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

Interview on Domain Name Wire

I recently had the privilege of being interviewed by Andrew Allemann of Domain Name Wire and this Podcast is now available via the link below. I really enjoyed discussing the domain industry with Andrew as we explored a wide range of topics.

Some of the topics include:

  • The domain industry
  • Why Google is taking more
  • How to increase the earnings from your domain traffic
  • Doing something different with your domains
  • Why you will lose money by sending all of your traffic to a single parking company
  • The difference between parking companies

It was great being interviewed by Andrew as he asked some really inciteful question. He's been blogging and running Domain Name Wire for many, many years and has an incredible level of knowledge across the whole industry.

Click here to go and listen to the Podcast

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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. 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

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mgilmour
Good question Peter. I've been in a variety of businesses, everything from: - The music industry - Riding the Desktop Publishing r... Read More
02 December 2014
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The Evolution of Domain Parking

Domain parking is dead and should have been buried a long, long time ago. This is what I see written in domain forums over and over again. I’m left with two questions, “Why hasn’t it died?” and “What’s next?”

There are a number of reasons why domain parking hasn’t died and the first being that domain investors continue to support the business model. Let’s face it, all you have to do is change your nameservers and voila! Money starts pouring into your bank account…..that’s the theory anyway.

The reality is that I end up spending a huge amount of my time ensuring that ParkLogic clients have their nameservers set correctly and that the domains are actually still in the right parking accounts. When was the last time you audited all of your domains? Trust me when I say that about 10% of your revenue is being lost by not doing this.

Escrow.com

There is one thing for sure about domain parking is that it’s scalable. There are very few barriers to the number of domains that you can park but there are barriers to managing your domain portfolio. For example, at about 5,000 domains you will probably discover that vlookup in Excel becomes your best friend.....even if your domains are successfully parked.

Given the alternatives for domains with more than 1 unique visitor per day domain parking is actually incredibly profitable. Sure, you could build out a domain into a business but given the cost of development you better make sure that you choose the right one that will go gang busters and make a bucket of money to offset the development cost.

This conversation is all very interesting but what I’m really interested in is what’s next?

One option would be that all domainers suddenly decided to invest in development and take all of their domains out of parking and somehow build thousands of profitable sites.

I see a couple of barriers to this business model. The cost (as mentioned above) but more importantly the management time. Let’s imagine that you have a thousand sites, how do you manage them all so that you can effectively impact each one? This is a really tough ask and one that bears a lot of thinking about.

This causes me to think about the other side of the equation, the parking companies themselves. If you really think about it, all of them have roughly the same Google contracts (ignoring Yahoo companies) so they’re really competing on their technology….I like that!

So let's picture what a parking company does for business. They work really hard at securing a client for a trial with a great revenue share, guarantees or a stack of other inducements. Essentially the parking company is using their balance sheet to try and fund their sales process into traffic opportunities. Sounds good except that ultimately it's not very sustainable.

Let's continue this scenario. The domain investor moves their domains for the trial and due to differing time frames the parking company rolls the dice to find out if they perform as well as the provided baseline where the domains were previously parked. I can almost guarantee that the new parking company will perform better on some domains but for the vast majority there will be lower revenue…..which means overall the portfolio doesn’t perform as well.

Just as an aside, some unscrupulous parking providers may artificially inflate the numbers and hope the domain owner hangs around long enough that they can “take” some of the revenue back later on. This means that they are playing around with the revenue share AFTER the revenue share has been agreed.

Have you ever fallen in love with a parking company, taken your eye off the numbers and then discover that the revenue has declined considerably? What’s really not good is that the domainer typically doesn’t have any way of proving that this is actually happening.....this is the result of a non-transparent industry.

So now that the test is a bust what does the domainer do? They look for the greener grass and move again. This isn’t a good outcome for the parking company because they really have to wait about eighteen months before they can convince the domain owner to try them out again……and so the cycle begins.

Let me propose something really radical here…..and a little bit self-interested. The domain owners place all of their domains with an intelligent switching company like ParkLogic (remember I’m a founder) or they can spend about 8 years building their own. The traffic will then flow to the winning parking solution on a continuous basis and also sample to ensure that the winning solution is actually still the winner.

This is great news for the domainer! They no longer have to move their domains around from one company to another as it automatically happens.

Let’s look at this from the perspective of the parking company. Any new clients should be directed to use a system like this…..why you may ask? It’s really simple. Where they win, they get the traffic. Where they lose, they get regularly resampled. There is no longer an 18 month sales cycle, fancy deals etc. It just automatically happens.

What it also means is that the parking providers are now competing on their technology rather than sales muscle. So this means that more resources are migrated into being innovative through development and away from sales efforts.

The ultimate outcome is that the parking providers become wholesalers to companies that intelligently switch, optimise and add value to the traffic. The parking providers have maybe half a dozen customers and the rest are routed through these other companies.

Parking providers can continue with the status quo. This will mean a race to lower margins and spending the cash in their balance sheets on fancy deals…..only to find the client vanishes. I actually wouldn't recommend this approach.

The wholesaling model is the best solution for both parking companies AND domain owners because it gets to the true value added provided by the parking solutions and closer to the true value of the traffic. In my opinion, this is exactly the type of innovation that the domain parking industry requires.

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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. 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

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TRAFFIC - Happy 10th Anniversary

I would like to wish the team at TRAFFIC all the best for their 10th anniversary. It's been quite a journey for Rick and Howard and their families for the past 10 years. Sadly, due to my daughters 16th birthday I won't be able to make this one....the first TRAFFIC that I've missed since the very first conference run all those years ago.

If you haven't registered then make sure that you go to targetedtraffic.com.

Please enjoy the video below...

 

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mgilmour
The only reason why I didn't travel this time was due to my daughters 16th birthday....otherwise I would have been there. This is ... Read More
27 October 2014
mgilmour
Thank you for your kind words.....I must admit that when you travel across the Pacific the number of times that I have it does hav... Read More
27 October 2014
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ICANN Los Angeles Wrap Up

At long last I’ve finally returned from attending ICANN Los Angeles. So was the jetlag, long hours and sitting in a flying tin can for a day and half worth it?

I found that the main attraction for me was that there were a lot of domain owners at ICANN that were looking for a solution that ParkLogic provides. This was great news and we ended up doing a lot of business.

I spent the majority of my time either in meetings or hanging out in the lobby waiting for my next meeting. I think that we had about 30 scheduled meetings and many more that were impromptu while passing someone.

As always, I enjoyed catching up with the many, many friends that I’ve made over the years as well as making a bunch of new ones. Both Joe (from ParkLogic) and I have been working with many of the people that we met for years and putting a face to a skype voice was fantastic!

A real highlight for me was when a group of us hung around a fire pit at the Intercontinental hotel until about 2:30am. It was a chance to really get to know the .green team and hear about their passion for the extension. Dirk from .club was also there and it was great to hear his story and journey over the last few years. We sometimes forget that with all of these new gTLDs that there are real people with real lives behind them that have often put everything on the line to see the extension come alive.

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mgilmour
No I didn't meet anyone specifically from China....although there was a lot of people there. I think that it could be worth going ... Read More
25 October 2014
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What was the ICA thinking?

The Internet Commerce Association (ICA) has just altered its membership structure and the way that board members can be elected. I must admit that I applaud the efforts of the incumbent board in trying to juggle the various stakeholders but let’s try and unpack what they’ve actually changed.

There are four classes of membership:
Platinum - $25K/year and an automatic board seat.
Gold - $10 to 24,999/year
Silver - $5,000 to $9,999/year
Bronze - $1,000 to $4,999/year

What’s interesting is the way in which new board seats are awarded. For every $25,000 in revenue a new board seat is created and the gold silver and bronze class members can nominate a member or non-member to the position. There is an election where Gold members have 5 votes, silver members 3 votes and bronze members 1 vote.

From what I see of this structure is that it rewards those with the cash. If you have money then you can effectively buy a board seat at the platinum level. This works well for a commercial organisation that has profit as the motivation but I do not believe that it is healthy for a non-profit association.

In an association the motivation needs to be for the common good of the industry. When it can be seen that members can buy seats then it can be construed by the wider domain community that the association can essentially be “out for hire”. If EVERY seat is up for election then this issue can never arise.

By tying the number of board seats to the revenue line of the association means that as the association becomes successful then it will either have a HUGE board or the $25K hurdle is increased. This will effectively enshrine the “board seat for money” ethos. What I believe it actually means is that the ICA is planning, at its core, to remain a small association. I don’t really understand why you would do this.

Just think about this. Let’s imagine that the association grows and the revenue line becomes $500K/year. This means there will be 20 board seats which in my opinion is way too large. Even Jesus had 12 disciples and one of those didn’t work out too well!

The converse to the situation is if the ICA contracts during the hard times does this mean that the board shrinks in size? This is crazy! This is the time when the board needs to become highly active to ensure that the existing and new members appreciate the value proposition. So just when the association needs the board it slashes the number of positions to reinforce the downward spiral. Why would any association do this????

Now let’s look at the voting structure. The first thought that I have is when a new board member is voted to the board who do they represent? The current structure doesn’t have a representative side to the voting system….it’s all money based. Wouldn’t it be good to have the monetisation, sales, development etc. constituencies rather than just platinum to bronze? Elected board members would then know whom they were elected to represent.

It doesn’t take too long to work out that I can get 10 votes for $10K at a bronze level 6 votes for $10K at silver and 5 votes for $10K at a gold level. How does this make sense? It doesn’t. As soon as you tie money back to number of votes then you no longer have a truly representative association.

What would have been better would be to have 3 board seats plus the CEO for all four classes. This would provide 12 board seats. Each class can vote for the nomination in THEIR class with ONE vote per member. As the association grows then the board seats will become more precious and even prestigious.

Since there are less members in the Platinum class then they are more likely to get voted onto the board. The competition would potentially be fierce at the Bronze level but they can still be nominated and still be elected to the seats allocated to their class.

This is democratic, representative and fair. It detangles the money from the number of votes and resolves the tying of the revenue line of the association to the number of board positions.

So what has really changed with the ICA announcement? I’m not really sure. There was nothing about vision, values or issues that are currently being tackled on behalf of the industry.

Unless I'm not clearly understanding the ICA boards decision, I don’t think that they have really thought about implications of what they have proposed. By putting this out in the public domain as a decision versus a discussion document the ICA board is now committed to a direction that in my opinion will not inspire the industry to get behind them.

As always, I’d be more than happy to discuss any of this with any ICA director.

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mdafni
Ouch. Is it any wonder that it is so difficult to get those in the industry involved?
09 October 2014
donna_mahony
Not even worth paying attention to any more. The ICA Facebook page is just kudos to those who gave money, this new announcement is... Read More
09 October 2014
mgilmour
Completely understand your position Donna.....don't blame you really
09 October 2014
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