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.

I will post here and there live from the TRAFFIC East domain conference, because the overlap of SEO and domaining is just so darn interesting I can’t help myself. This is just one of those posts from the floor of TRAFFIC  East in Hollywood Florida…. 

LeaseThis.com notes 2 separate camps meeting at the Google/Yahoo! trading post these days: Fortune1000 with big money, long investment cycles, and futures-research based vision, and domainer entrepreneurs with rapid change, independent strategic thinking. Kleenex didn’t want to be known as “tissue” and so had no interest in tissue.com. Domainers proved that “being” the definition of tissue on the Internet is extremely valuable. They are now called “domain assets” instead of domain names over at LeaseThis.com, because both camps understand that nomenclature. It’s not about clicks and uniques, but sales and conversions. When you look at sales/conversions, domain assets make sense to both camps.

There’s an office game over at LeaseThis.com… something like “how insane a URL for an advertisement have you seen” game. Instead of a short, memorable, generic defining domain name tied to a commercial campaign, many companies still use bizarre, long, difficult to remember “insane” domain names. We’ve all seen them, right? Add yours to the comments just-for-fun.

Adam Dicker from High Impact Sites… the future is relationships. Domainers are focused on acquisition, and missing the opportunity to make relationships that enable development. Planets.com should build a relationship with Discovery Channel, for example.  During the morning session he got an email offer to buy his domain zzzp.com for $1000. It is a nonsensical name in which he saw no value himself, but obviously somewhere someone values it at least $1000. That’s how it works. Adam says next 4 years is big for domainers.

Owen Frager has a blog… TheFragerFactor. Why it’s on blogspot I can’t explain, but his bio says he’s a creative strategist with a history of successes driving commerce through brands. I’ll try and meet him later and ask him myself, I promise. Sprint spent 1.8 billion in advertising and failed as a business during the same period of time. Hyundai ran a campaign branding a BigDot something or another without owning the domain. By the way, they lost sales over the two months of what they called a successful advertising campaign.  He notes NowWhat.com selling insurance where brand names like AllState wouldn’t convert nearly as well…. and he’s right. FreeCreditReport.com sold 20 million subscriptions via advertising FreeCreditReport.com to the public. he calls it “Direct Response Advertising”.. I think we call it offline promotion for affiliate income. Whatever. The Solgar-owning supplements company has 20,000 products in it’s marketing inventory… most with bad names. That’s a need for 20,000 plus domain names, no? Someone needs a matchmaker.

Leland Hardy’s NewYork.com is the “World’s Greatest Website” and does little promotion. It represents over 4,000 site seeing tours, and 70,000 hotels. Nice affiliate business. Oh, and he’s from Philadelphia, not New York. Go figure. His original concept for NewYork.com? A personal shopper service to help people who come to New York find the counterfeit shops on Canal Street where they could buy Gucci watches for $5. Even wrote a business plan around that, although he never built it that way. They key to success? Developing direct relationships with the tour companies and hotel operators as a referring affiliate. Smart man, that Leland Hardy. Oh, and by the way, he owns a domain asset NewYork.com that, for some reason, is worth a helluva lot of money. Let’s say it together….. “nice”.

By the way, did I mention that there is an outlet strip every 4 feet at TRAFFIC 2007? Nice.

Ron Jackson notes he is very, very positive about the domain industry. No kidding. Someone estimates a 37% growth rate for advertising in the domain channel alone next year. Up to 60% of every new ad dollar spent will be in new media. Ron owns DNJournal.com, as everyone knows. He’s such a bright guy I love to read his site, and he’s very supportive of the “human capital” of the domain industry. Nice read.. I totally agree. At last night’s cocktail party everyone I met was a domainer, but I didn’t meet anyone who wasn’t also a venture capitalist, private equity partner or fund manager, brand or trade executive, or otherwise a successful, informed, and involved high level executive (discounting myself, of course). Ron says things like how likely it is that the next American Billionaire is likely to come out of this very room. Ron says he gets so excited at TRAFFIC he can’t sleep well when he’s here. He supports the ICA initiative… noting the millions of asset value needing protection. As Howard Neu said after Ron finished speaking, “Excellent as usual Ron, thank you”.

Ammar Kubba says everything is looking good right now, and reminds everyone to “provide a high quality experience for end users and advertisers”. Educate people about where the traffic is coming from, because he believes parked domains are getting a bad rap in the press and word of mouth.

Peter Lamson of BuyDomains sold 80 domains for $200,000 in revenue last month (where domains start at $700 and go up). Global small business demand for domain traffic via domains. Drivers are online ad spend growth and the coming online of the global small business sector. The demand for brandable domains is MASSIVE.

I will post here and there live from the TRAFFIC East domain conference, because the overlap of SEO and domaining is just so darn interesting I can’t help myself. This is just one of those posts from the floor of TRAFFIC  East in Hollywood Florida….

Preserving the long term value of domain names for domain name registrants.

Who funds ICANN?  Domain Registrants do. And are domain registrants represented to ICANN? No. Unbelievable, but true until the ICA (Internet Commerce Association) started last year. It needs more grass-roots members.

Who lobbies for changes to the domain name dispute resolution process (UDRP/DRP)? Nobody on the domainer side… nobody on the webmaster side. But there are serious lobbies working to change the domain registration process on behalf of trademark groups (think Disney and RIAA and the like). Who will counter that lobbying action? SEMPO?

Howard Neu (a lawyer spcializing in domain issues) says that every domain out there violates or will violate someone’s trademark, somewhere. And the system is set up so that in the case of a trademark violation, the domain is taken away from the registrant and given to the “winner” of a trademark dispute. You all know that. What do you do to protect your long-term asset value? Of course you can file your own trademarks, which is good, but doesn’t insulate you from a dispute nor guarante you protections from someone else with a trademark, especially under the proposed “new” dispute rules being proposed by those RIAA-like trademark groups.

Philip Corwin of the ICA notes that special interests (corporations and large trademark interests) are trying to change US law as a lead in to changing International trademark rules, including a significant adjustmentof the current dispute laws that will make millions of domains subject to trademark dispute. No oneis representing the individual domain registrants, except the internet Commerce Association (ICA). The new DRP for new top level domains will be much different from the current UDRP process, favoring trademark interests (think of the RIAA as an example). The word is they will then push to move the new DRP back to exsting top level domains, accomplishing their overhaul of the intellectual property rules in favor of RIAA-like companies, much like Disney works copyright rules in its favor.

Think about it… if a 4 letter meme within your domain name is “confusingly similar” to a 4 letter acronym of some organization in the world somewhere, you may become subject to a trademark dispute under the proposed DRP rules. Your domain might be “given” to that entity, with no legal recourse for you. How about this one… if your domain name (or part of it) is deemed to “offend morality or public order”, then it is fair game to be taken away. That’s the language in the new proposal. Huh?  Are they serious?

Yes, they are.

And the ICA is trying to be the entity that protects domain registrants’ asset value in that now-very-politicalprocess. What else does the ICA support?

No more domain tasting… ICA agrees and supports the idea of eliminating domain tasting. From where I stand, that’s a good for all of us. Also no more registerFly’s… ICA outed the RegisterFly problem, where domain owners were losing their domains to a failing registrar that allegedly worked loopholes to avoid responsibility despite having been an accredited registrar. Do you see how ICA is protecting your long term asset value?

The ICA is new and needs funding to get established. Individual membership is somethinglike $295. Friday’s domain auction is expected to move between 10 and 20 milion dollars. I am wondering, why isn’t there a small mandatory ICA fee on domain auctions? What’s $500 on a $500,000 domain? What’s a hundred bucks on a $10,000 domain? Isn’t it like insurance, in a sense? A portion of ICA support is tax deducatle.. currently that portion is 80%. Seems like a no-brainer to fund the ICA, doesn’t it? Even if you flip your domain and suffer tax/asset/capital gains issues, the ICA portion is 80% deductable, no?