The Dismal Economics of Private Blog Networks

by | Dec 11, 2014 | SEO

For all of you blackhats freaking out, please read my disclaimer below detailing how this is meant to show that PBNs do not make economic sense on a small scale. Only if economies of scale are reached through larger investment do they make a viable financial model.

Ever get in an argument and realize all along that you were arguing about the wrong thing? That the argument itself was useless? In 1857, a man named Hinton Rowan Helper published a book entitled The Impending Crisis of the South: How to Meet It. Unlike the other abolitionist literature of the day, Helper’s book did not at all address the problem of slavery from the perspective of human rights or religion, but rather economics.

Helper sought out to show, and did so effectively, that slavery was in fact no longer economically efficient compared to northern wage labor. It seems when dealing with issues of black hat and white hat, we often get wrapped up in ethical questions when the economic question has already been answered, rendering the the ethical dilemma moot. Today, I intend to explain why Private Blog Networks (PBNs) are almost never smart investments for SEO, wholly aside from any questions of risk or ethics.

Building a Forecasting Model

Whenever launching a business or startup, one should at least consider building out a simple model detailing investments and revenue forecasts. The practice is fairly straightforward and can often bring down to earth the lofty projections one tends to conjure when considering a new and exciting idea.

After a “megathread” on PBNs was linked from the BigSEO Subreddit, I decided to read through the thread and it quickly dawned on me just how ineffectual PBNs would be for nearly any vertical. What I would like to do is very quickly walk through the simple math and then show you in a Javascript calculator exactly how poorly they perform.

Here are the things we need to document.

  1. Site Creation Costs
    • Domain Registration: One or two years? Dropped or Auction?
    • Content Creation: Outsourced or Spun?
    • Labor: How much do you value yourself?
  2. Site Maintenance Costs
    • Hosting: Monthly hosting costs
    • Content Creation: Creating content that will ultimately be linked
    • Labor: How much do you value yourself?
  3. Typical Target Keyword Value:
    So what does your average target keyword look like? How much revenue can it deliver? How competitive is it?
    • Monthly Traffic: Google Monthly Search Volume
    • Visitor Value: CPC is Your Best Proxy for this
    • Competitiveness (Root Linking Domains of Competitors)
  4. Target domain: The domain(s) you will try and rank
    • Existing Links
    • Domain Registration: One or two years? Dropped or Auction?
    • Content Creation: Can’t skimp here if you want to convert
    • Hosting

Assuming you are able to rank #1 for every keyword you attempt (which is insane) and assuming you overlap every keyword on your PBN (which is highly risky) and can stay under Google’s radar for 12 months (which is unlikely given such overlap), here are your projected earnings at the end of 12 months:Ranking 1 Keyword #1: $”+T+”Ranking 10 Typical Keywords #1: $”+C+”Ranking 25 Keywords #1: $”+L+”Ranking 100 Keywords #1: $”+A+”.

Honestly, when is the last time you ranked #1 for that many keywords? This is not to say one can’t succeed with private blog networks, rather to point out that it is very difficult. Is this the best SEO investment you can come up with? Unless you are truly well versed in black hat tactics, can bankroll potential losses, and can secure lower costs, private blog networks simply do not make sense. Maybe it is time to move past the ethical argument and realize the economic outlook just isn’t worth your time.

OK, so let’s try and put these together. I have set up the requisite metrics and put in dummy values. I think these values are fairly sensible if not outright charitable to the PBN builder, so feel free to vary the numbers as per your expectations…

Site Creation Costs
Item Cost
Domain Registration ($)  
Content Creation ($)  
Labor ($)  
 
Site Monthly Costs
Item Cost
Hosting ($)  
Content Addition ($)  
Labor ($)  
 
Average Niche Keyword
Item Value
Monthly Searches  
Visitor Value ($)  
Required Root Linking Domains  
 
Typical Target Site
Item Value
Domain Registration ($)  
Content Creation Startup ($)  
Content Creation Monthly ($)  
Hosting ($)  
Existing Root Linking Domains  
 

Go ahead and run the model by clicking the button below. Feel free to change the variables above if you like. As you will see, even a moderately sized PBN entails high startup and maintenance costs without taking dramatic risks. Black hat tactics are beholden to market forces just like any other business venture. PBNs just don’t appear to offer the value they may have once carried.

 
 
Author Note: There seems to be a lot of misunderstanding regarding the conclusions of my model. It is my intent to show that PBNs are financially ineffectual for most webmasters. Many have pointed out that the numbers I have presented are uncharitable to the efficiencies that can be earned by a larger network. I will grant this, which is why I provided a calculator so you can see at what point you would need to cost cut in order to make PBNs effective.
 
This is actually quite in line with Hinton Rowan Helper’s writings which I mention in my opening paragraph regarding slavery as an economic model. Slavery certainly made economic sense for the large plantation owner, where economies of scale could be exploited. However, it did not make economic sense for the average slave owner who, at the time, owned only a few. Similarly, I stand by my claim that PBNs are almost never the best financial solution, regardless of ethics, unless you are prepared to invest in much larger infrastructure.
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