Saturday Musings - The Importance of Family

Saturday Musings - The Importance of Family

I’ve been married for 28 years to Roselyn, she’s the most wonderful lady in the world. In fact, she plans to be at NamesCon this January to meet many of my domaining friends so be on the lookout for her! I’m blessed with three children, Tim and Sarah are in their early twenties and Elise just turned seventeen.

I was up really late last night finishing an analysis on the publically traded registrar/registry company, Rightside, for a future blog post. It seemed only moments later that I had to get up early to go and see Elise play in her netball final.

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Sadly, Elise lost her final but in my eyes she won the whole game. Despite being really sick this past couple of weeks and just coming through her final exams she put her heart and soul into the game and did the best she possibly could. I was a really proud father….regardless of the score.

Sarah is coming to the end of her course in specialist make-up (for movies and television) while maintaining a pretty full-on part-time job selling streetwear clothing. She’s killing her sales targets and is now one of the key members of the sales team.

Tim has just secured a position teaching English to Italian students through drama. This means that he’ll being heading to Italy first thing next year for five months of traveling to different schools around that country….what an experience! In the meantime, he’s just about finished writing his first book.

So why am I sharing a brief snapshot into my family? It’s so easy to take our loved ones for granted and assume that they will always be there…..and meanwhile time goes by. Sure, we have our difficult times, who doesn’t, but the reason why family is important is because…..well…..we’re family!

Over the years, finding out what really makes each other happy is crucial to happy family life. For instance, Sarah loves hearing that she’s doing well and getting little presents. Elise loves a cuddle on the couch, Tim likes any good conversation that also involves food and Roselyn loves it most when we spend time together.

If you’re struggling with your own family life or with a family member then my suggestion is to think about what really presses their buttons in a positive manner. We’re coming up to Christmas and it’s all about giving so why not think about your different family members in a new way. Instead of a gift voucher from Amazon, you may take your daughter out for dinner, spend some time getting some advice from your son about an investment or arrange for a day spa treatment for both your partner and you.

What I’ve found is that my family is just so important and provides the motivation to many things in my own life. Whenever I invest in my family I always seem to reap an incredible return….the challenge is to continue to invest for one day you may get surprised.

For example, a couple of hours ago Tim came home and presented Roselyn with a bunch of flowers and a box of chocolates for us both to share. He did this to just say thank you for dropping him off and taking him to the airport to visit his girlfriend in Sydney. It was a huge surprise for us both and a few tears of happiness were shed.

It made both Rosleyn and I so proud of our son and that some of those ratty teenage years were well behind him. As they say, “Ask a teenager while they still know everything” and spoken by a young man in his twenties, “it’s amazing how much smarter my parents are the older I become.” The person that coined these phrases really understood the torment that teenagers can sometimes bring a family.

If you’re going through this time, don’t worry, someday in the future your children will return to you and all the effort of bringing them up will be worth it.

Have a great weekend!

Michael

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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mgilmour
Thank you for your kind comment.
15 November 2015
Howard
Lovely family, inspiring article. what kind of book is your son writing?
14 November 2015
mgilmour
Thanks for that Howard! He's writing a real piece of literature about a fishing trawler off the coast of Tasmania. It has a lot of... Read More
15 November 2015
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4 Comments

How to Run Your Domains as a Business

How to Run Your Domains as a Business

I recently had a great time speaking at DomainFest in Fort Lauderdale. It was more of a chat than a formal session and it allowed for me to share some of my experiences in the business of domain names. I thought that I’d share some of what was covered in this article as it could benefit many readers.

The first lesson in business is really simple, revenue less expenses equals profit. In my experience, in their love for their domains an incredible number of domain investors forget this simple equation. They have a little story about how they acquired or registered each of their domains and like Gollum from “The Lord of The Rings” they constantly say, “my precious”.

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Yes, your domains are precious but if you forget the fundamental business equation then you’re not running a business, you’re enjoying a hobby. That’s fine to do but don’t expect to get business outcomes if you aren’t running your portfolio as a business. If you are running a business then you may have to drop a few domains into “Mount Doom”.

As much as I love my domains I’ve discovered that my wife loves my bank account far more. As she so lovingly puts it, “It’s very hard to cook a domain and serve it to the kids for dinner”.

The second mistake that many domainers make is to focus on the revenue side of the business to the exclusion of all else. These domainers are always holding out for the ultimate sale which is going to pay off the mortgage and allow them to sip margaritas on a far off beach. Seriously, for many of your domains you have more chance of winning the lottery than getting your asking price. My advice, get realistic with your pricing.

I was speaking to a domainer this past week and they were at their wits end because they had only sold a couple of domains in the past few years. They absolutely believed that their domains were worth millions. Here’s the problem, when the market tells you that your prices are too high then you can either listen or continuously fund the renewals out of your own pocket. It's your choice.

The biggest problem with the market is that it’s what we all live and die by. Promises and wishes are great but unless you actually convert a deal then they are pointless. I’ll quote my wife as she reminds me time and time again, “The deals not done until the cash is in the bank!” I couldn’t agree with her more.

If you aren’t selling your domains then either examine the price or your business model. For example, most domain sales are aimed at the small to medium sized business….I don’t know any businesses of that size with a spare $20K to spend on a domain. I know plenty that have $2K or $500 per month though!

Let’s get back to our equation and the other little factor that we have to consider, that is, expenses. Expenses go much, much further than renewal fees. Please, oh please, don’t forget to count the cost of your time. If you value your time at zero dollars then don’t be surprised when other people do so as well and waste a whole lot of it.

The time spent renewing your domains, keeping track of any PPC revenue and ensuring nameservers are set correctly is a direct cost to your investment. By the way, around 10-15% of your domains have incorrect DNS settings – if you don’t believe me then go and check. While you’re at it, don’t forget the costs of your accountant, any legals, bookkeeping etc. You may soon discover that your profit takes a significant hit.

Speaking of profit…..never get confused of the difference between cash in your bank account and profit. Just have a chat with the tax man and I’m sure that they’ll educate you on the difference. I’ve seen many domainers spend their cash only to forget about the fact that they need to pay their taxes.

Some of the hidden value in a portfolio can also be access via how you treat your domains for taxation purposes. My recommendation is to get some really good advice on this for your jurisdiction. I hate to say it but your little local accountant is unlikely going to cut it….there are just so many variables when it comes to domains.

For example, are they assets, expenses, contract rights or and expiring contract like an insurance agreement? If they are an asset then how is it that they can potentially be taken away from you? All good questions for an accountant in your own country.

Now that you have the most basic business equation under control let’s take a look at the next step….more on this later.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

Recent Comments
whizzbang
this is great advice for crap domains like Whizzbangsblog.com
10 November 2015
mgilmour
Many years ago I founded whizzbangsblog off the back of my reputation in the forums under the pseudonym of whizzbang. it was a gre... Read More
11 November 2015
mgilmour
Couldn't agree with you more....but the market is what the market is. The challenge is to educate the market and create a competit... Read More
11 November 2015
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5 Comments

What's Going On With PPC? - Part 2

What's Going On With PPC? - Part 2

This is the second part in a series in understanding what is going on with Pay Per Click (PPC) revenue.

We can see the overall impact of the CTR and EPC graphs (see the previous article) by examining the RPM trend chart. The shape of the chart really highlights the rush of advertisers and consumers pushing up the value of traffic in May and then a decline into the norhern hemisphere summer period.

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The seasonal summer downturn can be clearly seen and the rise through September is encouraging. It’s clear that in both cases the rise back up to the previous May values are not being reached so something else must have occurred to disrupt the normal cycle.

RPM chart

RPM Chart

It just so happens that in the first half of June, the worlds second largest economy, China, experienced the beginning of a huge downturn in their economy. The Shanghai Index fell from a high of 5,166 and by the end of September it was resting at 3,053. In addition, to help forestall a total crash of their economy, on the 12th Aug the Chinese authorities devalued the RMB from 16.1 to 15.6 to the $US.

Shanghai Index

US to RMB exchange rate

When we examine the RPM trend we can see that it started entering a slump earlier than normal for the seasonal summer period. It is now lagging behind the typical summer rebound in much the same manner as the Shanghai Index is still languishing in the 3000's.

Domain investors would have to be completely naïve to think that such a massive decline in China would not have some impact on advertising earnings.

The question that needs to be asked is, “Will the RPM rebound?”

Although it’s early days yet, the RPM is clearly rising. The bend downwards in the trendline at the end of October is more of a function of a level 4 polynomial trend function rather than sudden depressing numbers. Traditionally, the lead up to Christmas is always a good time for traffic monetisers as advertisers flood into the Google auction system and bid prices up. Eager consumers also enter the market in droves to snap up an online bargain.

What is clear is that there is some manipulation of both the EPC and CTR numbers being reported back by Google. According to Google, if the domain channel is on now on the high value feed (due to CAF) then domain investors are receiving 90% of the advertising revenue or 68% if they are on the lower quality Adsense like feed.....not sure where we actually are in this spectrum.

Google TAC

What is suprising is that Google’s quarterly earnings report their Traffic Acquisition Costs (TAC) are currently sitting at 21.3%. It seems logical to me that even at 68% of the advertising revenue someone else must be paid a fraction for their traffic if the total TAC is to reach 21.3%. Either that or the domain channel (and other channels) are actually aggressively smart priced downwards.

Due to the lack of transparency it’s more likely this is the case and that no one is actually getting paid anything like the stated high values. Given the inverted shapes of the CTR and EPC graphs this is entirely more likely.

It’s all very easy to get angry at Google and demand our “fair share” but let’s face it…..they are actually obligated by their shareholders to maximise shareholder value. So don’t be surprised by this type of activity. The bottom line is that Google has been constantly reducing their TAC so that they ca be more profitable. They have also been buying domain traffic at massively reduced rates….

There is very little that we can do about macro-economic impacts to the domain industry like the one from China. Sadly, we just need to ride these out. However, as an industry we need to be constantly looking for solutions that pay more for our valuable traffic.....more on this later.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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Saturday Musings - Job Well Done

Saturday Musings - Job Well Done

This past week I saw my son Timothy come alive. I’d just stepped into the house after the 30 hour journey from ICANN, Dublin and he told me that he’d just been found out that he’d got a job. This wasn’t just any job but one that involved him going from school to school teaching children English through theatre in Italy.

After competing for the position from applicants from all over the world he’d managed to secure the position and he was over the moon! I was so happy for him and it wasn’t long before the whole family was caught up in his enthusiasm.

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As a part of his application Tim had to put together a “show reel” for the company in Italy which showcased his acting talents. I must admit that it was hilarious and that his Russian and Irish accents for the big bad wolf and three little pigs was a scream.

There’s something really special about achieving a goal. Whether it’s getting a new job, building a business or achieving something personally in your life. It’s more than a tick….it’s an inner sense of satisfaction that causes you to smile on the inside…..and then let it burst out on your face.

For the past eighteen months the ParkLogic team have been completely redeveloping our entire platform from the ground up. Several weeks ago at “The Domain Conference” we released a sneak preview of the dashboard (you can see this at http://next.parklogic.com) and just this past week we completed migrating our complete hosting infrastructure to a new environment as we gear up for Next.

The redevelopment was a big audacious goal that had a lot of risks with it as the team balanced the needs of the existing platform with the new development. The good news is that we can now see the light at the end of the tunnel….and it’s not a train coming in the opposite direction.

ParkLogic Next will be released in early 2016 and like my son I’m going to have a great big smile on my face at NamesCon. It’s not just that the platform is much better than our legacy system. It’s the fact that a goal will have been achieved and what's inside will reflect on my face.

Have a great weekend!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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What's Going On With PPC? - Part 1

What's Going On With PPC? - Part 1

I regularly dive into "big data" to try and better understand what is happening with the performance of a client’s account and to determine whether action needs to be taken. It was at this point in time that I was faced with some very puzzling numbers to muse over.

It was always assumed that the click through rate (CTR) was an indication of user intent. The goal of any optimisation strategy was to maximise the CTR by making the advertisements more relevant to the domain so that the user then clicked. This seems to make logical sense but it’s clear from the recent round of data that something else is at play.

Escrow.com

Likewise, the Earnings Per Click (EPC) was a measurement of advertiser competitiveness. The greater the demand for the keyword the higher the price paid by advertisers….it’s essentially a reflection of the Google auction process.

In the past, domainers would select higher paying relevant keywords to maximise both the CTR and EPC. For example, I may set “Mortgage” as the keyword rather than “House Auctions” for a real estate domain because “Mortgage” had a higher EPC and around the same CTR as “House Auctions”.

This whole context sensitive mapping of the domain to the keyword was effectively thrown out when Google migrated to psychographic user based targeting. In other words, Google is now trying to match advertisements to the user and not necessarily the domain.

For example, if you’ve been searching for vacations in Bali recently then when you can go to parked golf related domain you will often see vacation advertisements. This seems to make sense until I pulled out the stats for a couple of accounts…..and this got me questioning what is really happening.

Both samples have thousands of domains and lots of traffic and are not being distorted by a single domain. The lines are a level 4 polynomial trend line for both CTR (blue) and EPC (red). Incredibly, both charts have a similar profile where the CTR and EPC effectively mirror each other and create an inverse impact. So what does this all mean?

Around two years ago Google migrated all of their parking partners to using what is now known as Custom Ad Frame (CAF). Essentially this means that all parking pages are now largely served by Google and not the parking companies themselves. The goal of this change was to open up Google’s premium advertisers to the domain channel….which is good news for domain investors.

The problem I have is that the CTR component of the graphs suggest that Google is playing a really strange game. They appear to be constantly moving from accurately targeting users with advertising to doing it really badly. Although some variations are expected, the wild swings from May to Sept are a bit perplexing. This seems to fly in the face of the Google ethos to always provide the user with better and more accurate results.

In both cases the overall CTR since May has dropped significantly while the EPC has risen! What this suggests is that during the summer people click less often but advertisers pay more. This is the reverse of what I would expect. During the summer period I would expect users to click less (distracted by the sunshine) and since advertisers are on vacation many of them would exit the auction process. This reduces demand and you would expect EPC rates to decrease and the traditional summer downturn would result.

What the data suggests is that as better quality advertisements (ie. higher paying) are displayed then people click on them less. This seems unlikely and combined with the shapes of the graphs it suggests a level of manipulation of the data behind the scenes.

So the question really needs to be asked, "What is CTR and EPC?" Unless we now live in a world where users can discriminate their clicking behaviour by magically known the EPC rates then there has to be something else at play.

I plan on unpacking this further in the next articles in this series as I explore what is actually going with domain traffic.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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