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Sunday
Feb012009

By the Numbers (February 2009)

Name Monetizer welcomes Howard Hoffman, who will be regularly reporting on the trends he is seeing in the nubers based on his extensive domain portfolio.

As most domain owners know, there has been a long-term trend of declining Revenue Per Click (RPC) from Google- and Yahoo-fed parking providers (DomainSponsor, Sedo, Fabulous, SmartName, TrafficZ, etc).  RPC is simply how much we get paid for each click-through to an advertisers website.  If all other things are held equal (Visitors and Click-Through Rate), then a 10% reduction in RPC will result in a 10% reduction in revenue.  For most of the services that we have tested and analyzed, the revenue peak occurred in January 2007.  Since that time, all portfolios that we monitor are down.  The average revenue reduction is around 45%, and most of that is attributable to declines in RPC.  There has also been some decline in Click-Through Rate (CTR).

First, lets consider CTR.  CTR reflects the interest of the web-surfer in spending there time to check out one of the ads on a parking page.  As pages have become more targeted and more attractive, we might expect a higher CTR.  More attractive may or may not increase CTR.  People at DomainSponsor, in particular, seem to be proud of ugly pages that have high CTR.  However, based on our experience, good looking graphics can give a web surfer a comfort level that they are at the right place.  However, this really depends upon a large number of factors.  Certainly, having relevant, targeted subpages and links will tend to increase CTR.  However, we believe that as more and more formerly blank domains resolve to parking pages, web surfers seem to be less interested in clicking thru.  So, this would explain a drop from around 22% CTR that we had one year ago to around 19% CTR today.

In one large portfolio that we have been testing, we have seen the RPC drop from $.33 a year ago down to $.30 in our most recent month.  Combing these two factors (RPC and CTR) yields a reduction in Revenue Per Thousand Impressions (RPM) from $75 down to $57.  This represents a 24% drop in RPM and a 24% drop in revenue for a portfolio with steady type-in traffic.  Of course, if your portfolio includes lots of expiring website domains, then you also experience declining traffic.  So, we are focusing on a more steady state situation, where the type-in traffic is fairly constant.

Next month, we will review some of the reasons why RPC, and therefore Revenue, has been declining for most domain portfolios.

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Howard Hoffman, President of PPC Income, Inc, has a BS in Civil Engineering from MIT and a MS in Environmental Engineering from Stanford University.  Hoffman is a serious investor in domains. Based on his early experience as a PPC advertiser, he embraced the income side of PPC and was an early user of domain parking services. His experience in generating income from his domain traffic is published at PPCIncome.com.

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Reader Comments (1)

One of our recent studies (Dec.2008-Jan.2009) have shown that ~5% of the .com/.net domains that drop on a particular day are registered on that same day (and kept after the 5 days grace period) and that on the following days the percentage of re-registers is below 1% but above 0.2% for at least 2 weeks.

This shows that at least the domainers are still confidant and maintain the same level of investment as before.

Check the site TearDrop Domains to find the complete list of domains that will drop on the next 5 days and soon more details about this study.

Regards

February 26, 2009 | Unregistered CommenterVlad Aros

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