2018 - The Year That Was...

At this time of year, I like to spend some time reflecting on the state of the domain industry and in particular what I’ve been up to the past twelve months. Let me say from the outset that I’ve seen a LOT of changes take place and from my perspective most of them have been good.

Development
At the end of 2017 I wrote about a project that I was working on that took domain development to a whole new level. Internally we now refer to this project as “Sites” and it’s now integrated into the main ParkLogic core systems.

Along the developmental journey there were a number of critical factors that needed to be resolved. Without revealing too much, amongst many other things, “Sites” now contains:

1. A flexible templating system to display landers that is very different compared to any of the currently available platforms (eg. Word Press, Joomla etc.). Widgets can be placed anywhere on the page and they both display information to the user AND also pass data back to the traffic quality system.
2. A quality system that used both web and behavioural analytics to determine the quality of the traffic being received by a domain. Each and every piece of traffic is scored appropriately, and this score is aggregated at the domain and account levels.
3. A reporting system that produces actionable reports based upon analytics at a dashboard, domain and traffic level.
4. A fully configurable API so that any data can be pulled from any “Sites” server and then analysed by either “Sites” customers or the ParkLogic team.
5. A back-end administrative interface that provides the necessary data for managing massive numbers of instances of “Sites” as well as assisting in determining more optimal monetisation solutions.

At the moment “Sites” processes around five million queries per day and in 2019 we see it continuing to grow as we focus our analytical skills upon it. It’s been quite a journey since its inception and it’s definitely not over yet….not by a long shot. When you control the page there’s a HUGE amount that is possible and this innovation will flow on as a direct benefit to ParkLogic clients.

Traffic Monetisation
We are continuing to see substantial growth in both traffic volumes and value as advertisers become more sophisticated and gain access to valuable domain traffic via direct channels. During the last few months of 2018, after a LOT of analysis, we made substantial changes to the ParkLogic traffic routing algorithms and we anticipate this will provide a step up in revenue into the new year.

I was recently asked the question, “When is a domain optimised?” My answer has always been the same. Domain traffic is so dynamic that we never stop working on the traffic to see if there is any possible way that greater revenues can be extracted.

If you think you should lock in the nameservers for a domain because you’ve found the highest paying solution, then you’ll be mistaken. What you may have discovered is the highest paying solution at an instant in time. Our goal is to find the best paying solution at every instant in time.

Domain Sales (stock items and high value)
I’ve always found domain sales to be less scientific and more opportunistic. As some of the online marketplaces have done, you can always weight the probabilities of a sale by bringing together both the buyersand the sellers but ultimately domain sale revenue is governed by:

1. The global demand for domains.
2. Overall domain supply.

While the global demand has been relatively static (at around 5%) the supply has reached saturation point with the massive influx of new gTLDs. Although this has not greatly impacted high end .com domains my impression is that middle to lower tier domains have had a difficult time in 2018 justifying their pre-new gTLD pricing.

This should not have been a surprise for domain investors as prices will always suffer in any market where supply is dramatically increased. I should also note that the almost complete exit of Chinese domain investors that artificially boosted prices in 2016-17 didn’t help the situation in 2018.

I actually believe the domain sales model is in desperate need of innovation. Bringing both the buyer and sellers together is one thing but there is so much more that can be done once this is accomplished.

For a start, accurately pricing domains based upon demand data is imperative. In my opinion, using “market comparables” for pricing is a very strange thing to do when you consider the entire selling point of a domain is that it’s unique. By using “comparable” domains you’re telling a potential buyer there are other domains they should be considering!

As a by-product of accurate pricing is the cleaning out of domains that have little to no value to end users and as a result end up as expense items for domain investors. From what I see, no one is advising investors to drop domains because they are worthless. This is effectively clogging the aftermarket with garbage and dramatically increasing buyer fatigue.

I don’t know about other parts of the world but when I go to the supermarket, I don’t see 50,000 different types of breakfast cereal. I see, maybe 20. If you put 50,000 in front of me, I’ll end up having fruit for breakfast because too much choice makes me choose nothing.

So there you have it…..my thoughts on 2018 and a few on the year ahead. There’s one thing  for sure, 2019 will be an exciting year for the industry with NamesCon kicking off the year in just a few weeks’ time.

I would like to take this opportunity to thank you for reading whizzbangsblog. You continue to inspire me to write about our great industry with your comments, insight and personal feedback. After more than a decade of blogging I will continue to write because you continue to read.

I wish you and your loved ones a Happy New Year.

Michael Gilmour