I’ve had many domain investors ask me what is the difference between domain traffic monetisation now versus five years ago. The best way to understand this is to use a simple mining analogy.
During the gold rush floods of people poured onto the gold fields in search of their dream nugget that would make them rich. They looked everywhere and in a number of cases, individuals found a mother-load of gold.
Then someone came up with the great idea of using a pan to “pan for gold” in creeks. They worked out that heavier gold nuggets would wash into the deeper parts of the creek and all you had to do was sort out the gold from the other rocks. More miners struck it rich with this innovation and gold fever seemed to be catching!
This is very similar to the early days of parking domains. Initially, all you had to do was find a domain with traffic and point the DNS to a parking company. Magic happened and you received a cheque each month.....cash was raining into the industry!
Now let’s move on with our gold rush…
As gold became more difficult to find miners moved from the creeks to digging shafts into the sides of mountains. They’d pull out the rocks and use a sluice to wash the muck to pull out the gold. The new sluice technology was incredibly innovative and made previously unprofitable mines viable.
In the domaining world it didn’t take long for individuals to realise that by using a complicated spreadsheet and a heap of “look-up” statements they could point some domains to parking company A while others to parking company B. This would then potentially increase the revenue but it required a lot of manual labour. It's the sluice but not full automation.
So where is the domain industry now compared to the gold rush? Right now, to extract all of the domain-gold we are driving shafts six miles deep into the earth’s crust. The crust is actually mass data and systems that plough through the muck and extract the gold.
So this brings up an interesting point….where are you in the spectrum of the domain gold rush?
Are you still putting all of your domains with one parking company because it’s easier? Are you using a traffic splitting system or are you digging into sophisticated analytics each and every day to extract every penny from the traffic?
If you are still parking all of your domains with one company then please let me know as I’d be reasonably confident that I could find a buyer that would be more than happy to relieve you of your portfolio. They would then take the domains and go up with technology curve to extract more value from the traffic.
Before looking at the following case study I will fully disclose that all of the data comes from ParkLogic of which I have a stake. I will also say that ParkLogic is a company that drives very, very deep shafts into the bedrock to search for domain-gold on behalf of clients.
At the end of July a new client came to us with a portfolio to see if we could extract any additional value from their domain traffic. Prior to ParkLogic receiving the domains they had been using a commercial rotation company to send the traffic to a number of parking companies. The baseline data from May 2015 was around $145 per day.
The first chart shows both the revenue and trend for the portfolio. It’s obviously a pleasing result for the client with the revenue continuing to increase despite the typical downturn that's expected during the USA summer.
The second chart shows the normalised RPM for the portfolio. A normalised RPM is VERY different from an RPM that is typically displayed in a parking company interface.
A normalised RPM is when the revenue is divided by the RAW TRAFFIC for the domain while an RPM is the revenue divided by the VIEWS. Why is this different?
Raw traffic is the unfiltered traffic that a domain receives while views is the raw traffic multiplied by some filter applied by the parking company. Since every parking company has a different filter then you get some very different RPM numbers that are quite often used as a marketing tool.
The fact that the normalised RPM trend is increasing indicates that more money is being earned for each piece of traffic. This is good news!
So what’s the bottom line?
By driving a really deep shaft into the data, so far, we’ve managed to increase the revenue for the portfolio by 27.35%. I’m reasonably confident that over time the portfolio will settle down to around an overall increase of 40%.
Not surprisingly, these numbers actually hide the true results for the portfolio.
If we were to take all those domains that displayed the same level of traffic as the baseline then the increase for them is actually 84%! For domains that had at least 80% of the traffic the number is a 62% increase. In other words, if there is the same level of traffic for a domain we knocked it out of the ballpark. These numbers can be viewed in the below graph.
Every domain investor needs to ask a simple question, “Where am I on the technology curve?” If you are still “panning for gold” with all of your domains at a single parking company then the data clearly shows that you are not getting the full value for the traffic. I would recommend to at the very least get stuck into Excel and get the sluice working for you.
I will be attending “DomainFest” in Macau later this week and also “The Domain Conference” in Fort Lauderdale at the end of the month. Feel free to reach out to me if you would like to discuss this further.