by Howard Hoffman
In my last column, I reviewed some of the reasons that domain parking revenues have fallen. As previously reported, my overall average revenue dropped about 45% between January 2007 and January 2009. First the good news: it appears that domain parking revenue may be stabilizing. Revenue has been fairly flat since December 2008. However, I must caution that I had a previous period, the 6 months from July 2007 through January 2008 where it appeared revenue had stabilized. However, a revenue decline from January 2008 through January 2009, corresponding to the collapse in the US/world economy, followed the 2nd half 2007 domain revenue rally.
To be a bit more specific, my overall RPM (Revenue per 1000 [Unique] Visitors) has fallen from an overall average of $95 to an overall average of $65 from peak to bottom. This has been accompanied by a decline in traffic, which have combined to reduce revenue by about 45%.
In general, my revenue from Yahoo-based parking providers seems to be off by more like 55% (from the January 2007 peak). My revenue from Google-based parking providers is off less, by around 40%.
One sector that has been especially hard hit has been casino/online gambling. In my experience, Fabulous.com has done well with most domains in this sector. As an Australian company, not subject to US law, Fabulous.com has attracted much of the advertising revenue in the sector. Changes in US law made it more difficult for online gambling sites to get US business and therefore, many of the relevant websites reduced their advertising. My casino/online gambling traffic earnings are off by around 55%. Even so, good poker, casino, and related traffic is still among the most profitable kinds of type-in traffic.
The loan and credit card businesses in the US have been hard hit by the US recession. Many financial services companies have gone out of business, usually by being absorbed by a more successful financial institution. However, credit cards are still an important and overall profitable business for US financial institutions. These companies have taken advantage of the economic situation to increase fees and interest rates, even as overall interest rates have fallen. My loan/credit card traffic earnings are off by an average of around 45%, consistent with the overall domain parking decline. This category is still among the most profitable major categories of traffic.
Another important sector is travel: especially hotels and airlines. Air fares have plummeted and so have hotel room rates, pretty much worldwide. People with cash (or intact credit) are taking advantage of record low international airfares. The airlines have recovered a bit from the extremely high fuel prices of early 2008. So, most of these companies have remained in business. Overall my travel traffic earnings are off by around 40% from the peak.
The retail sector is made up of many subsectors. However, the trend for more and more consumers to spend more revenue for online retail purchases has continued, or at least not collapsed like so many other business sectors. So, my online retail traffic earnings are down by around 35%. Subsectors like shoes, clothing, jewelry, and home furnishings still provide healthy returns.
I have never owned a lot of adult traffic. However, this is one sector that has really fallen. A lot of what used to be profitable in the online adult business is now being sold at very low profit levels. My adult traffic revenue has fallen about 70% from the peak. Revenue per click levels in this sector are very low. Typically, my RPC for this type of traffic is around $.05 to $.08. Strong sectors like credit cards and hotels might have RPC values 10 times those low levels ($.50 to $.80 and sometimes even higher).
In summary, the drop in domain parking revenue has been uneven, with some sectors getting hit harder than others. Of course, that is true with the overall US and world economic slowdowns.
Howard Hoffman has a BS in Civil Engineering from MIT and an MS in Environmental Engineering from Stanford University. He 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. He shares some of his recommendations at PPCIncome.com.