This past weekend I’ve had a real opportunity to play around with Virtual Reality (VR) and my Oculus Rift. If you’ve never experienced VR then I would highly recommend you take the first opportunity possible…..it’s simply incredible.

Earlier in the week I downloaded the social app V-time for the Oculus. This app allows you to meet with other people and then “teleport” to a wide variety of destinations. So you could be chatting with friends in Paris (including hearing the traffic in the distance and someone playing La Vie En Rose) or look down on the Earth from the International Space station.

There are other aspects of the app that allow you to share photos in a boardroom at the top of a skyscraper. I think it’s only a matter of time before you can share a power point presentation and have a white board materialise for anyone to interact with.

I downloaded Chronos the other night which is a VR game where you are wielding a sword to fight off bad guys. All really cool but the best application by far would have to be the star fighter combat game, Eve Valkyrie. When you hit your thrusters and whip around the far side of an asteroid to escape a locked-on missile it’s nothing short of spectacular. The sense of actually being in a cockpit and launched out the side of a space-carrier is amazing.

When you really think about it, VR is in its infancy and everything will just get better and better. I hate to think what it will be like in a couple of years time…..and hence my decision to dive into the programming side of the Oculus.

Games and apps from other people’s imagination are great but building a world yourself is nothing short of mind blowing. So far I only have really simple objects built out of spheres and cubes but not long from now I plan on building far more complex buildings that people can explore. Why am I doing this? Because it’s the future and any online business depends on entrepreneurs being able to quickly grasp the changing opportunities that VR like technologies will provide.

If any of you have an Oculus Rift or another VR headset then let me know.....maybe we can meet online. Anyway…..I’d better get going as I have a bogey on my tail!

So you’ve just been to The Domain Conference in Fort Lauderdale and a monetisation company convinces you that you should run a test with them. Is there any real point and what is the best way to do this?

If you’ve ever moved your domains between parking companies by changing the nameservers then you will very quickly realise that there are so many variables to consider that the test becomes meaningless. For example, by routing the traffic at different periods of time, traffic volumes and domain market verticals all contribute to distorting the results.

In addition, if you move all of your domains across to the new company then from the previous article in this series we now know the best case scenario is they will win 35% of the time. Remember this number is for a properly optimised domain portfolio. If they win more than that then it’s only because your portfolio has not been looked after.

All monetisation companies know that they will perform well on some domains and not so well on others. Their goal is to hope and pray that overall the total amount they pay you will be more than your current parking solution.

From the domain investors perspective this is a really silly way of looking at things. What you actually want is to leave all the domains that win with the new company with them and automatically move all the domains that do worse away. This then maximises your earnings.

The ideal solution would be to keep all of your domains where they are and then send a percentage of the traffic to the new company for testing. This process allows you to accurately benchmark the new deal with a greatly diminished risk, compared to sending all of the traffic for your domains to the new company.

Earlier this year, one of ParkLogic’s customers had just returned from NamesCon and they were approached by a couple of the parking companies to run a test. Rather than move all of the domains away from ParkLogic they had a chat with me and we then routed a portion of their traffic to special accounts setup for them at the new companies.

They then were able to assess down to the cent on each domain whether the new deals were any good or not. In the end they moved everything back to their ParkLogic controlled accounts as they performed better than the specially setup ones. I should say that we were very happy to facilitate this process for our client as we regard it as one of the services we provide.

This structured process provides domain investors and any of their investors the confidence that everything that can be done is being done to maximise earnings. There’s no “grass is greener on the other side of the fence” as we absolutely know what the grass looks like and tastes.

Ultimately what you need to assess is your stomach for risk or in other words, how big a percentage is good enough? We typically find that forcing around 20% of the traffic for each domain over a couple of weeks (time depends upon traffic levels) gives a good enough sample. If the new company wins then you should move 100% of the traffic across to them…..and this is what we do. If a few weeks later they don’t perform as well then we automatically migrate the traffic back to the winning solution.

So after going through this process, what constitutes a win for the new company? You can’t use revenue as the traffic will have varied for the domain and distort the result. The only measurement that you can use is the normalised RPM.

Remember, we discussed this in a previous article. A normalised RPM involves measuring exactly how much raw unfiltered traffic we have sent for a particular domain to a particular parking company. We then measure get the revenue generated from that traffic. For a domain, mathematically this looks like:

(revenue at a parking company) / (total traffic sent to the parking company) x 1000

This then means that for every domain we will typically have the normalised RPM for every monetisation solution at any point in time…..yes, that’s what we do. In fact, we collect around three hundred different metrics for every domain every single day.

So when we were assessing for a client whether the new companies were performing better we we’re not looking at the revenue. We are looking at the normalised RPM because this metric tells us if the grass is actually green or brown. Given the process we also know the colour of the grass for every solution at any point in time.

So let’s imagine you’re not with ParkLogic and you don’t have any baseline normalised RPMs. For many clients we typically integrate their current monetisation account into the system. They change the nameservers to ParkLogic and we then route 100% of the traffic back to their existing provider.

By going through this process there won’t be a drop in revenue and it allows us to establish a baseline normalised RPM that we can measure any new solutions against. We then test a portion of the traffic elsewhere to see if it will perform better at other solutions. The whole time we are keeping an eye on the normalised RPM. It isn’t long before we see an uplift in the overall revenue.

This is the proper way to conduct a traffic test as it provides definitive performance data that is accurate. I hate to say it but any other methodology will largely be guesswork which is likely to end up with a suboptimal result.

If you remember from previous articles the normalised RPM allows us to precisely compare one monetisation provider versus another.

This metric is VERY different from the traditional RPM that is often used more as a marketing tool than an actual unit of measurement. The normalised RPM is the revenue from every monetisation source divided by the raw unfiltered traffic, times by one thousand.

nRPM = Revenue / (Raw Traffic) x 1000

The chart below is one that shared at Domaining Europe and highlights a number of opportunities for domain investors. The first is on average, direct advertisers pay considerably more for traffic compared to Google based sources.

This should be no surprise but one of the problems that many domain owners have is they don't have the scale to access these larger payouts. In addition, the majority of monetisation sources are obligated to send the traffic to a potentially sub-optimal solution (eg. Google) so the traffic never gets exposed to the direct advertising networks.

What the chart also displays is each of the parking providers in the sample have massive swings in their average payout levels each day. This is contrary to what many people would expect.

The second chart shows what percentage of the traffic each company is winning over time for the portfolio being measured. The first thing you will notice is that although direct advertising networks pay more, they only pay more for a small amount of the traffic. The reason for this is they don’t have the breadth of advertisers that Google has…..but this is beginning to change.

What can be seen is no company wins more than 35% of the traffic on any particular day. This means the best case scenario that you have with leaving all of your domains with one company is 65% of the time the traffic could perform better elsewhere. Remember, that’s the BEST case scenario. The reality is typically much worse.

Both these two charts also show that every company wins some traffic. So moving all of your domains away from every company is a bad idea. The best thing to do is to drive the right traffic to the right company at the right time. For whatever reason, each of the parking companies being tested performed really well on a subset of domains….the challenge is the subset is often a moving target.

The third chart shows how a typical domain’s traffic could be routed across an eighteen-day period of time. Each row in the chart represents three days. What it shows is how the traffic is routed based upon the normalised RPM being generated for three parking companies. This is a sample of one domain and it should not be construed that one company is better for ALL domains. As can be seen, at the domain level the swings in who is winning is quite dramatic.

The case for routing your traffic with a technically proficient company is incontrovertible. Building systems, yourself is an enormous undertaking and I would highly recommend against pursing the investment in time and money so that you can focus on other endeavours.

The fact is if you wish to extract the maximum amount of return from your traffic then you need to pursue a course of action that leads to intelligently routing your traffic across multiple monetisation solutions. If you don't do this then you're leaving money on the table.

In the next article I will begin unpacking how to run a properly constructed traffic test as part of your overall portfolio optimisation strategy.

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.

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.

There was a knock at the front door and sure enough a smiling Irishman greeted me in his paint flecked overalls. He was here to paint the interior of the house and modernise the look a little.

What I didn’t really comprehend was the level of disruption that we would all experience as the furniture was dragged to the middle of each room.

So after a couple of days’ work, Roselyn (my wife) and I looked at the colour on the walls and decided we didn’t like it. This is despite the incredible number of sample pots of paint that we splashed against the walls.

We could have stayed with the colour and grumbled for the next ten years of our lives but today we made the decision to cut our losses and get something more to our taste rather than the tastes of some potential buyer at some point in the future. Sometimes you just have to say, “No, I just don’t like that.”

While this was all going on I’ve been getting back on the tools and writing some pretty awesome code for a new project. There’s nothing quite like the inspiration of paint fumes to fan the juices of creativity and inspiration.

I enjoy coding for a number of reasons and foremost is I have a personal belief that if a company founder in our industry really understands what’s going on at that level then they can ultimately bring better results to customers. I also find there’s something strangely beautiful and calming about a project materialising one line of code at a time. It’s all about seeing a vision come to fruition out of the chaos of the data right before your eyes.

It many respects, coding is like our Irish painter working on our house. By themselves, each brushstroke would look like a patchwork mess but combined they form the basis of a beautiful environment to live in.

Running an online business or domain investment portfolio is similar to painting as well. Each click that brings a customer, an interaction on your website or a dollar of revenue is what makes the canvas of your business so great and at times, all consuming. Tweaking advertising expenditure, portfolio mixes and deal structures is what makes you get up in the morning, pick up your brush and add some colour to your ventures.

Which reminds me, I think that I’d better get back to my own canvas with some new inspiration! Have a great weekend!