The domain industry is fascinating. I have enjoyed being involved in events that
are both educational and productive for Click Forensics and me. The latest event is the TRAFFIC conference
held this week in “The Happiest Place on Earth”, Disneyworld of course!
Everyone seemed happy (even though there wasn¹t a Starbucks anywhere to be
found!).
The domain industry appears to me to be at a
crossroads. While the value of names
continues to rise, the earnings from monetization programs are falling. Domain
owners and parking companies are struggling to gain more transparency from
Google and Yahoo. Today, there is essentially no transparency. Traffic from domains is sent up to Google and
some amount of money is paid for the traffic. While agreements regarding
revenue shares can be negotiated up front, without the ability to see inside
the black box, the monetization metrics are a mystery.
One speaker at this conference has a deep
understanding of this issue.
Michael Gilmour runs whizzbangsblog.com from his home
in Australia. I heard Michael’s
presentation and had a chance to speak to him at an after party.
He spoke candidly about the risks that the industry
faces from the search engines black box approach. “The lack of transparency in the whole
process means that they are accountable to no one,” Gilmour said. He accurately pointed out that, “Google has
been progressively reducing its network traffic margins from a high of 22.1%
(Q1 ‘06) to low of 11.9% (Q1 '08).” What
this means is that parked domain companies and site owners are being
squeezed. This is a trend that will
continue. Advertisers are demanding
higher quality traffic and Google has had a hard time delivering that from low
quality traffic sites like MySpace.
Enter the parked domain channel.
Gilmour has written a series of blogs addressing this
issue. The eight part series can be
found on his site at www.whizzbangsblog.com. In it Gilmour says, “Google is able to
launder a lot of bad traffic with good traffic and make it all pay the same
while they themselves can discriminate on what they pay out.”
There is a lot of great quality traffic that comes
from direct navigation domains. This is
an industry with lots of smart folks and great ideas to help advertisers sell
more stuff. It will take cooperation and
transparency to build value in the domain space. As Gilmour says, “Unless they (the parking
companies) are able to audit Google, then they can't ever be assured of their
share of the revenue.”
Without cooperation,
transparency and standards, future conferences may not be as happy as this one
was.