Facing The Absurd

The domain business is still about parking. That is still where the money is made and if you haven’t realized this yet, then you are getting something wrong. In many ways a large part of the aftermarket is held up by the parking business as parking earnings are reinvested etc.

In many ways, parking hasn’t really evolved over the last 5 years too much. It’s still quite similar. Parking companies are an entity that acquire an ad feed and are a mediator between domainers and the upstream ad providers such as Google and Yahoo. They ad a little twist with optimization etc but that’s it. Nothing fundamentally has changed over the last 5 years.

What is starting to happen and will continue is a margin squeeze for parking companies, it’s not really an envious spot to be in to be honest. A significant catalyst to that are services like Above.com (great service btw, really recommend it). Plain and simple, they send your traffic to wherever it pays best in an automated fashion. Hence parking is really becoming just a commodity because domainers are going to send their traffic simply where their traffic pays best. This should force parking companies to inovate more but also will force them to cut their margins. At least some good news to domainers!

This is really happening now and will grow even more so in the future (that is if evil Google doesn’t force the ban of redirects). DomainSponsor is now receiving more than 10% of it’s publisher traffic via Above. For namedrive I estimate it’s likely to be more like 20%. That’s a lot of revenue.

Parking companies should quickly realize that they have to start inovating more to be able to get more traffic from domainers. They should look into alternative forms of monetization like zero-click, lead generation, CPA. Or their margins will be squeezed further and eventually the middlemen could be cut out entirely.

As parking is more commoditized it looks obvious that the parking companies that built up/acquired their own portfolios have a decent hedge against this. Owning the traffic is vital. From this point of view the smart parking companies have been Oversee, HitFarm, Parked, NameMedia – they all have very sizeable portfolios of their own. Sedo has something as well of it’s own, not huge though. But for example Namedrive and Trafficz (not completely sure about Skenzo) have very limited portfolios and hence the margin squeeze could effect them much more than the others.

The second thing that will be vital in the future is owning the advertiser relationships if you don’t want to be squeezed. Parking companies should start going more direct to advertisers, it is a necessity for the future. Because in the end we are pretty much reliant on Google. Google can squeeze all of us.

Ladies and gentleman, welcome to my new blog about domaining and other related industries. In many ways this is a coming out for me (I have quite a few gay employees, so I often find myself using their terminology). Since I started in domaining in mid 2007 (started with cctlds, bought my first .com portfolio in December 2007) I have kept a pretty low profile, so most of you probably have not ever heard of me. In the course of the last 2 and a little years I have built one of the top 10 largest domain portfolios in the world. When I was starting, people would tell me that all the good domains have been long gone. Fortunately I didn’t listen…

Anyway, when I look back I’ve had a pretty phenomenal run in last two years since I finished University. Although I’m still just 24, my businenesses now span across domains, lead generation, affiliate marketing, domain monetization, a car insurance broker, search, arbitrage, facebook apps & games, mobile marketing and even a liposuction clinic altogether employing more than 70 people fulltime.

So why have I started blogging. Well there are multiple reasons. One is that the domaining community is simply great and I think it’s time to give back a little. When I was starting I was pretty much addicted to Frank Schilling’s blog (I finally got to meet the guy last month!), it was probably the most valuable resource for me and I would try to reverse engineer many things that Frank would talk about. Now it’s time for me to share some of my tips & tricks! Second reason, connected to the first one slightly, is that there really aren’t many decent domain blogs out there. Pretty much the only ones I find worthwhile of reading are TheDomains.com, DNW.com, DomainNameNews.com and DNJournal.com for the features and sales charts.. All others just seem to have a lack of insight, are limited to publishing recent sales and worst of all, don’t get the game and some are complete attention whores. So I plan on to bring a new interesting resource via my blog, Facing The Absurd. And thirdly, since I am starting quite a few new ventures, I need new channels of promotion, and a blog is a perfect way how to push the message.

I’ll be posting mostly about domains, monetization, acquistion strategies, financing etc. But I will also touch other related businesses such as lead gen, affiliate stuff, online marketing because in many ways these industries will come much closer to domaining in the future.

And lastly I might as well elaborate a little on why this blog is called Facing The Absurd. It’s a reference to my highschool love of absurdist/existentialist thought coming from authors like Camus, Sartre, Dostoevskij, Kafka etc. In many ways I view my life through the absurdist lens and my life is really about facing the absurd state and finding a meaning in a meaningless world.

So, happy reading, I’m off to write a few first meaningful posts…

It’s likely we’re going to see some industry consolidation this year, probably at least one “blockbuster deal” for the industry, maybe even two. So what are my thoughts on this and what I think should happen?

I think this “blockbuster deal” will somehow involve Namedrive. Namedrive is the fastest growing parking company, they are very aggressive, smart and flexible. They have a strong foothold in Europe. They have a lot of expertize in monetizing international traffic (international traffic is the next battleground me thinks), especially using the AFD feed. My personal thought on this is that Oversee.net should take over Namedrive, it would be a pretty good fit. Oversee has just opened a Frankfurt office and they are clearly signalling they are interested in Europe. I think Skenzo could be a buyer as well. Sedo probably not, the antipathy between Namedrive and Sedo is simply too big.

Also, I see Fabulous really getting marginalized over the last 2 years. I think it’s an option for them to sell the parking side of their business. Could be a nice scoop up for Sedo, which seems to specialize on these smaller bolt on deals (e.g Parking Panel, acquiring the parking biz of Dotster etc).

On the Yahoo! side of the fence I can see potential of something happening. I can see Skenzo being acquisitive, they have the institutional capital and can make a move. Parked.com would be a decent target I think, it’s relatively small, could be picked up well and would be a good fit. HitFarm/Reinvent won’t probably take part in these consolidation games.

And then there are the deals that look unthinkable at the moment, but could happen. Oversee.net is probably looking for an exit eventually. It could be bought by somebody, likely coming from outside the direct domain business. Why not Google for example? Sounds crazy, you can never rule it out though. Could be an ad network as well, would be a pretty decent fit. Why not Verisign. Sounds even crazier. But they clearly have the fire power to do it. Something similar could happen with Sedo as well.

I’m just really thinking out loud here what can happen….