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

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.

---------------------------------------------------

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.

Tags:
2205 Hits
0 Comments

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.

---------------------------------------------------

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.

1890 Hits
0 Comments

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.

---------------------------------------------------

 

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.

 
Tags:
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
3048 Hits
7 Comments

Domain Performance Analysis

Domain Performance Analysis

Understanding performance often requires getting really deep into the numbers. The other day I said to a client, “We like to understand which domains we win and which domains we lose versus a baseline.” Let me take you through some high level data that gives a snapshot of what I’m talking about.

For a start the data I’m about to go through is actual numbers for a client but for obvious reasons any identifiable information has been removed. The data is for a particular domain portfolio where it would appear that our optimisation services were struggling.

Escrow

The portfolio being tested has a baseline of around $95.59 per day and within the first week of being tested we underperformed by $12.37/day. Compared to what we usually experience this was a disappointment for ourselves and more particularly for the client. So what was going on?

Here is a snapshot of the performance data from 4 weeks, 3 weeks and the most recent week. All data has been normalised to reflecting the average daily for the period. There is the current revenue, baseline revenue and then Daily performance and the percentage difference.

Analysis

The columns are in bands of traffic. From All domains to those doing more than 0%, 20%, 40% etc. up to greater than 100% of the traffic compared to the baseline.

As an example, four weeks ago for domains that we saw at least the same amount of traffic as the baseline we performed at 100% of the baseline….in other words, no uplift. Overall, we performed 87% of the baseline for ALL the domains…..not good.

Most domain investors would immediately throw up their arms in horror and bail on the test at this point…..but let’s take a look at what happened over time.

I’m going to jump right down to the latest series of data for the past week and compare this to the baseline. For domains where we saw at least as much traffic as the baseline we are now performing 15% better. In fact, ParkLogic performed better for domains that have at least 60% or more of the baseline traffic. The overall performance jumped from 87% of the baseline to 96% of the baseline in a few short weeks.

What this data really says is that if there is traffic we perform better…..if not, then we don’t. This kind of makes sense! All that we really needed was for time to go by and those domains with little traffic generate a click or two.

To see the change in performance over my data set I summed the % Difference rows. This is a crude way to find out overall what was happening each week. The summed percentage moved from 634% to 711% which is an overall increase of 12% and to date this is continuing.

This is a lot of interesting data but what does it really mean? The problem with the portfolio isn’t that we aren’t performing, it was that it was taking a bit longer than normal because the typical domain has such low traffic. Unless there is traffic we really can’t quickly do the optimisation to increase the result.

What’s important is that as time goes by the trend is continuing upwards as our algorithms and processes go to work on the portfolio. What was also hidden in the data was the fact that we are currently providing an additional $40/day in revenue over the baseline for a large portion of the domains. In fact, if we were to keep managing all the domains that we were winning on, handed back the domains that we weren’t to the baseline company (assuming is performed the same as it previously did) then the client would receive a net revenue increase of 42%! That is a HUGE number!

The overall current number of $3.71 down was actually hiding a HUGE windfall….the challenge is to work out how to get at it. We are continuing to monitor the results each day and in our meeting with the client we plan on working out the next steps to extracting the traffic value.

There are two parts to this analysis which are key. First of all, you need the ability to mobilise the data and secondly, an eye to interpret what the data is actually saying. I’m not meaning to blow my company’s horn but the ParkLogic team has spent many years developing processes and skills to do exactly these two things.

---------------------------------------------------

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.

Tags:
2353 Hits
0 Comments

How to do a Domain Traffic Test - Analysis 101

How to do a Domain Traffic Test - Analysis 101

This articles continues directly from the previous in the series on conducting a traffic test (click here to view). I then create a summary tab which pulls all of this data together so that at a glance you can see what’s going on. Since we create these packages of analytics for clients on a regular basis you’ll have to excuse me if I refer to the testing company as ParkLogic.

In the summary, you need to know the total amount of revenue (daily) earned by the testing company and the baseline. This will provide the lift above the baseline. In the case of the screen capture there is a $190.94/day increase which has then provided a 127% uplift versus the baseline. This is quite a good result.

Escrow.com

I then like to find out what was the maximum amount that ParkLogic was winning by per day. This is so that clients that wish to take all of the domains away can then leave the winners with us. In this case it’s $457.54 per day which isn’t that bad considering the baseline for ALL of the domains was $715.40.

In fact, if you leave the winners with ParkLogic and send all of the losers back to where the baseline source then the result should be $1172.93/day versus a total baseline of $715.40. In this case the result is a 64% uplift in revenue and only assumes that the baseline produces the same results as previously attained.

Continue reading
Tags:
2688 Hits
0 Comments