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

Part 3 - A History of RPM

Two titans inadvertently impacting each other.

Please click on the below link to view the first two parts of A History of RPM:
Part 1 - A History of RPM
Part 2 - A History of RPM

The volume of domains being dropped was so high that Verisign found it was being buffeted by the Google margin grab. During this time, you could track the impact a one cent PPC drop would have on Verisign’s revenue line.

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I remember conducting an analysis that concluded it would be financially viable for Verisign to underpin the entire domain investment industry so domains weren’t dropped. From memory it showed that every domain dropped cost Verisign $73 of market capitalisation. By underpinning the PPC payouts by diverting marketing dollars directly into the monetisation companies Verisign could halt the tsunami of drops from marginally profitable domains.

Several years after the GFC Google had reached rock bottom with the margin grab. I can only surmise that if they kept on increasing their margin then the partner network would essentially collapse. This would not be a good thing to happen right in the middle of rumblings about monopolistic behaviour at the legislative levels.

What we shouldn't miss in this whole saga is that Google's behaviour has been completely economically rational. They have the interests of shareholders to consider and not the domain industry. Those domain investors that moaned about what Google was doing needed to make changes to their businesses and do something different.

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Part 2 - A History of RPM

This is the second in the series on "The History of RPM" and refers to the forumula discussed in Part 1.

RPM formula

Please click on the below link to view Part 1 of a History of RPM:
Part 1 - A History of RPM

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A number of years ago, one domain parking company (Domain Sponsor) controlled a HUGE volume of traffic and ruled the industry. Using their market power, they began to dictate terms to Google. Although I wasn’t privy to internal discussions, I could view Google’s response from an external perspective.

Since a contract was in place Mg was VERY HIGH and Google was bound to pay a bonus for what they previously thought would be impossible high traffic levels. This created a virtuous spiral for Domain Sponsor. As payments increased, they sucked in more traffic, climbed the tiers and they then increased payments further etc…..well, you get the idea.

What did Google do? They shattered the market by issuing a whole lot of new contracts (eg. Parking Crew, Internet Traffic, Voodoo etc) and wrote contracts that provided sunrise clauses to new players, so the traffic was sucked out of Domain Sponsor and the tail was no longer wagging the dog. They then rewrote the contracts with shorter terms and different values for Mg.

For those of you that are familiar with Domain Sponsor you will also know that it no longer exists. This could be blamed on a whole variety of reasons from bad management and VC driven outcomes through to Google but the fact remains that the once king of the domain industry was dethroned and ground into the dust.

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Wolftalker
23 September 2019
mgilmour
Thanks for that! I try to be as interesting as possible by providing a different perspective on what is often treated as the munda... Read More
23 September 2019
Guest — boboli
Thank you for the tutorial and history. Is there anything good about Google, dominant a player as they are, having such control o... Read More
24 September 2019
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Part 1 - A History of RPM

Getting a fuller understanding of RPM

In this series of articles, I plan on sharing my insights into RPM and how this metric has impacted all our lives in the domain industry over the last decade. I hope you enjoy the articles as much as I have writing them.

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For those of you that are unaware, RPM means Revenue Per Thousand Visitors. I find that very few people understand how this universally accepted measurement term is calculated and how it can vary from one provider to another. During the following articles I will be referring to how RPM has shaped the history of the domain industry….

Most people would be aware of the formula for a domain’s RPM looks like the one below:

Simplistic RPM formula

This looks simple enough until you begin to dig into it. The reality is that a sustainable market RPM formula it looks something more akin to the following:

Extended RPM Formula

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joezeppy
Hi Mike, You're a show off but I mean this in the most positive way. I love this stuff. LOL
24 September 2019
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apTLD Here I Come!

Leaving on a jet plane...

Once again, I find myself sitting in the Qantas Club waiting for my international flight connection to head to Singapore and apTLD. The first thing that many of you will be asking is what the heck is apTLD? apTLD stands for Asia Pacific Top Level Domains.

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I’ve been asked to speak at apTLD and to fly the domain investor flag to the ccTLD registries that will be present. Many of these registries don’t even know that domain investing exists so it should be an interesting education for both them and me.

I must admit that since it’s a short, day flight (only 8 hours), I’m looking forward to getting some work done, have a rest and generally let the world go by. The magic of noise cancelling headphones will block out the planes engines as well as the tap, tap, tap of my fingers on the keyboard.

This is the first trip for me after the northern hemisphere hiatus and I’m really looking forward to catching up with old friends and having a chat about business. I’ve always found that during July and August it’s a great time to do some development work rather than chase people who would much rather being enjoying the sunshine.

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Why domain traffic is so valuable

Getting to the real value in domain traffic.

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.

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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.

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joezepy
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 acq... Read More
16 August 2019
mgilmour
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 indu... Read More
17 August 2019
Guest — Todd
Very insightful post. "The challenge for the industry is how to best unlock this information, package it up and then onsell it at... Read More
17 August 2019
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