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, Battl...eframe. 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. More

Successfully Outsourcing Your Domain Management

Successfully Outsourcing Your Domain Management

I was speaking with a client that had been with ParkLogic for many years and they asked me to conduct a complete review of their portfolio. Without giving away too much about who the client is I thought that I would share some of the history and the results of the analysis.

The client initially had a team of people managing their domain portfolio for them. When they moved their domains over they ended up letting these people go or reassigning them to other projects as they were no longer required to manage the domains.

Escrow.com

I want to be right up front and say that I'm one of the founders of ParkLogic. Despite this, I found the results that we achieved for the client incredibly revealing about how a properly managed domain portfolio can produce huge rewards for investors. They completely outsourced the entire management of the portfolio to ParkLogic and this is what was acheived for a 4 years period.

 

So across the last 4 years the results can really be summarised in four simple charts.

 

Graph 1

 

The first chart shows the number of domains in the portfolio steadily dropping (orange line) as we managed out the non-performing. We had established a set of business rules with the client that we applied to the domains as part of the dropping process.

Naturally, the revenue declined as the domains were dropped and the industry overall declined. The portfolio went from doing around $38K/month to $28K/month or a decline of 27%. Given that many of the domains that were dropped had some revenue this decline was expected.

During the same period of time the domain industry experienced a MUCH sharper decline in revenues. It was through our technology and processes that we were able to bolster the earnings and cushion the major decline for our client.

The key line is the revenue per domain (the blue line). As seen by the dotted trend line it is sharply trending upwards in an almost linear fashion. The average revenue per domain per month has moved from about $1.75 to $4.48. This is an increase of around 256% which is an outstanding result that we see continuing into the future as we release new capabilities on the ParkLogic platform.

Graph 2

 

The second chart gives a picture of the financial position of the portfolio for the past 4 years, both 2011 and 2014 are partial years. The expense line includes all registrations and ParkLogic management fees. The fees cover optimisation, registration management and first line of call on any legal matters. The client no longer has $150K-$200K per year in staffing costs.

Although the revenue has declined the profit appears to be reaching an asymptote as the decline in costs are matching any declines in revenue.

Graph 3

 

Chart three shows the decline in renewal costs as we applied the agreed business rules to the portfolio for domain renewals. The bump up in 2013 is a timing issue on registrations and a portion should really be attributed to both 2012 and 2014.

We see a lot of domain investors renewing domains that are completely worthless and this directly impacts the profitability of the investment. We now have the portfolio at a nice stable base of profitable domains and the number that are being dropped each year has diminished greatly.

Graph 4

 

The final chart sums everything up. The profitability of the investment is trending upwards from 243% to 335%. As mentioned earlier, the cost of the staff that were laid off as the client outsourced to ParkLogic is not considered in the profitability calculation.

So during a tumultuous period of time for the domain industry ParkLogic managed to increase the profitability dramatically. In addition, the client no longer has to worry about the portfolio and waste their time managing their domains…..it’s been completely outsourced. All they have to do is count the money and receive an quarterly report for their board.

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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. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.
Click here to arrange time with Michael
Click here to advertising on whizzbangsblog.com

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What a CATastrophe!

What a CATastrophe!

The other evening my wife Roselyn and I went out for a bike ride. We left the door to the garage open and upon returning I made sure that I closed it so that it didn’t bang with the wind in the middle of the night.

Around lunch time the next day I asked Roselyn if she’d seen Pepper, our cat. She’s a wonderful cat that often curls into a ball in some hideaway in the house so it’s not unusual if we haven’t seen her for a while. She always comes when we call her name as she hopes to get some tasty morsel or two from us…..strangely this time when we called her name there was no sign of her.

After hunting around it suddenly dawned on me that maybe I’d inadvertently locked Pepper in the garage. Sure enough, after opening the garage door there was our cat staring with accusing eyes back at me. I apologised to her with a can of tuna and all was good.

So let’s unpack this story a little as there’s so much to learn from it.

escrow.com

When I closed the door of the garage from my perspective I had done nothing wrong. In fact, I was doing right by making sure that it didn’t bang all night. From Pepper’s point of view I was the most horrible person in the world! How dare I deliberately lock her in the garage!

This is often exactly the same when two people have a disagreement. It’s all about perspective. Like Pepper and I, it’s often the case that neither party was trying to do something deliberately to antagonise the other. Stuff just happens.

I could have tried to prove to Pepper that I was right and the cat was wrong for going into the garage in the first place. Pepper could have hissed at me that I should have checked the garage before closing the door. Both of us would have been right…..and also wrong.

The key here is the apology (ie. the tuna). An apology is all about recognising that you’ve hurt another person’s feelings, it’s not about whether you are right and they are wrong. In fact, it really doesn’t matter if you’re right or not.
My father used to tell me that you can win an argument and lose a friend or say sorry and keep a friend. It’s your call what you want to do.

This past week I wrote an apology and it did not matter whether I was right and the other person was wrong….what mattered was “I’d locked them in the garage” and they were hurting. A genuine apology was needed to help rebuild the bridges in the relationship that I’d inadvertently broken.

When I read some of the comments on the article it was clear that many of them missed the whole point of the apology as people rushed to take sides. It wasn’t about rights and wrongs at all…..and hence, for the first time ever I closed the comments on an article.

One of the comments would bear mentioning, as it really struck me…..it was suggested that I looked weak by apologising. You know what, I personally believe that someone who is willing to apologise is actually strong. It also means that when they mess up or hurt your feelings etc. they are willing to place the relationship before their pride. This is not to say that I’m some great “hero” but it’s a good life lesson to ponder. It’s also one of the major reasons why I’m still married after 27 years.

Let’s take this cat and garage story one bit further. Let’s imagine that Roselyn had asked me whether I’d locked the cat in the garage. I would have said, “No, of course not.” Later after the cat was found in the garage Roselyn could have said, “You’re a liar!”

No, I wasn’t a liar. From my perspective I didn’t lock the cat away. Luckily my wife is very understanding and she didn’t say these things but how often have we leapt to conclusions about someone’s actions and disparaged their character? It’s easy to do and it’s very destructive. My advice is to be very careful before you judge another person’s actions.

Over the years, it’s been my observation that many arguments are the result of different perceptions of the same events. In my case, the can of tuna went a long way to mending my relationship with Pepper and last night she curled up on the couch next to me. :-)

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mgilmour
Thank you Kassey!
16 November 2014
whizzbang
I'm a regular visitor to your blog.. but never commented on anything.. But This time I'm commenting... I would like to say that S... Read More
15 November 2014
mgilmour
Kan, it's great to see you here and comment on this article. It means a lot.
16 November 2014
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Buying and Selling a Traffic Portfolio - Part 5

Buying and Selling a Traffic Portfolio - Part 5

Like any industry where buying and selling is involved there is a potential arbitrage gap between what the seller is generating and what the buyer can potentially earn once a transaction is complete. This can dramatically change the return on the investment.

A simple example would be if a seller has all of their domains parked at Company A and they received a 75% payout. As the buyer, you know that at the same company you receive 85%. That’s a 13.3% greater payout. This means that if you paid 24 months revenue for a portfolio you should get the payback within 20.8 months.

Escrow.com

If a seller has all of the domains at a single parking solution then there are a considerable number of additional ways that you can increase the revenue. Over the years at my company ParkLogic I’ve found that the maximum any parking company typically wins in a portfolio is 20% of the traffic.

This means that if you are acquiring a portfolio that has been parked at a single parking company then you can at least improve it 80% of the time. That’s a great outcome! At ParkLogic we also have a real-time bidding system in front of the traffic that sends the traffic direct to advertisers to provide additional revenue uplift (enough of the sales pitch!).

The reverse of the above is when you find a portfolio that is parked all over the place or where there may have been some special deals in place that underpinned the revenue line. For example, let’s imagine the portfolio had a group of domains that were all going to a particular affiliate company? Will the deal also migrate with the domains or will the deal suddenly vanish once you parted with your hard cold cash?

Likewise, for domains that have “slept around” they are likely to be fully optimised. Be careful of buying these portfolios as there is unlikely to be much of a “free” revenue uplift from optimisation. What I would recommend is to ensure that you can establish an account with the optimisation company prior to the acquisition. We have a number of ParkLogic clients buying and selling domains between them to more secure their ROI.

I’d also be careful of fad domains. These are domains that are popular for a time and then the traffic just dies off. So do your due diligence on the traffic by requesting stats across six months and then view the traffic data on a domains by domain basis to see if there are any trends that you don’t like. Spikes in traffic and downward trendlines tend to be the bad ones to look out for.

Particularly look out for what I would call the “lucky click” domains. These are domains that may be sold in amongst all the others that have a tiny amount of traffic but got a $30 click. You’ll probably never see that click again but if you buy these domains you’ll be paying a lot for them. To find them calculate the RPM for each domain (revenue / view * 1000). Sort the domain list from highest to lowest and you will discover that these domains are typically sitting right at the top…..get rid of them from the deal.

The wise purchaser will take the time to thoroughly go through a list of domains and indicate which ones they are prepared to pay for and which ones they aren’t. The seller will try and keep the portfolio together as an aggregate to stop this type of cherry picking. In the end it will become a negotiation. The strength of your position in the negotiation will be determined by how much homework you have done at the analysis stage.

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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. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.
Click here to arrange time with Michael
Click here to advertising on whizzbangsblog.com

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My Apology To Donna at DBR

My Apology To Donna at DBR

I went and tried to login to the Domain Board Room yesterday and discovered that I’d been banned. I’ve never been banned from anything in my life so this was a new experience and one that caused me to be quite perplexed.
 
So the question has to be asked, “Why did I get banned from a forum that I’d been taking part in for a number of years?”
 
It was really simple. As a part of ongoing threads if I’d happened to have written an article on the topic then I’d say something like, “I’ve investigated this issue and you may want to check out a detailed article that I wrote on it.” I would then provide the link. The link was more for expediency, as I really don’t have much spare time it saved me from rewriting everything that I’d ever written on the topic.
 

I was asked by Donna (the forum owner) to not link as she thought that it was self-promotion. Even though that wasn't my motivation I can now see how it could have been viewed that way. Despite her request, I then made the fatal mistake of publishing a link to an article that another member had requested.....
 
I now find that I’m banned…..given that I didn't comply with Donna's request I may have deserved it. I think that she does a fantastic job with DBR and as the owner of the forum she has every right to ban whomever she wishes and for whatever reason.
 
From my perspective I honestly believed that I was just trying to help and self-promotion was the furthest thought. I bear no malice or ill will towards anyone at DBR and have enjoyed the many threads over the years. I contributed where I could and given my time constraints I participated in the best way that I knew how.
 
So why am I writing this blog? Right now there are a whole lot of people that I have been conversing with that will suddenly see me just vanish. This is the only way that I can communicate with them and indicate that I really wasn’t trying to do anything wrong. Donna, please accept my unequivocal and humblest of apologies as I never meant to do anything to offend you or anyone.
 
For those of you that are wondering, I’ve reached out to Donna a number of times as I didn’t want any ill feelings to be between us. I genuinely wish her and all of my friends at DBR all the best.....sigh......I will miss you all.

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Stop Biting the Hand That Feeds You!

Stop Biting the Hand That Feeds You!

I’ve been in the domain industry for more years that I care to remember and I constantly hear the cry of domain owners claiming that parking companies are defrauding them. So are they defrauding you?

I'm actually Parking Company independent.....at ParkLogic we send our client’s traffic to whoever pays the most at that specific point in time. In the last 8 years I’ve have only found one parking company do something deliberately wrong....and we terminated the relationship with them.

escrow.com

On the whole the major parking companies are run by honourable, good people that are doing their best to earn money just like the rest of us. They don't have a secret bucket of money that they are stashing away and they also don't steal from domain owners. If they did, they would pay out less and we would instantly move the traffic away.

That being said, stuff sometimes goes wrong....it's technology and as we know technology isn't 100% perfect all of the time. When something stuffs up give your account manager the benefit of the doubt that they aren’t trying to screw you out of a few dollars. The typical account manager has no say what goes on with the technology anyway!

I’ve talked to our own account managers and they often share about clients yelling, swearing and generally being completely unprofessional to them. Give them a break! They’ve got feelings too you know.

What I suggest is that you pick up the phone, skype, email, IM or whatever and thank your account manager for doing all the work that they are doing for you. They often do a lot of stuff behind the scenes that they either can’t or for whatever reason don’t share with you. So go and share some love :-)

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. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.
Click here to arrange time with Michael
Click here to advertising on whizzbangsblog.com

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