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

How To Conduct a Domain Traffic Test - Part 2

How To Conduct a Domain Traffic Test - Part 2

This is the second article in the series on conducting a domain traffic test. The first article can be read by going to: How to Conduct a Domain Traffic Test - Part 1

For the past 8 years I’ve been looking at nRPM (normalised RPM) numbers and routing traffic to the best solutions at any point in time. This has produced significant gains for clients and well worth the effort of getting messy in the numbers.

Escrow.com

So now that there is an agreed set of definitions for metrics what do we need to do to conduct a traffic test? There are two main approaches:

1.      Using baseline data

2.      Using the existing monetisation account

When conducting a traffic test most domain owners provide us with the previous month’s stats to be measured against. One of the problems with this is that we don’t have the raw traffic numbers to generate a normalised RPM. One of the good things is although the stats are taken from a different time period they can be useful in focusing attention on which domains are clear winners and losers. Regardless of the outcome we need to understand why we are winning or losing.

For example, what’s the point in claiming victory if the domain has twice as much traffic during the testing period compared to the baseline? Although good, it would be false to say that it was due to traffic optimisation.

For larger traffic tests it’s far better to adopt option two and run the test by integrating the existing monetisation account into the traffic mix and then sample around 20% of the traffic elsewhere. If the new monetisation sources win the traffic, then all of that domain’s traffic is then moved to the new provider.

For example, let’s imagine that you have all of your traffic going to an account at Domain Sponsor. You want to check out if they are still the best solution for your traffic so you ask me to setup a traffic test. The first thing we do is integrate your existing Domain Sponsor account into ParkLogic and then leave 80% of the traffic still flowing through to DS while we test other monetisation solutions with the remaining 20%.

So rather than having to move all of your traffic you are now only risking 20%. Remember that 20% will earn some money (hopefully more than DS) so your revenue risk is more than likely going to become a win. What’s even better is that we can clearly establish a nRPM for the traffic flowing through to DS and know beyond any doubt who is actually paying the best at that point in time.

With traffic optimisation it’s vitally important that each domain is reviewed and treated as a unique case. There is no point in optimising across an entire portfolio is you don’t also focus on the domains themselves. It’s like the old saying, “look after the pennies and the dollars will look after themselves.” The domains are the pennies and the portfolio is the dollars.

The next article will continue to unpack what metrics we focus on in a traffic test.

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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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How To Conduct a Domain Traffic Test - Part 1

How To Conduct a Domain Traffic Test - Part 1

So many domain owners get incredibly confused by all the different companies that want to monetise their traffic for them. Which one is best? How do I really know if they are better than another? What is the best way to run a test? All of these questions are vital if you wish to get the most out of your domain traffic.

In this article I will unpack the critical success factors of what makes a viable good traffic test so that you will always know that you are monetising your traffic with the right provider.

Escrow.com

For a start, to eliminate any discrepancies in timing, all traffic tests need to be conducted simultaneously. What you don’t want to do is change your DNS to point to parking company A and then a few weeks later change the DNS to parking company B. The two separate periods of time introduce large errors in determining who is the real winner.

Without the proper tools, running a simultaneous test can be difficult but with a good partner this is eminently achievable. As an example, we find that at ParkLogic a number of clients use our services purely for benchmarking one monetisation source versus another. We’re happy to work with anyone on this.

The most important factor in a traffic test is understanding the definition of success. So many people fall into the trap of believing that revenue is the only metric that should be paid attention to. So is that the revenue for December or for September? Is that the revenue where there happened to be a 20% increase in traffic or not? Or how about the revenue when it just so happened that an advertiser paid more for the traffic by a mistake?

As can be seen, revenue, although important, is not the best metric to pay attention to during a traffic test. Many domainers have migrated to RPM (revenue per thousand visitors) in an effort to remove the distortions caused by variations in traffic.

For example, if you make $100 from 1,000 visitors then you have an RPM of 100. Let’s imagine that you did a test and you made $200 from 1,000 visitors from a different monetisation provider. Many people jump to the conclusion that the second monetisation provider is the clear winner with an RPM of 200…..and they would be wrong.

The problem with RPM is that it depends upon the views reported by each of the monetisation providers. Sadly, there aren’t any standards on reporting views therefore each provider has a different set of filters applied to the traffic which can dramatically change the number of views reported and ultimately the RPM.

It wasn’t so long ago that some parking companies used RPM more as a marketing tool to say they had the best in the industry! This was easily achieved by just filtering the traffic more aggressively, reporting less views which meant a higher RPM.

For a proper traffic test what we need is an unassailable metric that can be verified for each monetisation source that we wish to test. The only way to do this is to count the raw unfiltered traffic (ie. URLs) that we send to each monetisation provider for each domain and then see how much revenue that generates. This provides us with a normalised RPM (ie. nRPM) that we can then use for direct comparisons at any point in time.

Let’s take a look at some actual data for a domain (XYZ.com) across a ten day period of time (see below). Day 1 is the latest day’s data and Day 10 is the oldest. There are columns for URLs, nRPM and Revenue for 4 parking companies (1-4). The easiest way to understand what is happening is to read the table from the bottom up so that you can get an idea what is happening as the algorithms seek to move in on the higher paying revenue solutions.

Forensic report

Initially, the domain is only with parking company 4 and on day 7 forced sampling was implemented to expose the traffic to the other parking companies. At Day 6 parking company 4 was being beaten by parking companies 1 and 2. More traffic then flowed to those parking companies and away from two and 4 until parking company 2 began to perform and parking company 4 completely dropped out of the race.

In this example, the traffic flowing between the monetisation providers is very dynamic and moves around quite a lot due to the switching regimes being adopted during the sampling process. There’s a lot of moving parts and reasons why the traffic flows where it does but the whole time the algorithms are focused on increasing the domains revenue.

In the next article in this series I will really unpack how to conduct a structured traffic test and why most domain owners get this wrong.

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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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whizzbang
Hi Michael thanks for the article. Is there a variation on results if the domain is pointed to the platform via DNS A Record ( as ... Read More
02 February 2016
mgilmour
Awesome questions and it's great to be dealing with someone that has some technical experience. Can I suggest that we take this of... Read More
02 February 2016
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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.

Escrow.com

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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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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Finding the Gold in Domain Traffic

Finding the Gold in Domain Traffic

I’ve had many domain investors ask me what is the difference between domain traffic monetisation now versus five years ago. The best way to understand this is to use a simple mining analogy.

During the gold rush floods of people poured onto the gold fields in search of their dream nugget that would make them rich. They looked everywhere and in a number of cases, individuals found a mother-load of gold. 

Then someone came up with the great idea of using a pan to “pan for gold” in creeks. They worked out that heavier gold nuggets would wash into the deeper parts of the creek and all you had to do was sort out the gold from the other rocks. More miners struck it rich with this innovation and gold fever seemed to be catching!

Escrow.com

This is very similar to the early days of parking domains. Initially, all you had to do was find a domain with traffic and point the DNS to a parking company. Magic happened and you received a cheque each month.....cash was raining into the industry!

Now let’s move on with our gold rush…

As gold became more difficult to find miners moved from the creeks to digging shafts into the sides of mountains. They’d pull out the rocks and use a sluice to wash the muck to pull out the gold. The new sluice technology was incredibly innovative and made previously unprofitable mines viable.

In the domaining world it didn’t take long for individuals to realise that by using a complicated spreadsheet and a heap of “look-up” statements they could point some domains to parking company A while others to parking company B. This would then potentially increase the revenue but it required a lot of manual labour. It's the sluice but not full automation.

So where is the domain industry now compared to the gold rush? Right now, to extract all of the domain-gold we are driving shafts six miles deep into the earth’s crust. The crust is actually mass data and systems that plough through the muck and extract the gold.

So this brings up an interesting point….where are you in the spectrum of the domain gold rush?

Are you still putting all of your domains with one parking company because it’s easier? Are you using a traffic splitting system or are you digging into sophisticated analytics each and every day to extract every penny from the traffic?

If you are still parking all of your domains with one company then please let me know as I’d be reasonably confident that I could find a buyer that would be more than happy to relieve you of your portfolio. They would then take the domains and go up with technology curve to extract more value from the traffic.

Before looking at the following case study I will fully disclose that all of the data comes from ParkLogic of which I have a stake. I will also say that ParkLogic is a company that drives very, very deep shafts into the bedrock to search for domain-gold on behalf of clients.
 

Case Study

At the end of July a new client came to us with a portfolio to see if we could extract any additional value from their domain traffic. Prior to ParkLogic receiving the domains they had been using a commercial rotation company to send the traffic to a number of parking companies. The baseline data from May 2015 was around $145 per day.

The first chart shows both the revenue and trend for the portfolio. It’s obviously a pleasing result for the client with the revenue continuing to increase despite the typical downturn that's expected during the USA summer.

b2ap3_thumbnail_20150902_revenue.gif

The second chart shows the normalised RPM for the portfolio. A normalised RPM is VERY different from an RPM that is typically displayed in a parking company interface.

A normalised RPM is when the revenue is divided by the RAW TRAFFIC for the domain while an RPM is the revenue divided by the VIEWS. Why is this different?

Raw traffic is the unfiltered traffic that a domain receives while views is the raw traffic multiplied by some filter applied by the parking company. Since every parking company has a different filter then you get some very different RPM numbers that are quite often used as a marketing tool.

The fact that the normalised RPM trend is increasing indicates that more money is being earned for each piece of traffic. This is good news!

b2ap3_thumbnail_20150902_plrpm.gif

So what’s the bottom line?

By driving a really deep shaft into the data, so far, we’ve managed to increase the revenue for the portfolio by 27.35%.  I’m reasonably confident that over time the portfolio will settle down to around an overall increase of 40%.

Not surprisingly, these numbers actually hide the true results for the portfolio.

If we were to take all those domains that displayed the same level of traffic as the baseline then the increase for them is actually 84%! For domains that had at least 80% of the traffic the number is a 62% increase. In other words, if there is the same level of traffic for a domain we knocked it out of the ballpark. These numbers can be viewed in the below graph.

Percent

Every domain investor needs to ask a simple question, “Where am I on the technology curve?” If you are still “panning for gold” with all of your domains at a single parking company then the data clearly shows that you are not getting the full value for the traffic. I would recommend to at the very least get stuck into Excel and get the sluice working for you.

I will be attending “DomainFest” in Macau later this week and also “The Domain Conference” in Fort Lauderdale at the end of the month. Feel free to reach out to me if you would like to discuss this further.

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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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Recent Comments
impulse
Great posting. You said we should ask ourselves "where are you in the spectrum of the domain gold rush?". But, the bigger question... Read More
02 September 2015
mgilmour
Thanks for that! I know people that are still building traffic domain portfolios right now. The mining side of the equation is how... Read More
03 September 2015
vanclute
Nothing to see here... move along...
03 September 2015
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