Since the beginning of the year many of the parking companies have reported a steady decline in earnings per click payments from their upstream providers. This decline seems to have really unnerved many domain owners and a flood of domains for sale (albeit "secretly") has recently hit the market.

At the beginning of the year I spent quite some time analyzing where I thought the industry was heading and what was likely to take place over the next couple of years. I then presented this information at the Las Vegas TRAFFIC conference and summarized much of it in a single powerpoint slide. I think that now we are just past half way through the year that it would be a good idea to explore this slide further.

There are four critical points in the graph, each of which are labeled either A, B, C and D. Prior to 2008 and up until "Point A" the industry was exploding with domain valuations increasing rapidly off the base of an exuberant market and high earnings per click rates. Google and Yahoo were slogging it out and desperately trying to buy all of our traffic to bolster their revenue lines.

Domain valuations were underpinned largely by domainers reinvesting their PPC income into domains. A few notable large domain owners began to heavily buy into the industry.

Structured debt entered the market for the first time with firms such as Domain Capital funding domain acquisitions that were largely secured by PPC based cashflow lines.

This combination of additional capital reinvestment accelerated domain prices and a feeling of euphoria entered the market. A sudden flurry of smaller investors jumped in and tipped in additional amounts of cash, all hoping that they hadn't missed out. My guess is that most long-term domain owners have been approached by family, friends or even strangers about how to get into the industry at this time.

This article will continue in a couple of days time as I continue to explore what Point A actually means and why it's important for us all.

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