Part 5 - Portfolio Optimisation - Traffic Domains

Part 5 - Portfolio Optimisation - Traffic Domains

So far we’ve touched on a number of aspects of building a domain into a solid business. Obviously we could spend years on that topic but what I would like to do is move onto the second segment in our portfolio optimisation – traffic domains.

Many people believe that generating revenue from domain traffic is dead and buried…..nothing could be further from the truth. The real issue is to assess what you are doing now which is different to what you were doing in the past. If you keep on doing the same thing as you’ve always done, then don’t expect your revenue line to increase.

Escrow.com

Increasing your revenue from traffic has moved on a long way since the humble days of putting all of your domains with one parking company and then collecting a cheque. As one of the founders of ParkLogic, we’ve been optimising domain traffic for clients for nearly a decade and the sophistications of the real-time algorithms for routing traffic has grown considerably.

Let me say from the outset that optimising domain traffic is not a trivial exercise and has moved a long way from making decisions via a spreadsheet. To extract the full value out of your domain traffic routing decisions must be made on a real-time basis. If they aren’t then you are making sub-optimal decisions and leaving money on the table.

There are a number of ramifications to real-time traffic switching. Like any industry, the traffic side of the domain industry has evolved into two camps. Those that outsource their traffic optimisation and those that try to do it themselves.

Even if you have the expertise and the knowledge to be constantly working away at systems you would have to be crazy to invest in building your own traffic optimisation platform. Rather than managing a simple agreement you’ve now taken on the responsibility for an entire technology ecosystem that has real costs associated with it. The opportunity cost and distraction of managing such a platform is considerable.

For example, as many of you know, I’m a fan of the CRM platform, SalesForce. A major reason for this is I know that every single day I have literally thousands of developers working on my behalf to improve and maintain a platform I use extensively. The marginal cost I pay out each month is inconsequential compared to if I decided to build my own CRM. I’m getting a growing benefit for no additional effort or allocation of resources.

Likewise, by completely outsourcing your domain traffic optimisation you are getting a platform and a team that is constantly thinking about how to improve your results for you each and every day. I can’t speak for any other companies but I know that the number one issue for us is how to increase a client’s revenue from their traffic.

When you outsource your traffic revenue you need to be confident the company is doing the best job possible at every instant in getting the most from your traffic. More than that, they need to be able to prove it. This means that there needs to be real people, doing real work on your behalf that you can reach out to if you have any questions.

In the next article on traffic optimisation I'm going to dive into some compelling  numbers from a sample portfolio that prove the benefit of routing traffic to maximise revenue. For the first time ever I made the decision to expose some of our numbers in a presentation that I made at the recent Domaining Europe conference.

Over the years, many people have said to me that it really doesn’t make a difference what parking company you use as long as they have Google as their backend. The data in the next article proves that this assumption is false.

Recent Comments
mgilmour
Sorry for the delay in responding to your comment Jeff. The key factor with genuine domain traffic is that it's valuable because ... Read More
29 July 2016
1679 Hits
2 Comments

Practicing What I Preach!

Practicing What I Preach!

Why is it that the lights at an electrician’s house don’t work, taps malfunction at a plumber’s and domainers seem to forget why they bought their domains? At the recent domain conference in Florida I found myself sharing about domains and I thought to myself, “It’s about time that I reviewed my own portfolio!”

Escrow.com

Too many of us are so busily acquiring domains, working on projects or just having a good time that we risk forgetting that we’re actually running a business. Unlike a hobby, a business needs to have an outcome that involves some sort of profit….and in many cases it’s really simple to generate but we just don’t seem to bother.

Take me for example. A few days after they poured me off the plane (it’s a 30 hour journey from Fort Lauderdale) I began working through my personal domain portfolio and noted beside each of them what business model I was applying to them. This isn’t really that hard as there are 4 primary business models to think about.

1.      Traffic domains – revenue comes from domain traffic

2.      Stock turn domains – selling the domains for around $X,XXX

3.      High value domains – selling domains for $XX,XXX+

4.      Development

The next thing I did was contact Chris Leggatt at domain holdings and said, “Hey Chris, how’d you guys like to broker gx.com.au?” It’s a two letter com.au that would be great for a forex website as it could stand for “global exchange”. I’ve had the domain for years I thought that it was about time I did something with it or sell it off to someone that will.

I then looked at another portfolio that had about 30 three and four letter .com/net domains in it that once again I’d been happily renewing year after year. I called up Tessa Holcomb at Igloo (like Chris, she’s an awesome broker) and passed these across to her. If you’re interested in these domains then reach out to her at “sales at igloo.com”.

Making sure that my traffic domains were looked after was a breeze….after a review, I handed them all over to ParkLogic. Even though I’m one of the founders of ParkLogic, let me say that I eat my own dog food….!

The developmental domains are already secure in various businesses that are progressing forward quite nicely (whizzbangsblog.com is one of them).

So once the brokers have completed (or not) a series of transactions I will just move through my list. Anything that doesn’t have a business model gets rejected and dropped.

What am I actually doing here? I’ve essentially outsourced all of my domain management to experts in their fields. I’ve been in the industry for way too many years and there’s one thing that I’ve learned….don’t try and do everything yourself! Speak to experts in their fields and get them onboard working for you.

I will unabashedly say that I’m an expert in traffic monetisation….there’s very little I don’t know about how to squeeze every last penny out of domain traffic. Although I also know quite a lot about selling domains I pass the challenge onto experts who do this day-in and day-out. This will maximise my sales and also frees up my time to focus on other opportunities.

I said it at the Florida conference that one of the problems that domainers often have is that they value their time at $0. Don’t fall into this trap…..outsource your different tasks to experts and move on. Whatever you do….don’t be like the electrician and plumber!

Have a great weekend!

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

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:
2119 Hits
2 Comments

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.

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

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

3761 Hits
0 Comments