have to do with domain names you say? Sometimes, and it depends on lots of factors of course, we look to buy domains that are for sale at the auctions and closeouts that had a decent following with leftover backlinks and traffic coming in every day. Some may have even been listed on DMOZ and ranked highly in Google at one time.
There are numerous domain investors that speculate on buying domains with backlinks. They park the domains and then collect revenue from leftover traffic with ads placed on the parked page. And, the guys that know what they are doing do well from it.
The strategy lies herein – revenue from the ad clicks on the parked pages eventually pays for the purchase of the domain and the registration fee every year, and hopefully there should be a little bit of revenue left over.
Before you get any grand ideas, it takes owning a whole bunch of these types of domains with backlinks and traffic before any real money adds up. And, once all the income is sucked out of the domain, you drop it. This is a prime example of the harvest strategy with domain names, in my opinion.
Oh, and the harvest strategy with domain names has nothing to do with type-in traffic, that is whole other ballgame.
Reinvesting in Harvested Domains
Now this is what I do. When looking to buy domain names with backlinks, I do a Wayback Machine search on the domain to see what kind of website was once on the domain. I use Domain History, Hoster Stats, Whoisology, Valuate and DomainIQ to make sure I know everything about the history of the domain and its owner.
If the domain in question is a keyword with a decent amount of backlinks, an aged .com, and a niche I’m interested in – I buy it, then I develop it and then I move on. It’s what I call reinvesting in harvested domains.
This way I don’t ride the domain down to zero and then cut it loose. It’s called development and developing our domain names to their fullest potential is what we as domain investors should all be doing. I just feel better about the ride back up, than the ride down.
To give you an example – I bought AntebellumTrail.com in January. It was first registered in 1997 and had a website on it about the Tennessee Antebellum Trail. The site was later taken down and the domain has been unused for over ten years.
I started on it two weeks ago and it took me about a week to get it back up and running. The brand new, updated Tennessee Antebellum Trail is now ready to go. Take a look and tell me what you think.
11/02/17 – With Google’s update over the weekend AntebellumTrail.com just moved up to first position – it only took 8 months. 🙂