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Affiliate Summit ended tuesday in Vegas and we were obviously there with Elephant Traffic. Since a lot of our advertisers our affiliate marketers that arbitrage domain traffic to CPA, AS is a really good avenue for us to acquire new advertisers. Our cost to take part with 5 people including booth, flight, accomodation, parties with clients was about $40k. However we usually make this money back in 3 months time from new advertisers, so it’s definitely worth it. We also take part in the Ad:Tech and LeadsCon conferences, which bring us a similar return.
Our booth was sort of stylized to Prague since we were offering a draw for a vacation worth $5k there. This is how it looked (Jeremy Lopez, GM of ET in the photo):
Otherwise Vegas was pretty fun as usual, although didn’t do as much partying as when I was there last year. Surprisingly even managed to win some money and finally learned the basics of craps, courtesy of our head salesman Yancy. Looking forward to DomainFest in LA now…
I harvest domains predominantly for their PPC revenue. Recently I’ve noticed an interesting thing with the CCTLD portfolios I create by new registrations – suddenly sales are bringing in a “noticeable” part of the portfolio’s revenue. When it comes to the cctld portfolios, this sales element is about 15% of the revenue (the remaining 85% coming from PPC). With my .com portfolios this is probably only about 3%. Interesting, can’t really find a reason to why.
Otherwise when it comes to ccltds I’ve been much more active with them recently. Since I’ve sort of overharvested the .com universe and ROI has been worsening there, I’ve been looking for other TLDs where ROI is better. So last year I did a lot in .nl, .se., .de, .co.uk, .it, .be, .com.mx, .ca, .com.br, .pl etc. Recently I’ve gone so exotic as to play around with .jp or .co.nz. Now I have around 50k CCTLDs but I think I’ve depleted them quite a bit as well
Happy New Year’s everyone! Hope 2011 will be a great year for you!
Anyway, just wanted to share an idea I have had for some time now. Never really got a chance to do it myself initially, then I decided that the business opportunity isn’t that huge and I have to focus on bigger niches. It’s basically an aftermarket play exploiting the drop game, a domain flea market if you will.
The idea is simple – all of us domainers drop domains sometimes, we choose to let them expire. The idea is that somebody would build a service where you could push these domains, say 2 weeks before they expire, and offer them for $10 a piece + renewal fee. If two or more people would be interested in the same domain, a standard namejet style auction would follow. The service operator and the domainer would then split the proceeds 50/50.
The service would just need to create accounts at all the main registrars where domainers would push the domains and do some simple programming of the marketplace, not much work imho.
This idea is based on a simple premise: some people can find gems (in their perception) in your garbage.
I personally drop a couple hundred thousand domains a year. The thing is that my only criteria for renewal is if the domains make reg fee. If they don’t, I simply let the domain drop and there are definitely gems in these drops that other people can discover but I don’t have time for.
I hope I created a new buzzword “drop monetization”:). Hope somebody picks this idea up. Good luck with it!
I happen to live and run my businesses from a country that most Americans can’t point out on a map or still call Czechoslovakia (which is totally understandable, I couldn’t name the 50 US States either). Although I am obviously a big Czech patriot, I would still like to ventilate my frustrations of operating a business from a country that has a population of 10 million. It makes competing on a global scale much more difficult and me and my team have to go the extra yard to be better.
The most frustrating thing is the size of the market – 10 million people with a GDP per capita of $24k at PPP. Compare that to the U.S. with 300 million people / $46k and you find out that the US is roughly a 60x bigger market than the Czech Rep when it comes to buying power. Because of all the language barriers and unique aspects of every European country, it is very difficult to scale a project/service once you reach a certain level. Being part of the EU has certainly helped, but the EU is certainly not a federation of states like the US. Just to illustrate this frustration with an example – take our lead generation department within Elephant Orchestra. Lead Generation is in many ways a local service – you have to be close to your customers (lead buyers) and you have to understand the local market for acquiring traffic. What is currently frustrating us here is that we are hitting a major constraint in the amount of traffic we can profitably buy and convert. If we want to grow, we have to expand into other lead gen niches (like health, education) or expand abroad. But expanding abroad is very difficult since you have to build up your knowledge and a team from zero and that costs money. Whereas if we would have a US presence, it would be much more easy to scale our model and maintain margins.
Then there are several frustrations of running a global business from here, again to illustrate, I will use the example of Elephant Traffic. First of all, if we want to sell in the US, we have to understand the language. The HR pool of native speakers is really tied to the expat community. Or we have to “import” the people. Second is the travel barrier, if we want to meet our clients, we have to be constantly travelling, which increases costs. Then there is the time difference, hence our sales people and account managers have to work the US time zone, which means coming to work at 3 p.m. and finishing at 12 p.m. Again that limits the HR pool, a lot of people don’t want to work those hours. Then there is the issue of knowledge exchange – there are virtually no people that would be in a similar business as us, so you can’t refine your ideas, network etc. Then there is the mindset. Czechs typically have a pretty provincial way of thinking (recommend reading the book Good Soldier Svejk to understand). It is difficult to transplant “global thinking” into them.
Obviously there are certainn advantages of operating from the CZ such as well educated cheaper labour, maybe a more favourable tax climate, it’s easier to become a market leader here etc. But really the dissadvantages are still much bigger. Hence I think it is inevitable for us to open a US presence next year. That will allow us to both exploit some of the favourable aspects of the CZ but also make it easier for us to compete with the global players. Take the best of both.
I see a lot of domainers diversify into real estate when they start making money. They view it as something similar to domains. The truth is that they would have been much better off if they would have kept re-investing in domains or other businesses.
My perception is that real estate investments are a sinful waste of money, money that maybe yields 5% per year. For us domain investors that is a petty return. If I would have a choice, I would prefer to have money in the bank than in real estate. Because it’s liquid and available for opportunistic deal making and this liquidity outweighs the forgone yield for me.
The main arguement made by domainers is that real estate is a very secure investment. Every domainer has paranoias that his domains might be taken away but he knows that nobody is going to take his house away. Hence they sacrifice yield in favour of security.
The big secret is that you do not have to sacrifice yield in exchange for security. The answer is diversification. If you have a diversified portfolio of high yielding investments (like domains) or businesses (obviously running the risk that some of these may default/go bancrupt) you will still be better off in the long run than if you plow money into real estate.
I like to illustrate things with analogies, so here’s one from the bond market. In the long run, a well diversified portfolio of junk bonds will perform better than a portfolio of tripleA rated bonds. Some of the junk bonds will obviously default, but the higher yield of the others will more than compensate for this in comparison to the AAA’s.
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!