The last 2-3 years have been tragic for the parking side of the domain business.  Parking earnings have probably gone down by an average of 60%. Can they fall further?

We should probably look at the main factors behind the fall in ppc on the domain channel in the first place to able to make a good judgement:

• GOOG/YHOO cleaning up the domain channel’s traffic quality alongside with the parking companies. Within the domain community there has always been this belief that domain traffic quality is absolutely outstanding in comparison to search, which is usually based on one stupid report from Efficient Frontier. As a whole, domain generated traffic is worse than search for sure, there are just certain domains/verticals where traffic quality is indeed better, but this cannot be generalized for the whole channel. GOOG/YHOO have worked hard on establishing what domain traffic converts and which doesn’t and have established mechanisms to penalize bad traffic.
• Along with this clean up payouts have been cut using some kind of quality control mechanism. Although being a black box, it is likely that bad traffic is penalized in financial terms but also good traffic is not rewarded, or at least not rewarded enough.
• Advertisers are now easily able to exclude the domain channel from their PPC advertising campaigns. That is also a pretty recent case.
• GOOG/YHOO simply taking a bigger cut. One thing is what the parking companies rev share is in their contracts, second being the real rev share that takes into account the “black box”.
• Advertisers are more capable of measuring the success of their ppc campaigns. More and more advertisers measure conversions etc. This again is connected to traffic quality I mentioned above.
• The general economy. Not really necessary to explain.

The good news is that parking earnings have stabilized in the recent months, or at least they are not in free fall anymore.

So I think there is light at the end of the tunnel because a new “equilibrium” is being reached with the major cleanup of traffic quality and PPC should even increase as the economy improves. With the massive previous fall of PPC, other ways of monetizing domain traffic are suddenly kicking in. For example, I am now selling over 5% of my traffic directly to advertisers and I just started sales in January. I haven’t even started to fiddle around with affiliate stuff yet, which should bring another slight boost.

Tags: channel, domain, domain community, efficient frontier, measure conversions, parking, PPC, quality, quality control mechanism, traffic, traffic converts, traffic quality