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Why domain traffic is so valuable
Have you ever wondered why advertisers keep on paying for domain traffic year after year? Despite all the naysayers out there saying that domain traffic monetisation is dead it seems to keep on getting better….yes, you just heard me right.
Domain monetisation isn’t just about views, clicks, RPM and the like. Domain monetisation is all about matching advertising to user intent and this is why it’s so valuable for advertisers. When a person goes to a domain name, they have an intent behind their query about what they are looking for and this is incredibly powerful. The user has already passed from wondering what to look for to seeking to find.
The great majority of people who are in a seeking to find mode are wanting to purchase when they find what they are looking for. The difference between looking up something on a search engine versus domain traffic is that a person looking up something on a search engine is seeking information while a person typing in a domain name is seeking to buy.
Many years ago, I read a report that Google produced outlining that domain traffic produced better results for advertisers compared to search traffic. It was at a time when Yahoo reigned supreme in the domain space but it wasn’t long before Google aggressively went after the domain industry as the traffic converted for advertisers.
You only need to ask yourself, what depends upon user intent to realise the domain industry is residing on a treasure trove of valuable data. If you then ask what depends upon user intent then you quickly end up with the answer, “Everything!” In fact, the domain industry is essentially a great big search engine full of not just user intent but motivated user buying.
If we have a statistically sound slice of the global user buying activity, then the value of domain traffic is in this information not just in the next click. Right now, the domain industry is effectively being throwing this information out the window and valuing it at zero dollars. It’s this pool of data that makes domains so terrifyingly powerful and one of the reasons why I believe Google sought to control this space so effectively.
Just think about this for a minute. The financial markets react to news releases, earnings reports and the media. The media report on what they see happening with organisations, sales results etc. This whole value chain has an incredible amount of lag in it. Domain name traffic is a snapshot of the raw source of data at the beginning of the chain that the whole financial eco-system depends upon.
I wouldn’t be surprised is in the future a person in a billion-dollar hedge fund scratches their head and asks the question, “How do we get closer to user buying behavior?” The answer resides in domain name traffic.
The challenge for the industry is how to best unlock this information, package it up and then onsell it at a high premium…..or use it for ourselves. Ultimately, it’s the domain owners that control the destinations that need to be compensated for the risk they took in seeing the potential in one of the most amazing things in the world today….the humble domain.
The next time you look at your numbers ask yourself the question, “What else are they telling me?” This is what keeps me awake at night as it’s the future of the domain industry and one that puts a smile on my face.
Comments
Hi Michael,
Do you have any stats as to how much of Google's ad business comes from domains?
Do you know where that might be acquired?
Thx
There isn't any definitive data on this but my guess is that it's several billion dollars a year to Google.....of course, the industry only gets a small percentage of that.
Very insightful post.
"The challenge for the industry is how to best unlock this information, package it up and then onsell it at a high premium…..or use it for ourselves."
Any ideas you can propose that domain investors can get behind?
Also, the quality of parking providers and stat reporting from parking providers is low. Tools for analysis are low. So domain investors may have data, but 1) it is not of high quality and 2) they don't have tools to analyze it.
A basic analysis tool to rate or provide a score for each domain so domain investors can more easily identify valuable domains and/or valuable traffic information would be very helpful.
Hi Todd,
All good questions. I can only say that at ParkLogic we've been developing a platform over the last 2 years to do exactly what you're talking about. We score the traffic as it comes through, have a CMS to display a full website and then have backend reporting on the aggregated data.
It's very simple metrics. What is the domain conversion metric? Backed by Microsoft whitepaper? It's 4.2%
What is the conversion rate for Google search? 2.3%
So using 3rd party whitepapers direct navigation traffic coverts at twice the rate of
google search traffic.
Rick dumbed it down for everyone. When you type in cubic zirconia would you expect to buy a diamond?
Now lets move into a billion dollar industry. real estate. If a broker owns a city,or town domain and gets type in traffic for that city and it coverts at twice the rate of google search...including ppc why would any broker advertise on google? Trulia, Realtor or any other third party platform?
Remember the avg home is 300k with a 5% commission is 15K dollars. Every single real estate broker is to fucken stupid to understand this. And they keep pissing away millions of dollars on 3rd party platforms and at the end of the day own nothing.
I've always believed that Rick was a canny guy and now you've proved it. :-)
I couldn't agree with you more on this point....keep the comments flowing!