Domainer profit margins: Michael Gilmour of WhizzBangsBlog.com knows his business. He presented numbers (I love to see numbers) on Google’s traffic acuisition costs and the percentage of ad revenue shared between Google, domainers, and parking companies. Guess what? Google’s share has gone down (-29%), domainer’s have basically stayed the same (-3%), and parking companies revenues have increased around 45% (since Q4 2005).
What I love most about TRAFFIC East so far (on the second day) is how humbling it is for me. Many of these guys know what’s what and are exceptionally good at what they do. They are only beginning their adventures in the development space, but I suspect they will put today’s affilliate marketers to shame once they get going, and it won’t be simply because of their bankrolls.
What does it mean when domain parking companies are able to extract a 40+ percentage increase in ad revenue share from Google, while Google allows it’s own share to go down and domainer’s are not getting increases? It means Google needs traffic. It means domainers should lean on their parking companis, and challenge them to do better delivering the goods to their clients (domainers).
If you’re in SEO/SEM you know that, but did you really accept it? Was that knowledge you probably felt in your heart truly actionable info for you? Is your mid-term strategy based on the fact that Google absolutely needs more traffic than it has now, and is willing to pay for it?
Quality content will get rewarded. Professional committed web publishers will get rewarded, as fly-by-trend search engine spammers get dropped. Serious, commited efforts to increase the rich web experience for users will increase traffic, and will get rewarded by Google. I’ll leave for homework the question “How will Google reward such efforts”. Here’s a hint: T-R-A-F-F-I-C.
Word is, parked pages convert, but there are few standard metrics to prove it and a poor public perception of the quality of parked page traffic. I wonder, does that bad reputation come from the “talking heads” of SEM? Like I said, chatting with serious business people at TRAFFIC is humbling for me, and I wonder if those talking heads of SEO/SEM world are worthy of the impact of their noise making.
I had lunch with good people…. every meal, every break, every cocktail party so far has involved good people. The number one most obvious attribute so far is…. they do. They act. They execute. Keep it simple, and keep it going. Sound familiar? Of course it does. But how often do you actually see it vs. hear the words?
Dr. Christopher Hartnett of USA Global Link reminded the audience that entrepreneurs ar enot like corporate people. In 1926 a friend’s grandfather (a founder of Remington Amrs) bought an entire city block in Manhattan for $2 million dollars, as a means of securing the family wealth into the future beyond the success of Remington Arms? A four generation trust continued to buy property moving north from his city block. He bought 4,000 acres in Morristown, NJ as a back up plan, so that if there was a second Big Recession or real estate in Manhattan failed, the kids could live on the New Jersey farm and at least have food to eat. I used to live next to Morristown, NJ, and that property was sold off for $890 million dollars, still retaining 200 acres. The New York city block is still a depressed area not worth nearly what it could be worth.
This Big Picture story addresses our current perspectives, and how we base our “investment” decisions from our perspectives. Dr. Hartnett says your inner perspective is what you should follow, even though it is probably not well supported by those around you. In 1995 he looked at domains as real estate, and spent $5 million dollars building 5,860 websites in 1996. It was very difficult. People were negative, always trying to take away the dream. Don’t worry. Do what you know you should be doing.
He says there are 500 people in this room, and maybe 2,000 people in the world who own the potential of the explosive internet growth to come. He won’t sell any domain he has for less than $100,000 because they are simply worth a lot and more every day. Create a brand and the advertising potential in the 10 year term is unbelievable. A lunch table mate reorted moving 32 billion hits per month through his domain network. Right now. What will it be next year?
The world “global” translates into 16 languages as … “global”. The word “tv” translates into virtually *all* languages as .. you guessed it, “tv”.
How smart is this guy… I don’t wonder. Early industry equals no transparancy. Low transparency means arbitrage opportunities and profits for those who can execute on that. Maturity means increasing costs and bigger investments needs. That creates a development industry (e.g. real estate developers) who will be funded by larger entities that can manage risk (e.g. insurance companies). With that comes increased transparency and standards, which reduces margins. It’s all happening now for domains. It has happened in jewelry… as wholesale prices became known, the increased transparency created new markets, more efficient markets, etc. Opportunity to make profits exists in the interim, and we are in that interim period NOW. Wow.
Stuart Wood says development is 3 P’s : Plan, Passion, and patience. Enuff said.
Jonathan Boswell of LeaseThis.com says if you don’t actually do what your domain is about, then partner for the development with someone in that business. Good advice.
Here’s an interesting discussion of trademark infringement and parked pages… if you park e.g. igloo.com and the parking company does PPC and ads show for igloo coolers, can Igloo Coller company challenge the domain name rights via a UDRP and take it away? Yes, they can. generic domain name, but used in an infringing way, with no real case for it being used for non-infringing use. Bummer. Happened to the registrant of unlv.com, which was taken away.