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.
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!)....