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.
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Wednesday, 20 September 2017