Early buyer of Web domains venturing into software

Indianapolis resident Chad Folkening is one of those Internet entrepreneurs who made $1 million during the dot-com boom, wears flip-flops most of the time, and has never answered to a boss.

Domain Holdings co-founder Chad Folkening worked for years in flip-flops. (IBJ Photo/ Perry Reichanadter)

Folkening, 39, is a domain investor. His company eCorp.com owns 15,000 sites, such as handyman.com, that can generate revenue through online traffic or be sold to someone who wants that Web moniker.

Folkening says his portfolio still earns money, but the business, known as “domaining,” isn’t easy. Google finds new ways to filter generic sites out of its search results. Commissions on pay-per-click advertising have fallen. And it takes time to keep traffic coming and strike deals with merchants for referring it their way.

“There’s a lot of people that own domains that probably don’t make any money,” Folkening said.

That’s why Folkening’s latest venture is domain-management software called Domain Power. He hopes it becomes the go-to software tool for fellow “domainers,” kind of what WordPress is to bloggers.

By choosing templates from drop-down menus and filling boxes with articles or other content, a domain owner can turn a blank site into a miniature business in a few minutes. No programming skills required.

Domain Power was rolled out late last year by Domain Holdings, a Delray Beach, Fla., company Folkening started around the same time with John Ferber, the former owner of Advertising.com. This summer, the company raised $2.9 million, which Folkening said should be enough to see it to profitability by the third quarter of 2012.

The whole enterprise, which has 28 employees, is a new experience for Folkening.

“I’ve been sitting behind my desk in flip-flops for 15 years,” he said. “Now I’m going to the office.”

Well, sometimes. The Westfield native still spends six months a year working from his Indianapolis home, which is the East Kessler Boulevard compound that eccentric businessman Jerry Hostetler built and decorated with loads of dolphin statues.

Folkening is one of the few domain investors who has done it full time since the late 1990s. He really did earn $1 million from the sale of domain names–-one was Webex.com—in 2000, and he continues to buy and sell in six-figure deals.

But he admits that his portfolio started losing ongoing revenue two to three years ago. Google, through Google Maps, began emphasizing local search results. Folkening, who owns 90 domains with the word “Indy,” hadn’t developed any of his domains that had local-search potential.

Google’s big algorithm change earlier this year weeded out so-called “content farms,” which copy the same information across multiple sites. Folkening said Google’s latest move only confirmed his belief that domain owners have to place useful content on their sites and develop diverse revenue streams. When investors don’t have time or know-how to build up sites, they “park” them, meaning a site remains a mostly blank landing page with a few links that generates traffic because of its name. The site owner collects a few cents per click from advertising partners.

“Our industry got really lazy,” Folkening said.

More active domain owners generate revenue by creating links to online merchants—Amazon.com is a big one—and earning sales commissions, or by generating leads for service companies.

But it takes time to do that for dozens or hundreds of sites. Folkening’s contract programmers had been working for years on a software tool that would beef up his thousands of sites quickly. They created something called Rapid Domain Builder, which formed the basis for Domain Power.

“He’s been at it a long time. It kind of gives me hope that this software is going to do what he says,” said Tricia Meyer, the owner of a local Internet marketing firm, Meyertech LLC.

Programmers and other Internet-savvy professionals invest in domains as a sideline, Meyer said, and they often talk about creating their own software tools to tackle the same problems Folkening had.

That do-it-yourself mentality might be the biggest competitor for Domain Power. The software is free, but the company takes 40 percent of the first $5,000 in revenue from each domain that it hosts.

That’s a hefty cut to Mike Sullivan, a Chicago-area domain investor and industry blogger.

“There’s other software out there that you can pretty easily install,” he said.

Even a parked domain can generate enough revenue to at least cover an annual $10 registration-renewal fee.

Folkening argues that Domain Power’s tools can help investors steer their properties toward more lucrative sources.

If, for example, a site attracts a lot of visitors, but not many advertisers, the owner could redirect traffic to a related business that’s willing to pay a commission, he said.•