Blogs about the domain industry and the various players and companies within it.

2018 - The Year That Was...

The year that was and the year ahead!

At this time of year, I like to spend some time reflecting on the state of the domain industry and in particular what I’ve been up to the past twelve months. Let me say from the outset that I’ve seen a LOT of changes take place and from my perspective most of them have been good.

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Development
At the end of 2017 I wrote about a project that I was working on that took domain development to a whole new level. Internally we now refer to this project as “Sites” and it’s now integrated into the main ParkLogic core systems.

Along the developmental journey there were a number of critical factors that needed to be resolved. Without revealing too much, amongst many other things, “Sites” now contains:

  1. A flexible templating system to display landers that is very different compared to any of the currently available platforms (eg. Word Press, Joomla etc.). Widgets can be placed anywhere on the page and they both display information to the user AND also pass data back to the traffic quality system.
  2. A quality system that used both web and behavioural analytics to determine the quality of the traffic being received by a domain. Each and every piece of traffic is scored appropriately, and this score is aggregated at the domain and account levels.
  3. A reporting system that produces actionable reports based upon analytics at a dashboard, domain and traffic level.
  4. A fully configurable API so that any data can be pulled from any “Sites” server and then analysed by either “Sites” customers or the ParkLogic team.
  5. A back-end administrative interface that provides the necessary data for managing massive numbers of instances of “Sites” as well as assisting in determining more optimal monetisation solutions.

At the moment “Sites” processes around five million queries per day and in 2019 we see it continuing to grow as we focus our analytical skills upon it. It’s been quite a journey since its inception and it’s definitely not over yet….not by a long shot. When you control the page there’s a HUGE amount that is possible and this innovation will flow on as a direct benefit to ParkLogic clients.

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Why Domain Optimisation Never Stops

What to do when flights are delayed...

Once again I find myself in the Melbourne Qantas Club….it’s becoming like a second home for me which in many respects is a bit sad. I’ve just received word that my flight has been delayed by over ninety minutes…..which is not good.

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For those of you that are frequent travelers you will appreciate my angst as I instantly calculated whether I have enough time to get to my connect in Singapore. Since it’s the same terminal I may still just make it…..fingers crossed.

The helpful check-in lady suggested that I may have to stay in Singapore for the night but to not worry as Qantas will foot the bill for the accommodation. The fact that my room at the Park Hyatt at my ultimate destination would be sitting forlornly empty didn’t occur to her. This combined with the fact that I’d miss half the conference I was hoping to attend didn’t inspire me to have many smiles.

So what should I do? Get angry and yell at the world or just roll with the punches. When you’ve traveled a LOT you get used to these types of things and realise that there isn’t much point in getting angry at person number seven at the check-in counter. They’re just doing their job.

Now that I’m in the lounge one of the first things I did was check out the number of flights from Singapore to the Park Hyatt…..there were enough for me to begin to relax. I’m sure that some airline will be happy to take my money.

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ICANN 63 - Barcelona

Kevin, Lars and Michael showing off ICU

ICANN finished a few days ago and I've finally got the energy to write a few thoughts down about it. I must admit that it does help that I'm now on vacation in Provence, France....

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In terms of business, ICANN was gruelling. After stepping off the plane on the Saturday I literally had back-to-back meetings from early in the morning until late at night. For me, each day at ICANN is becoming much more like NamesCon with a continuous stream of excellent meetings followed by a quick sleep.

Of course, it’s always good to catch-up with friends. Many of the relationships go back more than a decade and it’s a privilege to know people of the calibre of many of them. I remarked that one of the great things about the domain industry is that not matter which city in the world I happen to be in there is always a person I can have dinner with.

One of the strange things about ICANN is that it’s almost completely unaware of the domain investment community or at the best views it with a bit of distain. What all of the registrars and registries need to understand is that domain investors underspin the entire eco-system…..that’s the drum that I beat over and over again anyway.

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Gambling on Domains

Are you gambling on domains?

I must admit that I’ve never really understood the business model underpinning domain sales. I know that in this article I may rain on your parade and for that I’m sorry….but please help me out in getting over some of my possibly faulty logic

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The state of the market for domain names is that it has fallen from a peak growth of 11.7% in 2015 to 1.2% in 2017. The 2015 peak was spurred on by two factors:
•    The Chinese domain boom
•    Greater release of new gTLDs

When you begin to drill down into the data it becomes even more interesting. For instance, .COM grew by 6.4% in 2015 and is growing by 2.8% in 2017. The legacy TLDs (eg. org, net etc) grew by 1.5% in 2015 and slipped backwards by -1.9%. The surprise was the ccTLDs (country codes). In 2015 they were growing by 14% while in 2017 they are beating .COM out with a growth rate of 3.9%. I must admit that I love ccTLDs and have made a lot of money from them over the years.

The sorry tale is the new TLDs. After exploding out of the blocks in 2015 with a growth of 196% they are now contracting by 14.6%. Many have stated that this is not surprising as speculators leave the market but when you consider that over 50% of the domains are parked then you’ve got to ask what’s actually happening. The simple answer is some of the extensions (eg. XYZ) are experiencing massive drops which is influencing the numbers overall…..so no panic here for the truly good extensions.

Ignoring the decline in the new TLDs the overall growth in the market is around 4.8% or approximately 9 million more domains from 2016 to 2017. This is an important number as it represents the demand side of the market and should dynamically influence the sale price of domains.

The other curve is a little frightening…..the supply curve. Since the new TLDs were released, the market has been swamped with a massive level of supply. This is not the early days of the Internet where there was .COM, the CC’s and a few others. We are now in an environment where the supply is so large that it MUST impact the sales price.

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Recent Comments
mgilmour
I based this roughly on overall market share. Yes, many domains are sold privately but I think not as many as people would have yo... Read More
11 October 2018
mgilmour
Many thanks for the extensive comment! My understanding was the $150m was the revenue line to GoDaddy not the net revenue. Maybe I... Read More
11 October 2018
mgilmour
Thanks for the correction of .tk.....I forgot to take them into consideration. What is for sure is the domain market is mature and... Read More
11 October 2018
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Subprime Problems with Online Advertising

Will online advertising survive?

Back in 2008 the world experienced the impact of the subprime mortgage crisis. Greed, combined with a dose of stupidity put the global economy into a tailspin. The question I have been asking myself is whether the online advertising industry is heading for its own subprime shakeout.

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The global financial crisis was caused by blending toxic loans that would never be paid back with good loans that would. The thought of big commissions spurred Wall Street forward to meddle with the ratio of good performing to bad performing loans so they were weighted on the wrong side of the ledger.

Ratings agencies such as Moody’s and Standard and Poors would look at these loan blends and put a rating on them that represented the riskiness of the blended loan portfolio. The problem is the agencies were paid by the banks that were trying to sell them…..so guess what, all these toxic loan portfolios received the highest investment rating.

I know that I’ve over simplified the whole financial crisis but what happened next was incredibly predictable and now a part of history. People lost their jobs as a credit squeeze hit the financial markets and central bankers wondered how they were blindsided.

Let’s compare this to the online advertising industry.

Traffic can be bought at varying degrees of quality and blended together so that it’s just acceptable enough for advertisers to buy. In fact, the name of the game for many traffic sellers is to get an advertiser hooked on the “heroin” and then dilute the traffic quality with “talcum powder”. This way the sellers can maximise their returns.

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