In this blog I’m going to be a little like Rick Schwartz and have a rant. Many domain investors make the mistake of assuming that domain parking is dead and the only real business model is available to them is domains sales. Is domain parking dead? No, it’s not dead but for a growing number of investors it’s morphed into something a lot more sophisticated.

One of the strengths and weaknesses of traditional domain parking is that behind all the smoke and mirrors lies Google. Google buys a lot of the domain traffic because they have a huge breadth of advertisers. If you have a website that is about "Norwegian Knitting" then it’s likely Google can put relevant advertisements on the page.

The weakness of traditional domain parking is that Google has manoeuvred itself into an unassailable position and has then exploited this position by continually reducing pay-outs. Domain investors shouldn’t be surprised by this behaviour as it’s economically rational in a world that is driven by quarterly earnings calls….so stop complaining and just get over it.

Notice what I said earlier…..Google buys a lot of the traffic. Just because Google is wanting to buy your traffic doesn’t mean you have to sell everything to them. It would be far more sensible to only sell to Google what Google is paying fairly for and then sell to other people what they want to pay more for.

What I've found is the majority of domainers are like a person selling a bucket full of oranges. The buyer (ie. Google) asks if you can throw in your car with the deal and with a grateful smile you say “yes”. In fact, it’s a bit worse than that. Domain investors are selling oranges and Google takes the car without asking because they believe they deserve it. Remember they still only paid orange prices for your car.

I received an email the other day inviting me to spend some time on a panel at a conference discussing the impact that Zero Click has had on the domain monetisation industry. It should be said that I like data…..touchy feely stuff is all well and good but getting a return from your domain investments is all about getting dirty in the numbers.

First of all….what is zero-click? Zero-click advertising networks bid in real-time to get access to traffic. In the case of ParkLogic, there may be a dozen or more companies bidding for each piece of traffic every hundred milliseconds or so. The winning bid must outbid every other bidder AND also the best traditional parking solution to receive the traffic. This is all good news for domain investors.

So after receiving the email about the conference I decided to do a dumpster dive into the data and out popped the following chart about the impact Zero Click advertising networks have had on domain monetisation. The data goes from 1 November 2017 to 25 July 2018. I should say that we deal with many traditional parking solutions and zero-click companies and the numbers are aggregate of all of these.

 
The chart comprises of three lines with two trend lines on the orange and grey series. The orange line represents the percentage of revenue that is now going to zero click companies and uses the right-hand axis. The trend is clear….it’s headed upwards.

I had a discussion with a domain investor today that went like this….."Michael, ParkLogic isn’t performing for my portfolio so I’m going to stop the test.” I replied, “Let’s take a look at the numbers and understand what they are saying.”

We have a standard report that compares a baseline for domain names versus the most recent data. It only took a few minutes to identify the problem….it just so happened that out of over one hundred domains there were five that were pulling down the results for the portfolio.

Without the five domains there was an overall 63% performance increase. Our recommendation was to move the five domains that were pulling down the results and re-baseline them to see if it just so happens an advertising has gone missing during the USA summer period. If the domains popped back up then it was a great win for the client.

Getting into the numbers is key to assessing the performance of a domain portfolio and yet, so many domain investors don’t understand how to do this. The question that I constantly ask is “Why?”. Why are the domain not performing? Why are the domains performing? Why is company X winning the traffic? Why is the traffic going down? Why is the traffic going up? Why are/are not direct advertisers bidding on a domains traffic?

It’s asking the “Why” which leads to a fuller understanding of the overall portfolio performance. For example, without those five badly performing domains there was an overall revenue increase of 75% for domains that had at least 80% of the traffic compared to the baseline. Anyone would have to agree this was a great result!

For those of you that listen to the naysayers and believe that monetising your domain traffic is dead then think again. The reason why domain traffic continues to be valuable is because advertisers want to reach potential customers.

This demand for quality traffic has continued to increase while the volume of high value traffic has decreased as domains were dropped. Since the supply is diminishing and the demand increasing then the price paid for the traffic has gone UP over the last few years.

The question has to be asked, “If the price being paid by advertisers is going up then why are most domain investors experiencing a decline in their traffic based revenues?”

The answer is really simple. The advertising aggregators (of which Google is the largest) is taking a bigger slice of the pie. Ask yourself a really simple question, “How much of your earnings are exposed to Google?”

If the answer is “a lot” then don’t be surprised by the decline in your earnings. Albert Einstein said the definition of insanity is doing the same thing and expecting a different result. Are you doing the same thing as you’ve always done?

So how do you get an improvement in your results? I like to think about this in a similar manner to the gold rush. Many years ago, a farmer stubbed their toe on a rock, only to discover the rock was a nugget of gold. This was like the first domain investors monetising their domain traffic. It was an awesome time of easy money!

Getting to a definition of traffic quality is one of those elusive things that’s quite often difficult to pin down. It’s almost like discerning the difference between art and pornography…..you know the difference when you see it.

Advertisers pay huge sums of money for quality traffic and shy away from garbage. The question needs to be asked, “What’s quality?”

Some have answered, that’s easy! It’s real human traffic. I agree that we need to do as much as we can to remove all the automated bots but just having “human” traffic doesn’t necessarily define it from an advertiser’s perspective.

For example, let’s imagine I directed real humans from China to an USA based company’s website. My guess is the US company wouldn’t be too happy with paying for all the Chinese traffic…..why? The traffic didn’t convert for them.

Now we are defining quality as traffic that converts. Strangely, this definition means the risk associated with conversion is pushed back to the traffic provider and not the websiteowner. From our example above, if I’m now only sending US traffic to the US based company then they should be happy…..well, maybe.