In the last 2-3 years there has been a trend in the domain biz that I have been puzzled about. The big players started a push to control the entire domain ecosystem. Apart from parking, they wanted a registrar, an aftermarket, a conference etc.
I think it was the wrong choice that stemmed more from the empire building will of management/owners than strictly looking at ROI and ROE of shareholders. There was a promise of up-selling/cross-selling but that never really materialized. Instead the big players lost focus of their core businesses. Plus the acquisitions to control the entire ecosystem often turned out very sour.
Let’s start with Oversee for example. They shelled out several tens of millions for snapnames and Moniker. Snapnames few months later lost its vital Network Solutions contract and a few months ago the Halvarez scandal broke out. Moniker was also bought at the height of valutions. The amount of gross margin that these two companies contribute to Oversee.net is absolutely miniscule in comparison to its owned and operated portfolio and it’s monetization service DomainSponsor. Imagine that instead of plowing this crazy money into acquisitions, Oversee could have invested into its core businesses. It could have acquired more portfolios and invested into better monetization. In my opinion that kind of investment would generate much more substantial ROE for Oversee. Don’t also forget the time spent to integrate the new acquisitions.
A similar example is TrafficZ with its buyout of DomainTools that ended very sour as well – they are fighting former owner Jay Westerdal in court now. Aftermarket.com is home grown project but you cannot really talk about success there either. The Domain Rountable conference is losing traction as well.
Pretty much all the other big parking co’s played this game as well, maybe to a smaller extent though. One exception is Namedrive which kept its focus predominantly on monetization. That’s one of the reasons it has grown so rapidly and became a substantial player in monetization.
Wisdom of the day: Don’t let your Ego into strict business decisions.