Risks vs Business Models

• Risks depend upon the business model being adopted.

• Each business model has its own risk profile that will or will not suit the domain owner. For example: stock items, high value sales, traffic and development.

Risks To The Domain Name Industry

• Advertising aggregators (Google / Yahoo)
• Traffic Aggregators (Parking)
• Domain Sales Models
• Regulatory and Legal

Regulatory and Legal Risk

• Every domainer needs to evaluate their portfolio from a legal risk perspective.
• Asset protection is crucial to long-term success.
• ICANN & Registries will change the rules.
• Get rid of those domains that are unprofitable and with legal risk

Revenue Share

• Google is paying less for traffic
• Based on calculations looking at the mean (curve) the average cost of traffic is 27.9% (what Google pays network partners) and the domain Industry gets 17.6%

Rules For Dealing With Advertisers

• Quality: Google and Yahoo will smart price your whole portfolio up and down.
• Watch out for fraudulent behavior.
• Do not put high paying non-performing keywords on high volume low CTR traffic.
• Match advertisers to traffic.
• Its no longer good enough to set a keyword and never touch the domain again.
• Think about how our behavior effects the advertiser.

Measuring Performance

Parking companies use different metrics. For example, how is an IP address measured?

• 18 Hours - Parking Company 1
• 24 Hours  - Parking Company 2

I backordered two domains (com and net) last year that were closely linked together by topic. Both of them were parked at a well known parking company. While both domains got a bit of traffic, they just werent converting. To be honest, I probably could have sold them on DNF for $XX, but I just don’t have the time.

Another domain name I won at auction many years ago has been declining in both traffic and consequently revenue. In 12 months to date its made US$4.50 on a very popular topic. In my book, that’s not enough, so I decided not to renew any of them!

The domain names are now gone, expired, thrown back into the drop. Some domainers that I know would have a heart attack and say “But you could build a site around X and use Adsense and blah blah blah”. But do you *REALLY* have the time to do this? Are you *REALLY* going to do it anyway?

What are your thoughts on this? When do you draw the line and say, enough is enough?

This happened again to me last week. I won an auction for a .us domain name. Now, I wouldn’t normally buy a .us domain. This is in fact my first, however it was a single English word AND was also being used as the name of a product line. How could I not buy it? So what happened?

Date Won:      9/8/2008 12:28:00 PM
Yours On:      *9/16/2008 12:00:00 AM

The domain name I won was parked at Godaddy when I purchased it. I must admit, I was quite irritated by the fact that I have to wait 7 days while the parking revenue, from a domain that I purchased, went to Godaddy. As I type this; 6 days later its still parked at Godaddy.

The 7-day grace period has been discussed in many forums, but without an explanation from Godaddy. As such, I asked Godaddy for an official view on this particular issue. While I’m not going to name specific individuals, Godaddy was both highly professional and very responsive.

Here is their unedited view, in full:

“When a domain name expires, the original registrant has a 42 day grace period to renew or redeem the domain.

If the customer has not renewed the domain name 26 days after expiration, the domain is sent to auction through TDNAM.  The auction for the domain runs from the 26th day to the 36th day of the domain’s expiration.

As the original domain registrant has 42 days to renew or redeem the domain, there is a 7 day grace period from the end of the auction (day 36) to the day the domain is no longer available to the original registrant.  While there is a chance for the domain to be renewed by the original registrant, many auctioned domains bid upon are awarded through TDNAM.

When a TDNAM bidder enters an auction for an expired domain, TDNAM states on the bid page (as part of the terms and conditions) the original registrant still has the opportunity to redeem the domain name.”

There you go. It’s pretty self explanatory. If I was to summarize it, I’d say that buy the time a domain expires, Godaddy has a buyer and cash in the bank from a) parking revenue and b) the auction process.

While it might irritate people having to wait 7 days, when you take the time to understand it, it makes good business sense. That’s Bob Parsons for you - which is why I have his 16 Rules for Success poster on my wall.

Like a kid in a candy store, I quickly visit the Network Solutions website to check that everything is ok - but I can’t - their web site isn’t accessible. Grrr… Unfortuantely I can’t make any DNS changes to park the domain name. But then again, should I even have to? If you use Snapnames, you can go into your settings and nominate default DNS servers. Not in this case - I won using NameJet! Network Solutions has my beautiful domain name, parked with their ads! Noooooooo!

Lets look at their cashflow model:

1. Sally buys name at Network Solutions = $$$
2. Sally doesn’t renew her name
3. Network Solutions provides NameJet with the ability to auction the domain name = $$$ ?
4. John wins the auction and pays NameJet = $$$
5. The domain name is parked at Network Solutions until the owner changes the DNS = parking $$$
6. The domain name is renewed by the new owner = $$$

How the role of a domain name registrar has changed!

• Lack of understanding of the industry amongst the media and the general public.
• Introduction of legislation by governments.
• Trademark and copyright issues.
• Lack of active industry associations.
• A few bad eggs….

Over the next few weeks I’ll be discussing these issues at length and what we can do as individuals and as a group, to combat these threats.