Facing The Absurd

domain parking arbitrage

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domain parking arbitrage 2012

Sorry for not posting much lately. First two weeks of November I was too busy. Second two weeks I was depressed (manio-depression sucks). Last week I am hyper though again so back in work mode. Just wanted to give a little update on things I am working on and how things are going.

- Elephant Traffic – since I last posted about ET has grown tremendously, we are currently monetizing about 550k uniques a day, which is a very decent chunk of traffic. Our advertiser base is growing on a daily basis and on some domains we are peforming 10x better than parking. If you have high volume domains doing over 1k uniques a day, contact us, we can beet your current monetization by a big margin. We’ve also expanded the team and planning version 2.0 hopefully next week.

- Elephant Orchestra lead generation – Still growing very nicely, we are now doing $200k in revenue a month, however we do have some issues with profitability, so we need to work hard on our margins, 30% is not enough. We need to get it up to 40% next year and double revenue, then it will be a pretty nice business. We’ve added a lot of bluechip clients in the last two months such as the Czech Rep’s biggest bank etc, expanded into new verticals such as utilities and travel etc.

- Otherwise we continue to be chased by venture capital, we just had a meeting with a fund with over $11 billion under management, they seem to be pretty interested. Otherwise word is on the street that we are planning an IPO in Poland, funny we had Nasdaq OMX contact us as a result and pitching their exchange to us as a better option

- When it comes to my own domain portfolio, I’ve been selling off a little. I sold about 20k domains in the last two weeks alone. I don’t usually sell much, but this is probably the best time of the year to do so since ppc is high. Plan is to use the cash to deleverage a little, maybe build a little warchest for some nice acquisitions.

- I”m thinking of buying one multimillion domain at the moment, so I’ve been putting together the cash, arranging a little investor syndicate and raising some debt for it. We’ll see how it goes. Plan is, believe it or not, develop!

- Otherwise Rick Latona has a new venture called WatchBrokers.com, so I put some money into that along with my friend Ammar. Looks very promising. Basically it’s a cash4gold concept, but for luxury watches. And I also think Rick can pull it off.

- I’m also bankrolling a new start up that is playing around with some semantics, we want to build out a new news aggregation service that will have some advanced features such as sentiment, emerging story spotting, some hyperlocal features etc. More news soon.

- Otherwise my friend Ondrej Bartos finally launched his venture fund Credo Ventures, so I put in a million euros into that. Plan is to finance promissing Czech and regional IT/biotech companies. Somehow makes me feel a little bit good as well as it’s nice to plow some money back and help start-ups.

- Otherwise my facebook game development venture Viral Maniacs that I bankrolled didn’t go so well, so we had to lay off the whole gaming division, we will just be focusing on apps now. One big one coming hopefully still this year, gut feeling that it might be a killer. All is not yet lost hopefully.

- What has been absolutely hot hot hot is our online insurance broker ePojisteni.cz. We are now the biggest in the Czech Rep, doing about 4,500 car insurance contracts a month. Our staff has grown to 50 people there and is actually starting to be a bottleneck since we need more skilled phone brokers. Early next year we’ll launch a new site with more products and also run a big media campaign for around $1 mil. That should boost our dominance further.

- Otherwise I had to scratch plans for the wood pellet factory in Eastern Slovakia. Corruption there is terrible and I refused to give bribes. Nothing was simply possible there with stuffing somebodies pockets, so in the end we didn’t get the contract for wood etc.

- My lipousuction chain Slim & Go is a little shit now, a) it’s a bad season now and b) competition has gone up like crazy and everybody is discounting like hell. We opened a new one in Brno though and will open in Ceske Budejovice in january.

- What’s been really fun lately is this movie we are making together with a friend. We have a pretty decent budget for a Czech film, hired the mexican cameraman who did Amorres Perros, so shots look really good. I’ll hopefully have a little teaser in a few weeks, so will post it here.

- Also have plans to open a new small club in Prague, little bit of a freak show. I’m talking midgets, women in latex, men in wehrmacht uniforms, cyberpunk music etc. Will be fun hopefully. Still early stage idea at this point only.

- Otherwise the European Poker Tour is coming to Prague next week, so will be probably playing the main event or at least the heads up event. Have had a pretty sick run in poker in the last two weeks, up more than $40k, mostly in heads up cash games.

- As for my travel plans, I’ll probably show up at Affiliate Summit in Vegas and DomainFest in LA, so if you’re coming, let me know.

P.S. Keep it real!

Earlier this year I wrote a post about the likely consolidation in the parking business and that Namedrive was very likely to play a role in it. Seems like I have been right and Namedrive is being bought by Key Systems. Should be made public very soon… Otherwise the parties in Prague are starting to get really tough here at DomainFest

I like making suggestions to parking companies how they should improve monetization, so here’s another try…here is how I think keyword optimization can be improved.

Today most parking companies rely on auto-optimization for optimizing their partners’ domains, over the years they have improved their automated systems to do this. To a smaller degree, parking companies do sometimes play around with manual optimization, i.e having their employees manually optimize domains. For example Skenzo does a lot of manual optization, obviously having the advantage that it can bank on a cheap Indian workforce.

In my experience auto optimization is often not the best option. For a lot of domains manual optimization brings a lot of upside.

I think that better keyword optimization could be brought by introducing crowdsourcing and decentralization into the opimization process.

Imagine that parking companies would create a “marketplace” where freelance optimizers could try and optimize their partner’s domains. The new settings would then be A/B tested against auto-optimization or other freelance optimizer’s optimization. If the freelancer’s optimization would be better, he/she would be paid a fee for his work. As part of the “marketplace”, the parking companies could score the various freelancers on their optimization skills and only let the most successful optimize the biggest domains etc. This process would need a lot of tweaking but I think it could work for the benefit of both parking companies and domainers.

Introduce decentralization into the optimization process is the phrase of the day!

I am fairly critical about the lack of evolution of the domain parking industry – it really hasn’t evolved much in recent years. Since PPC has fallen so sharply, it still is a puzzle to me why parking companies are not becoming more inventive when it comes to monetization.

One area I see completely unexploited is behavioural targeting on parked pages. When you look at ways how parking pages are optimized is is really all about contextual targeting. You basically have a universe of users hitting a particular domain, you optimize the ads based on the the domain name, what users are clicking on and maybe on location. However the point is that if you would take the universe of all US users hitting the domain for example, they would be all shown the same ads. Why not actually target the ads more to the particular user, for example based on his interests, gender, age etc and mix this behavioural targeting with the standard contextual targeting?

Parking companies themselves collect massive amounts of data by which particular users could be categorized. They could also partner with big ad networks that have collected even bigger swaths of data such as Doubleclick. Then use this data to improve targeting and monetization. If big e-commerce sites such as Amazon or Netflix can exploit this data, I don’t see a single reason why the parking companies couldn’t. This data is a potential goldmine that is just waiting to be collected by somebody.

I am generally cautious with new monetization platforms. So I’m generally not the first to jump on the bandwagon for tests. I prefer other friends to test out first and if I get a decent recomendation I start thinking about it. That was the case with WhyPark. I heard a lot of positives about it during DomainFest in January.

I’ve known Craig for some time, so I finally decided to run a test. Two weeks ago I pushed over a couple thousand domains onto their system that were making zero – we tested them on pretty much every parking company, so these were domains relegated to being dropped. From day one they started making about $20/day on WhyPark and about 7k uniques/day. Today it’s two weeks later and they are getting 11k uniques/day, so search engines are starting to pick them up. The amount of searches and clicks are going up as well, as the WhyPark team optimizes the domains. Yesterday they made $80, which is a great result if you look at it that previously they were making zero and were ready to be dropped. Seems like the earnings still have potential to go higher.

The test has been successful, so I’ve decided to put much more domains on WhyPark very soon. Well done WhyPark boys, looking forward to doing more business! Your platform has proved itself to me.

About two months ago we picked up a nice little generic domain domain – leyton.com – on the drop for $1k. Our plan was to do a little development and we didn’t even bother parking it. Few days later we got an offer from a company which had Leyton in it’s name offering us 10k euro for it. We rejected the offer and made a higher counter-offer. The company’s response was to file an UDRP against us. Our lawyer on this, Stevan Liebermann, advised us that it is very likely we will lose the UDRP, so we were ready to take it to court if we lose. Fortunately Stevan wrote an amazing response to the UDRP and against all odds we won it. The story even had a happy end for us – we ended selling the domain for $50k to the company.

This is just a little story to illustrate how important it is to protect your property. It also is a big favour to the domaining community. Since the IP lobby is so strong, we as whole have to try to counterbalance it as much as we can.