Maximising Domain Revenue

Maximising Domain Revenue

After publishing the article, “Getting Dirty in the Domain Data”, earlier this week I ended up having an interesting discussion with a domain investor. I thought that it would be worthwhile continuing to pull apart the data from the previous post to help many domain investors understand why optimising traffic across multiple monetisation solution is so beneficial.

Escrow.com

I will be referring to the data from the previous article so you may wish to read it if you haven’t done so already.

Sampling by Changing the DNS

Many domain investors sample different parking providers by changing the DNS. This method is fraught with many problems that largely stem from comparing results from single sources across different periods of time. Some of the challenges are:

1.      What are you measuring?
Revenue is not a good measurement of success as there will be different levels of traffic at different points in time. Since parking companies count traffic different you can’t rely on the produced Revenue Per Thousand Visitors (RPM) numbers.

2.      Data Distortion
When testing different parking providers over different periods of time you can get massive distortions in the data from seasonality in both the domains and the time of year. In the example from the previous article the domain had massive results in May to July due to it being a travel related domain.

3.      Traffic Leakage
There is a propagation delay each time you change the DNS and this creates more traffic leakage and no new information. In some extreme cases where the TTL (Time To Live) for the domain is long the DNS may not update for months for some users.

The Cost of Information

Some investors believe in splitting traffic equally across multiple solutions and then at some point in time sending all the traffic to the monetisation company that pays the most. This is one of the worst ways to optimise domain traffic and here is the reason why.

There are a lot of strategies around sampling but they basically boil down the single question, “What did the information cost?” In other words, if I was earning one dollar with one company and then sampled another company and found they were paying 90 cents then the information cost me 10 cents.

Minimising these "information costs" is crucial to optimisation. From the example domain, A.COM, in the previous article if we sample the traffic equally across the different parking companies then the portfolio would have earned $1611 versus $2217 or 38% less overall (ignoring direct advertisers).

Every domain needs its own sample regime. At the most simplistic level domains with less traffic should be sampled less often compared to domains with high levels of traffic. In each case, what you are after is a statistically significant result that allows you to decide where to route the traffic. If you don’t have a statistically large enough sample, then you’re guessing.

Real-Time Decision Making

All traffic routing decisions need to be made on a real-time basis. Based upon the data, decisions need to be made literally milli-second by milli-second. I can only speak for my company, ParkLogic, as we use dynamically changing data from multiple inputs to alter not only the routing decisions of traffic but what is displayed on the page and ultimately which advertisers are engaged.

As an example, we track over 250 different metrics for every domain every day and process this data to alter how the traffic is routed. Layered over the top of this daily data we then can then incorporate external dynamic data such as geo-based weather.

Everything must lead to a decision....otherwise it's just intellectually interesting but pointless.

Winning Solutions Constantly Change

If you sample other solutions (however you decide to do it) and then lock that solution in for an extended period of time, then you will be losing. The data from the previous article clearly shows that even for a single domain the winning parking company changes constantly (see below table).

For example, if we routed ALL the traffic through to Voodoo (average winner) and applied Voodoo's payout rates each month then Voodoo would have paid out $436 for the ten-month period. The domain actually earned $4531 for the same period of time (including direct advertisers). The reason for this was a combination of an advertiser paying a lot for the traffic in May-Jul and other parking solutions beat Voodoo the majority of the time.

This doesn't mean Voodoo is bad....as they actually did win for a couple of months. Remember the data is summarised on a monthly basis and can only testify to the fact that the same behaviour exists at the daily and even changes milli-second by milli-second.

Winners

Benchmarking Results Must be Done Simultaneously

I mentioned this point briefly when discussing the problems with sampling via DNS but it is important to reiterate it. Testing new solutions must be conducted at the same point in time otherwise distortions in the results will occur and incorrect decisions made.

Let’s imagine I used the domain’s revenue results in June as the baseline data and compared this to any new parking company in September. I could erroneously conclude that the new company was hopeless! Remember that A.COM (in the previous article) is a travel domain and has extraordinary performance in June.

Understanding Data

I’m in a discussion right now with a customer where about one hundred of their domains just aren’t performing. I’m not worried about this customer leaving ParkLogic as we are both working through the data to understand why their performance is down.

Too many domain investors immediately bail on their existing partner and whip their domains out somewhere else in the vain hope they will perform better. This syndrome has a saying, “The grass is always greener on the other side of the fence.” In other words, you will always think somewhere else is better than where you are.

My advice is don’t do a knee jerk reaction and move your domains. Sit down and dig into the data and really understand what’s going on with the traffic. We are in an industry that is built upon data and if you wish to get abnormal returns then it’s vitally important that you get your arms around it or work with a partner that can help you do so.

 

I hope the few items I’ve raised here in this article will help give you a fresh perspective on your own domain portfolio. Over the years I’ve found that earning more from domain traffic is not always the solution that investors are after. What they want to know is they are maximising their returns and there is proof that this is being done.

Anyone can have a good or bad month but knowing that there are systems and experts in place that are monitoring and understanding the results is really where it’s at. This is particularly the case if you must report to investors or a board. Having the data to confidently know that everything that can be done is being done often alleviates the concerns of the most aggressive directors!

Greenberg and Lieberman

Recent Comments
mgilmour
I agree.....we take that responsibility on at ParkLogic and aggregate all payments into a central single monthly payment. This is ... Read More
01 November 2016
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Part 1 – Why Domain Portfolio Optimisation Works

Part 1 – Why Domain Portfolio Optimisation Works

I recently had the privilege of conducting a session at Domaining Europe on the topic of monetisation. Many domain investors have fallen into the trap that monetisation is dead and let me share with you that nothing is further from the truth. Domain monetisation is alive, well and thriving.

Escrow.com

What has happened, is like any industry there has been an evolution in technology. Those that have kept up with the technological curve remain successful while those that don’t struggle to remain in business.

This is not dissimilar to the days of the buggy whip manufacturer. During the days of horse drawn carts they made an absolute killing. Then a strange contraption initially known as a mechanical horse came onto the market. This technological innovation was really expensive so the buggy whip makers all laughed at the early version of the motor car and continued to make their whips. The rest is history and other than the handful of craftsman buggy whip makers are no more.

It’s the same thing in the domain industry. On one of my recent trips around the world I was talking to a domain owner that had been in the industry for years and he was decrying that monetisation was dead. I asked him one question, “What are you doing now that you weren’t doing five years ago?”

He replied, “I’m doing the same thing.”

I then said, “So you are expecting a different result by doing the same thing? You do know that’s the definition of insanity, don’t you?”

Of course, he wasn’t insane but how many domain investors behave in exactly the same manner? Five years ago they placed all of their domains with a single company, watch their revenue line fall and then claim that it has nothing to do with their own behaviour but the industry. The problem with these domainers is that they are still trying to make buggy whips rather than innovate.

So in this series of articles I’m going to share with you what I do with my own domain portfolio and more importantly why I do it. Since I’m a numbers guy, as much as possible I’m going to track everything back to facts rather than fiction and gut reaction.

When I think about optimising my domain portfolio I place each asset into one of four main buckets.

1.      Development
2.      Traffic
3.      Stock-items
4.      High value

In terms of development, I have whizzbangsblog.com and after a hiatus of about five years I’m in the process of rebuilding my aviation website downwind.com. Why these two domains? I’m passionate about both sites and I really enjoy engaging with readers. For example, those of you that have left comments here at whizzbangsblog quickly discover that I really enjoy replying to questions and helping other domain investors out in any way I can.

Developing a website that you’re passionate about is really important as it will spur you on to write or work on the site into the years ahead. I was speaking to a domain investor about developing a website into a business and I shared that it was actually really easy to do. In my case, all I had to do was write an average of three articles a week for nine years. Voila! Success :-)

I’m actually really proud of the articles here on whizzbangsblog and I often find myself trawling back through the archives to review how my thinking on a topic has developed over the years. I also find that I do much of my thinking about the domain industry and all of the opportunities within it while writing articles. It may sound strange but it’s my way of relaxing.

Every domain investor should have a couple of projects that they are developing into real businesses. In the case of whizzbangsblog I have the privilege of Escrow.com and Epik sponsoring my blog and this helps fund my time for writing.

I'm really careful about the number of sponsors and who sponsors my blog as I'm tying my own reputation to the services being offered by the sponsors. If their services aren't any good then it reflects badly on me.

With the relaunch of downwind I will be seeking aviation industry advertising as the traffic grows.

What’s really important is that when you develop a domain, develop it into a business. Don’t try and make something pretty because you like pretty websites. Focus on the end goal of how you will make money from the site so that what you develop is sustainable over time.

For the record, it doesn’t take much to get a good website up and running. There’s many different platforms available for managing the content. I personally use Joomla but wordpress is just as good.

If you spend over $1,000 getting an initial launch of a website put together then you’re probably spending too much. Make sure you get your first dollar of revenue in as fast as possible and whatever happens, learn from customer feedback!

In the next articles I’m going to dive really deep into my thinking around the four business models and how they help me optimise my domain portfolio for greater profitability. In the process I also plan on revisiting the series on pricing domains.

Recent Comments
london555
Hi Michael-great post so thank you. We own the name eEconomist.com and have thought it would be a great name for a worldclass econ... Read More
27 June 2016
mgilmour
John, I'm glad I could be of assistance. Feel free to reach out to me if you want to chat about your domain.
28 June 2016
mgilmour
It's easy to say yes to money and then realise that you've made a BIG mistake.
28 June 2016
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10 Comments

How To Conduct a Domain Traffic Test - Part 2

How To Conduct a Domain Traffic Test - Part 2

This is the second article in the series on conducting a domain traffic test. The first article can be read by going to: How to Conduct a Domain Traffic Test - Part 1

For the past 8 years I’ve been looking at nRPM (normalised RPM) numbers and routing traffic to the best solutions at any point in time. This has produced significant gains for clients and well worth the effort of getting messy in the numbers.

Escrow.com

So now that there is an agreed set of definitions for metrics what do we need to do to conduct a traffic test? There are two main approaches:

1.      Using baseline data

2.      Using the existing monetisation account

When conducting a traffic test most domain owners provide us with the previous month’s stats to be measured against. One of the problems with this is that we don’t have the raw traffic numbers to generate a normalised RPM. One of the good things is although the stats are taken from a different time period they can be useful in focusing attention on which domains are clear winners and losers. Regardless of the outcome we need to understand why we are winning or losing.

For example, what’s the point in claiming victory if the domain has twice as much traffic during the testing period compared to the baseline? Although good, it would be false to say that it was due to traffic optimisation.

For larger traffic tests it’s far better to adopt option two and run the test by integrating the existing monetisation account into the traffic mix and then sample around 20% of the traffic elsewhere. If the new monetisation sources win the traffic, then all of that domain’s traffic is then moved to the new provider.

For example, let’s imagine that you have all of your traffic going to an account at Domain Sponsor. You want to check out if they are still the best solution for your traffic so you ask me to setup a traffic test. The first thing we do is integrate your existing Domain Sponsor account into ParkLogic and then leave 80% of the traffic still flowing through to DS while we test other monetisation solutions with the remaining 20%.

So rather than having to move all of your traffic you are now only risking 20%. Remember that 20% will earn some money (hopefully more than DS) so your revenue risk is more than likely going to become a win. What’s even better is that we can clearly establish a nRPM for the traffic flowing through to DS and know beyond any doubt who is actually paying the best at that point in time.

With traffic optimisation it’s vitally important that each domain is reviewed and treated as a unique case. There is no point in optimising across an entire portfolio is you don’t also focus on the domains themselves. It’s like the old saying, “look after the pennies and the dollars will look after themselves.” The domains are the pennies and the portfolio is the dollars.

The next article will continue to unpack what metrics we focus on in a traffic test.

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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. 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.

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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.

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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. 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.

 
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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
3049 Hits
7 Comments

Critical Insights Into the Domain Industry - Part 3

Critical Insights Into the Domain Industry - Part 3

I remember speaking at TRAFFIC Vegas 2008 and I put up the below graph on the projector. I indicated that the industry was in a mini-bubble with domains at hugely inflated prices. I had a large number of people come to me after my session and tell me that I was nuts. Was I wrong?

I believed that we were at point A in the chart and the mini-bubble was in full swing. So why did I stand up and pour call water over the partying atmosphere? To understand what I was seeing we need to understand the industry at that time. This is the state of the industry back in 2008:

  1. Market valuation were being underpinned by a few select domainers – no market depth.
  2. Domain investors were massively reinvesting their parking revenues
  3. Debt has entered the market.
  4. Flurry of new small investors hoping they weren’t too late.
  5. Lack of domain liquidity

Escrow.com

Anyone of these factors alone would inflate prices but combined, they created a massive bubble. Domains with little to no value went for crazy prices and traffic domains sold for insane multiples. The euphoria was like a contagion that was eating away at the heart of the industry as it danced to some strange beat. More and more people wanted to join the celebration as if there would be no end.

I’ll never forget seeing a domain magazine enter the market (remember we are niche) and then a second magazine appeared! This is when I personally sold the vast majority of my own domain portfolio….the writing was on the wall. I was out! I took the money, spent 6 months traveling, got my pilot’s license and paid for the kid’s school fees. Life was very good.

Since that time there’s been a lot of blood in the water as domain investors that had raised debt/equity capital discovered they were in a new world - point B. The Global Financial Crisis (GFC) was the icing on the cake and Google, correctly put the squeeze on payouts….don’t forget they have shareholders in a turbulent financial market.

When seeing the GFC storm first hit I read a domain blog suggesting that it was great to be in the domain industry and not be subject to the financial winds. I immediately wrote an article saying that if you believed the writer then you were living in a fool’s paradise.

Let’s think about the GFC and the factors above. Market makers left as they battened down the hatches of their own financial situations, parking revenues declined courtesy of Google, debt financing dried up and new investors vanished. I’ll deal with the final factor in my next article…so let’s hang onto that one.

During this time I know of quite a number of companies that have either had to tell investors that their ROI will now be over a much longer time frame and some even had to liquidate assets to crystalise losses. Many of those individuals that raised debt have found themselves selling their house or have gone into bankruptcy. This is a sorry tale but one that has been a nightmare reality for some.

It has been really difficult for these individuals as they were like shooting stars that shot across the sky in a blaze of glory just to burn up. Most are no longer in the industry, some stole from other domainers, others suffered massive personal problems as the financial pressures came to bear and quite a number ended up with serious health problems due to stress.

I remember calling up one such person to see what I could do to help them out. They sounded like a shadow of their former self. My advice to anyone that has gone through financial hardship is to get help sooner rather than later. For the rest of us that have survived those years….we need to thank God that we’re still here!

I say to my kids that the cheapest way to education is to learn from other people's mistakes. Our industry needs to learn from those turbulent times and learn both the good and the bad from those people that blazed across the sky. We also need to learn from those people that are still around and remember those times....there are still quite a number around.

One of the things I love doing at conferences is getting together with this group of domainers and discussing what kept their heads in the game during those years and what they're doing now. They typically don't make a big show about what they are doing but nevertheless they are inspirational individuals and are ALL in my "Hall of Fame".

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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. 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.

Recent Comments
whizzbang
I agree, Thank God we made it this far. Quite a journey full of experiences and hardship. Maybe the ones no longer here weren't me... Read More
05 June 2015
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