In my last post, in comments area, Stephen Douglas of Success Click wrote:
It’s time for domainers to reassess their domains by evaluating their monetization paths, and then move accordingly
The domain industry has significantly changed in the last 12 months like never before. Payouts decline, layoffs, Marchex and other domain related public companies are on sale, and if that is not enough, Google is now going direct.
Back in 04 when Marchex set the benchmark for revenue multiples (8X rev. for generic domain names, Yun Ye’s portfolio purchase), many felt it was wrong, it was too little. While I too thought it was not a fair represention of domain values, I was happy to see some benchmark established. Today, end of 08, I believe values have significantly dropped. Here’s why:
1. Your domains are making less.
This is by far the most important reason why your portfolio is worth considerably less today. PPC revenues took a major hit, up to 50% in some verticals.
2. Buyers have scaled back
The second most important reason, less buyers, more sellers. In short, buyers have more choices than sellers. Rotchield once said “You buy when there’s blood in the streets” and today, the domain streets are flooded with blood.
3. Many across all industries, including the domain space, have overextended themselves. Today they are trying to survive, pay bills, not to grow, reinvest.
All these are major factors in your portfolio value.
On the other hand, tough times force us all to innovate. To increase your portfolio value you may consider increasing liquidity rate (sell more often), lessening dependence on parking companies, or explore better optimization methodologies between parking companies (shameless plug: consider PortfolioHelp.com for higher payouts).
Reassessing allows you to stay on top of your holdings, identify gaps, find what does not make sense and do something about it. In other words, you can not find a treatment without first finding what is wrong.
Lastly, remember that even if your property values have dropped significantly, others have as well. Markets are cyclical, there’s ups and downs, and I truly believe “this too shall pass”.
Have a great day,
Sahar
Well said. Its just another cycle in the roller coaster of life and yes, it will pass.
Great research, summary and insight.
We are all poorer but I still wouldn’t want to be in any other business other than maybe running job retraining centers for auto workers, stock brokers, car dealers, etc. etc.
I remember well the multitude of conversations where I was being told the valuations were way too low and they should be 30x in some cases. I always tried to temper people upper end expectations with the looking and inevitable market correction every industry sees a few times over its lifetime. The PPC space is and will be no different.
Welcome to reality check 08 - 09
My problem is I’ve been through several boom and bust cycles in other tech industries, and the rebound never matches the original boom. Marketplace efficiencies take over and drive out the fat. That will happen in the PPC space for sure real fast .
In the past 2 weeks alone, we’ve seen how multi-millionaires have bcome destitudes becaus3 of Madoff.
The current financial tsunami has affected everyone around the world, and it doesn’t take a genius to read and understand what’s happening all around us, that’s old hat.
The key question we should be asking is;
1. So what do we do to keep ourselves in a positive frame of mind?
2. Where are the new opportunities in this stage of wealth deflationn?
3. What new business models do we adopt given the fact that the world’s financial state is nothing more than a global Ponzi scheme of recycling money and debt obligations out of nothing more than accounting hocus foucs.
The days of traffic for the sake of eyeballs or single clicks that earn you $7 are over. What’s next?
For starters I would say you can earn more rev from your AdSense account by parking with sites like VentureNames.com. secondly - time will tell because these are early days yet in this recession and I think that a LOT more people are going to immerse themselves in finding work/revenue from the internet. This is going to be a realization for a great deal of people - there is another source of income available!
Good timing for this write up and discussion as well…lets talk numbers though…
from the hitfarm index;
http://www.hitfarm.com/tour_06.html
10 travel domains
cheaptravel.com
bestflights.com
globalvacations.com
travelshop.com
hoteldeals.com
smarttours.com
carrent.com
lastminuterooms.com
discountcruise.com
travelplanner.com
stats combined for this group;
the domains jump up and down… but it looks like they get around 700 to 800 unique visitors per day
they earn like $300/day max…… that is like $10k/month…….
although everything is on the decline currently, both traffic and revenue but its just trends
lets say $150k per year in earnings
and - $100 in renewal fees
i dont think kevin ham will sell this group for anything less than $5m maybe not even 8 million or $10,000,000 big ones…….. what justifies this crazy multiples? the little bit of traffic?? the potential??
we are talking about 30x and 50x multiples
i know travel conversions……payouts…… i know how much of this traffic is really worth, and some this multiples just uhh…. they are all wrong if we look at the facts.
selling domains and pitching them on this very limited potential is a thing of the past.
2009 is going to make or break many domainers dreams, as well as businesses and operations…. it all depends on whether you are going to be proactive or how much you are going to be able to react
Mike
http://www.wannadevelop.com
Thanks Sahar for giving me the honor of a mention on your blog. I appreciate that!
My true belief is that domain values will still increase in aftermarket sales to end users, and prices will fall with sales between domainers (The Incest Affect). I believe domainers will focus more closely on the domains they already own, and start developing them, however their budget allows. I also believe that 2009 will be the year of “Content and Action” for domainers;
1) CONTENT - Build out your content on your domains. There are several good inexpensive services that provide this.
2) ACTION - Master the CPA game (Cost Per Action) using affiliates, ebooks, and even refcomms on services looking for new customers.
Contrary to the belief that 2009 and beyond will be “sad times” for domainers, I have the opposite belief, optimistically pushing the fact that a domain name is a piece of property that has no “zoning laws” — you can build it as big as you want, and provide all the prodserv you want for revenue paths.
I’m actually very bullish on the coming years, probably because I never felt PPC would last and didn’t focus my domain purchases on that single rev source.
My “Happy holiday” message to domainers is “Find your footing, build out and sell your best domains only to end users. Your financial success will be more secure in the long run.”
THINKBIG.ORG!