Articles associated with managing domain assets.

Successfully Outsourcing Your Domain Management

I was speaking with a client that had been with ParkLogic for many years and they asked me to conduct a complete review of their portfolio. Without giving away too much about who the client is I thought that I would share some of the history and the results of the analysis.

The client initially had a team of people managing their domain portfolio for them. When they moved their domains over they ended up letting these people go or reassigning them to other projects as they were no longer required to manage the domains.

Escrow.com

I want to be right up front and say that I'm one of the founders of ParkLogic. Despite this, I found the results that we achieved for the client incredibly revealing about how a properly managed domain portfolio can produce huge rewards for investors. They completely outsourced the entire management of the portfolio to ParkLogic and this is what was acheived for a 4 years period.

 

So across the last 4 years the results can really be summarised in four simple charts.

 

Graph 1

 

The first chart shows the number of domains in the portfolio steadily dropping (orange line) as we managed out the non-performing. We had established a set of business rules with the client that we applied to the domains as part of the dropping process.

Naturally, the revenue declined as the domains were dropped and the industry overall declined. The portfolio went from doing around $38K/month to $28K/month or a decline of 27%. Given that many of the domains that were dropped had some revenue this decline was expected.

During the same period of time the domain industry experienced a MUCH sharper decline in revenues. It was through our technology and processes that we were able to bolster the earnings and cushion the major decline for our client.

The key line is the revenue per domain (the blue line). As seen by the dotted trend line it is sharply trending upwards in an almost linear fashion. The average revenue per domain per month has moved from about $1.75 to $4.48. This is an increase of around 256% which is an outstanding result that we see continuing into the future as we release new capabilities on the ParkLogic platform.

Graph 2

 

The second chart gives a picture of the financial position of the portfolio for the past 4 years, both 2011 and 2014 are partial years. The expense line includes all registrations and ParkLogic management fees. The fees cover optimisation, registration management and first line of call on any legal matters. The client no longer has $150K-$200K per year in staffing costs.

Although the revenue has declined the profit appears to be reaching an asymptote as the decline in costs are matching any declines in revenue.

Graph 3

 

Chart three shows the decline in renewal costs as we applied the agreed business rules to the portfolio for domain renewals. The bump up in 2013 is a timing issue on registrations and a portion should really be attributed to both 2012 and 2014.

We see a lot of domain investors renewing domains that are completely worthless and this directly impacts the profitability of the investment. We now have the portfolio at a nice stable base of profitable domains and the number that are being dropped each year has diminished greatly.

Graph 4

 

The final chart sums everything up. The profitability of the investment is trending upwards from 243% to 335%. As mentioned earlier, the cost of the staff that were laid off as the client outsourced to ParkLogic is not considered in the profitability calculation.

So during a tumultuous period of time for the domain industry ParkLogic managed to increase the profitability dramatically. In addition, the client no longer has to worry about the portfolio and waste their time managing their domains…..it’s been completely outsourced. All they have to do is count the money and receive an quarterly report for their board.

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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
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Revenue Leakage

Two words that you really don’t like to see in the same sentence is “Revenue” and “Leakage”. This is a polite way of saying money that you should have been earning that you really aren’t. I have conversations with people day in and day out that revolves around how to stop the leakage and make more money….so what I have learned over the years.

Revenue leakage comes in many, many forms. It could be that the domains aren’t installed correctly at a parking company or they’ve been moved out of your account at a parking company (this happens a lot). The nameservers aren’t set correctly or cNames aren’t up to date if you are using a rotation service.

The most obvious revenue leakage is forgetting to add your W8/W9 tax form or even your bank details to your parking account. I don’t know how many times I’ve received an email from a person accusing me of taking their money and not paying them. I check their account and they’ve forgotten to provide bank details. Their tone usually changes dramatically at that point.

Escrow.com

Another form of revenue leakage is not actually knowing what you own. The problem with domains is that they’re just so easy to forget about, drop and then lose. We had a client that had their domains littered across about fifty registrars and they had no idea what was going on. They asked for our help and over the next year we aggregated the domains into a single registrar, locked them down and saved them a fortune.

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Tracking the Data

So what does it mean to properly manage your domain assets? Some people believe that as long as you're earning PPC revenue, renewing domains and getting sales then all the bases are covered. These are important things to consider but let's unpack things a little.

Traffic revenue is money generated from the people that are going to your domains and clicking on advertising. There's a few things here that needs to be nailed down on a daily basis:

1. Aare the nameservers pointing correctly? These are often changed at renewal time by registrars.....especially if you are slightly past the renewal date.
2. Do you need to set cNames for routing traffic? cNames are used to route traffic to Google parking companies if you have a traffic routing system.
3. Are the domains in your parking account? Conflict resolution is a huge issue for parking companies and domains can often be inadvertently removed from your account if someone else believes that the domain is owned by them.
4. Keywords - are they the best ones and do they need to be updated?
5. Are there any other optimisation levers that you can use to extract more value from the traffic?
6. Is there are way to aggregate your traffic with others to get a better deal?

So this is just a few of the things that you need to consider to manage your traffic domains.....now let's look at sales......

1. Have you responded to all the sales offers? Most offers are SPAM so you need to spend some time wade your way through the good and the bad.
2. You've had a successful sale, now there is the whole Escrow and transfer process. Sounds easy but you need to remember to do it.
3. How do you work out the sales price for you domains? Is there an automated system or should you use your experience?

I could go on and on with the sales list but here's the really big one and it's often the most ignored......asset management.

1. What did you buy the domain for?
2. What did you sell the domain for?
3. What is the inventory carry value for the domain?
4. What system are you using to appraise the acquisition of a portfolio of domains, individual or average cost pricing?
5. What is your capital gains tax position at any point in time?
6. How are the domains locked down and where are they?
7. Renewals and on what basis is a domain renewed?

This last category is just as big if now bigger than sales and traffic tracking and it can have an even bigger impact upon your earnings then the first two. If you don't get asset management right then you could end up in trouble with the IRS (tax authorities).....so don't ignore this one.

I can only speak about the fact that at ParkLogic we track over 250 different metrics every single day for our clients. It's a true domain asset management platform that also optimises the traffic and helps you increase sales. What I've learned over the last decade in this industry is that effectively managing your assets can provide huge dividends for your business.

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