Discussions and blogs that relate to the monetisation of domain traffic.

Part 9 - Portfolio Management - EPC/CTR May Not Be What You Thought

Part 9 - Portfolio Management - EPC/CTR May Not Be What You Thought

I’ve been asked a lot of questions by readers on the topic of traffic optimisation and I thought that it would be worthwhile diving a little deeper into some of the metrics that underpin all our traffic monetisation earnings.

To fully understand click through rate (CTR) we need to take a look at the formula.

CTR = (total number of clicks) / (total views) x 100%

Both of the measurements used in the CTR formula are subject to various levels of filtering. For example, is the “total number of clicks” the actual number of clicks on advertisements or the number of clicks on advertisements within a specified time frame? Or is it actually the number of clicks within a specified time frame for a particular IP address? Or is it the number of clicks within a specified time frame for an IP Address/Cookie combination?

Different companies will count clicks differently and there isn’t really much we can do about this. I have unpacked views in previous articles but it basically boils down to:

Views = (Raw Traffic) x Factor

The factor is a wide range of filters that are applied to the raw traffic by monetisation sources to strip out everything except traffic that is actually monetisable. Since there is no industry standard definition for views this metric will vary greatly from one parking company to another. This does not mean that any of the parking companies are behaving in a fraudulent manner but it does mean they count things differently.

So given the fact that both metrics used in calculating the CTR are completely subjective is there any point in looking at the CTR? Let me say that comparing the CTR between companies is a lesson in futility but comparing the CTR over time for a domain within a single company is actually worthwhile.

The CTR is actually a measurement of user intent. If a domain has a low CTR then it invariably means the parked page has little relevance to the desires of the traffic visiting it. So from an optimisation perspective we want to match the traffic to the page results as accurately as possible. In many respects Google gets this pretty right but there are always cases where Google gets it completely wrong and keyword optimisation comes into play.

With the introduction of CAF (Custom Ad Frame) by Google a number of years ago it essentially means that Google now serves the parked pages. You only need to do a “view source” to see that this is the case. What Google did was mimic the various parking provider’s templates and then they serve the pages themselves. The CAF strategy was driven by Google trying to stamp out fraudulent traffic – and they largely succeeded.

What this also means that when you set a keyword Google largely views it as a serving suggestion. Setting a keyword does not guarantee that Google will use that particular keyword for your domain.

Many years ago some domainers quickly realised that by setting mortgage keywords for all of their domains they would get awesome earnings per click but really low CTR. The huge EPC rates more than offset the decline in CTR. This is one of the reasons why Google doesn’t completely allow you to set keywords anymore…..they want to provide a better user experience (ie. CTR).

Earnings per click (EPC) is exactly what is says, how much money do you make for each click.

EPC = (Total Revenue) / (Total Views)

This formula seems pretty obvious until you begin to dig into “Total Revenue”. The total revenue for a domain is influenced by many different factors, including:

  • Google tags at the parking level to encourage parking companies to maintain quality
  • Sub-tags where a group of accounts at a parking company will be evaluated on their quality
  • DRID (Domain Registrant ID introduced by Google at CAF time) – are you a good player or not?
  • Clawbacks (often known as advertising credits)
  • Account adjustments

A lot of these different metrics are wrapped up in the phrase “smart pricing”. In other words, has your domain/account been smart-priced up or down? This will all contribute to influencing the EPC.

But at its core, what is EPC? EPC is the measurement of advertiser demand on the Google advertising exchange. It’s a position on the supply/demand curve where if there is less supply the EPC goes up or if there is less demand for the same volume of traffic the EPC rate goes down.

If you ever see an EPC rate that suddenly jumps up, then it’s typically the result of a marketing manager putting the decimal point in the incorrect spot for a bid. Don’t get too excited, just enjoy the increase and expect it to fall off as their budget is quickly consumed…..with any luck you won’t get a clawback!

What we should also appreciate is that advertisements higher on a parked page get paid more than those lower down the page. The spread in EPC rates down the page will really depend upon the number of advertisers bidding for the traffic (think of it like market depth with shares).

Don’t forget that EPC is implicitly a measurement across a period of time. When you look at your parking company stats the lowest level of data you can view is the EPC rate for a day. I’ve said this before but it’s important to recap…..what you are viewing is an average EPC rate. This is vital in understanding how to optimise domain traffic.

So ultimately what domain investors want is a high CTR (user intent) and a high EPC (advertiser demand). The best way to achieve this is to examine the data, "suggest keywords" and then revisit the changes you've made......which is a LOT of work.

In my time as the vice-chairman of the Internet Industry Association of Australia I had the privilege of chairing the committee for setting the online advertising standards for our nation. There is one thing that I learned from that experience, fully understanding the definitions driving the metrics is mandatory if you wish to grow your online advertising based business.

Anyone that earns money from monetising their domain traffic should spend a considerable amount of their time not just looking at their numbers but interpreting what they mean. The only way you can do this is to understand the definitions. I hope this article has helped you out on your journey…..BTW, definitions can also change over time….so beware!

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Part 8 – Portfolio Management – Traffic Domains

Part 8 – Portfolio Management – Traffic Domains

The current series of articles has really provoked some interesting discussions with a number of domain investors. What I have noticed is the high level of emotion that surrounds the whole domain traffic and optimisation debate. Many people have leapt to conclusions rather than look at the data and try to understand what it is saying.

Let me say once again that domain monetisation is not dead. The reason for this is genuine domain traffic contains valuable leads for businesses and advertisers are more than willing to pay for those leads. The goal of optimising your domain traffic is to best match the right advertiser to the right piece of traffic at the right time.

Like any industry, the advertising buying market is very dynamic with wide ranging payout levels at different times during the year, day and even sometimes second. So when I talk about optimising domain name traffic we need to really be as close to real-time as possible. Given the volume of data, the only way to route traffic to the highest paying solution is via algorithmic switching. So is all of this work really worth it?

I recently published some numbers over at the NamePros forum and I thought that it would be worthwhile digging into them here. For full disclosure I should state the data is from my company ParkLogic and we use algorithmic switching of domain traffic.

The data is real and was used as a part of the optimisation process for a particular client. Results for new clients will vary depending upon the optimisation levels and the domains in question.

ParkLogic Results

What the screen capture shows is if we saw at least 100% of the baseline traffic (ie. The same) then we provided a 184% uplift in revenue. At least 80% of the traffic we provided a 162% uplift and for the entire portfolio there was a 127% uplift versus the baseline. In other words, if we saw similar levels of traffic to the baseline data then we knocked the results out of the ball park.

The baseline data came from a portfolio that was currently being optimised across multiple monetisation solutions via Above.com. I have nothing against Above as ParkLogic provides an entirely different service compared to them.

Just for the record, there were some domains where the baseline outperformed our results. This could be for statistical variations across time etc. We would recommend to any client where the baseline outperformed ParkLogic to take those domains away from us and re-baseline them to ensure the results hold true. ParkLogic does NOT win for every domain ALL of the time (versus a baseline) but I can say that we DO send the traffic to the winning monetisation solutions at a particular point in time.

What the data clearly shows is when you apply a level of discipline to optimising a domain portfolio that we do then the improvement can be considerable. The problem is most people try to optimise their portfolio themselves and have convinced themselves that they are saving money in fees.

This is a false economy because the data clearly shows that any fee would be more than covered by the uplift. In addition, the fact that you now have all of your time available is a huge saving in itself!

I don’t normally toot my own horn but ParkLogic really knows its stuff. We’ve been optimising domain portfolios for nearly a decade and when someone comes along and says they’ve built their own optimisation system it’s hard not to roll my eyes. Over the years I’ve heard many approaches……everything from DNS round-robin through to an automated system that leaves traffic at one place for a few days and then moves it to another for testing. I hate to say it but all of them are sub-optimal.

As an example, let’s tackle something really simple, incorporating zero-click real-time bidding (RTB) solutions into the traffic stream. Essentially RTB platforms let you poll them for what they are willing to pay for a piece of traffic. So they may come back with 12 cents as an answer. If you look at the traffic for a domain you may have an earnings per click rate of 10 cents and immediately jump at the 12 cents…..that is actually a really silly thing to do.

What we need to understand is that the 10 cents that is being earned at parking companies is an average across a period of time (typically a day) while the 12 cents is at a point in time. In other words, the 10 cents could be made up of a 20 cent click, a 5 cent click and a 3 cent click which provides an average of 10 cents.

What you don’t want to have happen is the RTB networks take the 20 cent traffic and pay you 12 cents while leave the 5 and 3 cent traffic behind. This would effectively reduce the yield from the traffic. So after around 6 months of testing various methodologies we worked out a system for incorporating RTB networks in an effective manner.

I know this was a simple example but it does give a glimpse into some of the complexities around routing traffic to the highest paying solution. It also illustrates that if you get your maths wrong then you could lose your shirt!

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Part 7 - Portfolio Optimisation - Running a Traffic Test

Part 7 - Portfolio Optimisation - Running a Traffic Test

So you’ve just been to The Domain Conference in Fort Lauderdale and a monetisation company convinces you that you should run a test with them. Is there any real point and what is the best way to do this?

If you’ve ever moved your domains between parking companies by changing the nameservers then you will very quickly realise that there are so many variables to consider that the test becomes meaningless. For example, by routing the traffic at different periods of time, traffic volumes and domain market verticals all contribute to distorting the results.

In addition, if you move all of your domains across to the new company then from the previous article in this series we now know the best case scenario is they will win 35% of the time. Remember this number is for a properly optimised domain portfolio. If they win more than that then it’s only because your portfolio has not been looked after.

All monetisation companies know that they will perform well on some domains and not so well on others. Their goal is to hope and pray that overall the total amount they pay you will be more than your current parking solution.

From the domain investors perspective this is a really silly way of looking at things. What you actually want is to leave all the domains that win with the new company with them and automatically move all the domains that do worse away. This then maximises your earnings.

The ideal solution would be to keep all of your domains where they are and then send a percentage of the traffic to the new company for testing. This process allows you to accurately benchmark the new deal with a greatly diminished risk, compared to sending all of the traffic for your domains to the new company.

Earlier this year, one of ParkLogic’s customers had just returned from NamesCon and they were approached by a couple of the parking companies to run a test. Rather than move all of the domains away from ParkLogic they had a chat with me and we then routed a portion of their traffic to special accounts setup for them at the new companies.

They then were able to assess down to the cent on each domain whether the new deals were any good or not. In the end they moved everything back to their ParkLogic controlled accounts as they performed better than the specially setup ones. I should say that we were very happy to facilitate this process for our client as we regard it as one of the services we provide.

This structured process provides domain investors and any of their investors the confidence that everything that can be done is being done to maximise earnings. There’s no “grass is greener on the other side of the fence” as we absolutely know what the grass looks like and tastes.

Ultimately what you need to assess is your stomach for risk or in other words, how big a percentage is good enough? We typically find that forcing around 20% of the traffic for each domain over a couple of weeks (time depends upon traffic levels) gives a good enough sample. If the new company wins then you should move 100% of the traffic across to them…..and this is what we do. If a few weeks later they don’t perform as well then we automatically migrate the traffic back to the winning solution.

So after going through this process, what constitutes a win for the new company? You can’t use revenue as the traffic will have varied for the domain and distort the result. The only measurement that you can use is the normalised RPM.

Remember, we discussed this in a previous article. A normalised RPM involves measuring exactly how much raw unfiltered traffic we have sent for a particular domain to a particular parking company. We then measure get the revenue generated from that traffic. For a domain, mathematically this looks like:

(revenue at a parking company) / (total traffic sent to the parking company) x 1000

This then means that for every domain we will typically have the normalised RPM for every monetisation solution at any point in time…..yes, that’s what we do. In fact, we collect around three hundred different metrics for every domain every single day.

So when we were assessing for a client whether the new companies were performing better we we’re not looking at the revenue. We are looking at the normalised RPM because this metric tells us if the grass is actually green or brown. Given the process we also know the colour of the grass for every solution at any point in time.

So let’s imagine you’re not with ParkLogic and you don’t have any baseline normalised RPMs. For many clients we typically integrate their current monetisation account into the system. They change the nameservers to ParkLogic and we then route 100% of the traffic back to their existing provider.

By going through this process there won’t be a drop in revenue and it allows us to establish a baseline normalised RPM that we can measure any new solutions against. We then test a portion of the traffic elsewhere to see if it will perform better at other solutions. The whole time we are keeping an eye on the normalised RPM. It isn’t long before we see an uplift in the overall revenue.

This is the proper way to conduct a traffic test as it provides definitive performance data that is accurate. I hate to say it but any other methodology will largely be guesswork which is likely to end up with a suboptimal result.

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Part 6 - Portfolio Optimisation - Traffic Domains

Part 6 - Portfolio Optimisation - Traffic Domains

If you remember from previous articles the normalised RPM allows us to precisely compare one monetisation provider versus another.

This metric is VERY different from the traditional RPM that is often used more as a marketing tool than an actual unit of measurement. The normalised RPM is the revenue from every monetisation source divided by the raw unfiltered traffic, times by one thousand.

nRPM = Revenue / (Raw Traffic) x 1000

Escrow.com

The chart below is one that shared at Domaining Europe and highlights a number of opportunities for domain investors. The first is on average, direct advertisers pay considerably more for traffic compared to Google based sources.

Normalised RPM chart

This should be no surprise but one of the problems that many domain owners have is they don't have the scale to access these larger payouts. In addition, the majority of monetisation sources are obligated to send the traffic to a potentially sub-optimal solution (eg. Google) so the traffic never gets exposed to the direct advertising networks.

What the chart also displays is each of the parking providers in the sample have massive swings in their average payout levels each day. This is contrary to what many people would expect.

The second chart shows what percentage of the traffic each company is winning over time for the portfolio being measured. The first thing you will notice is that although direct advertising networks pay more, they only pay more for a small amount of the traffic. The reason for this is they don’t have the breadth of advertisers that Google has…..but this is beginning to change.

Percentage of Traffic Won

What can be seen is no company wins more than 35% of the traffic on any particular day. This means the best case scenario that you have with leaving all of your domains with one company is 65% of the time the traffic could perform better elsewhere. Remember, that’s the BEST case scenario. The reality is typically much worse.

Both these two charts also show that every company wins some traffic. So moving all of your domains away from every company is a bad idea. The best thing to do is to drive the right traffic to the right company at the right time. For whatever reason, each of the parking companies being tested performed really well on a subset of domains….the challenge is the subset is often a moving target.

The third chart shows how a typical domain’s traffic could be routed across an eighteen-day period of time. Each row in the chart represents three days. What it shows is how the traffic is routed based upon the normalised RPM being generated for three parking companies. This is a sample of one domain and it should not be construed that one company is better for ALL domains. As can be seen, at the domain level the swings in who is winning is quite dramatic.

Traffic Routing For a Domain

The case for routing your traffic with a technically proficient company is incontrovertible. Building systems, yourself is an enormous undertaking and I would highly recommend against pursing the investment in time and money so that you can focus on other endeavours.

The fact is if you wish to extract the maximum amount of return from your traffic then you need to pursue a course of action that leads to intelligently routing your traffic across multiple monetisation solutions. If you don't do this then you're leaving money on the table.

In the next article I will begin unpacking how to run a properly constructed traffic test as part of your overall portfolio optimisation strategy.

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Part 5 - Portfolio Optimisation - Traffic Domains

Part 5 - Portfolio Optimisation - Traffic Domains

So far we’ve touched on a number of aspects of building a domain into a solid business. Obviously we could spend years on that topic but what I would like to do is move onto the second segment in our portfolio optimisation – traffic domains.

Many people believe that generating revenue from domain traffic is dead and buried…..nothing could be further from the truth. The real issue is to assess what you are doing now which is different to what you were doing in the past. If you keep on doing the same thing as you’ve always done, then don’t expect your revenue line to increase.

Escrow.com

Increasing your revenue from traffic has moved on a long way since the humble days of putting all of your domains with one parking company and then collecting a cheque. As one of the founders of ParkLogic, we’ve been optimising domain traffic for clients for nearly a decade and the sophistications of the real-time algorithms for routing traffic has grown considerably.

Let me say from the outset that optimising domain traffic is not a trivial exercise and has moved a long way from making decisions via a spreadsheet. To extract the full value out of your domain traffic routing decisions must be made on a real-time basis. If they aren’t then you are making sub-optimal decisions and leaving money on the table.

There are a number of ramifications to real-time traffic switching. Like any industry, the traffic side of the domain industry has evolved into two camps. Those that outsource their traffic optimisation and those that try to do it themselves.

Even if you have the expertise and the knowledge to be constantly working away at systems you would have to be crazy to invest in building your own traffic optimisation platform. Rather than managing a simple agreement you’ve now taken on the responsibility for an entire technology ecosystem that has real costs associated with it. The opportunity cost and distraction of managing such a platform is considerable.

For example, as many of you know, I’m a fan of the CRM platform, SalesForce. A major reason for this is I know that every single day I have literally thousands of developers working on my behalf to improve and maintain a platform I use extensively. The marginal cost I pay out each month is inconsequential compared to if I decided to build my own CRM. I’m getting a growing benefit for no additional effort or allocation of resources.

Likewise, by completely outsourcing your domain traffic optimisation you are getting a platform and a team that is constantly thinking about how to improve your results for you each and every day. I can’t speak for any other companies but I know that the number one issue for us is how to increase a client’s revenue from their traffic.

When you outsource your traffic revenue you need to be confident the company is doing the best job possible at every instant in getting the most from your traffic. More than that, they need to be able to prove it. This means that there needs to be real people, doing real work on your behalf that you can reach out to if you have any questions.

In the next article on traffic optimisation I'm going to dive into some compelling  numbers from a sample portfolio that prove the benefit of routing traffic to maximise revenue. For the first time ever I made the decision to expose some of our numbers in a presentation that I made at the recent Domaining Europe conference.

Over the years, many people have said to me that it really doesn’t make a difference what parking company you use as long as they have Google as their backend. The data in the next article proves that this assumption is false.

Recent Comments
mgilmour
Sorry for the delay in responding to your comment Jeff. The key factor with genuine domain traffic is that it's valuable because ... Read More
29 July 2016
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