First ask yourself: What is the worst that can happen? Then prepare to accept it. Then proceed to improve on the worst
-Dale Carnegie
If you are like majority of domain name owners your majority of income comes from pay per clock advertising (PPC). Pay per click advertising for domain owners is being reliant on others’ advertiser-base and fair revenue sharing practices. In current form, most PPC business online as well as for domainers is controlled by two companies: Google and Yahoo.
The liabilities are:
1. Two control pricing. You do not need two to go out of business to spiral down, one will do. If one drops the other literally can do what they want to put prices down. The rule here is the 95/5 rule. That rule, in real estate leasing, says that your ideal price is where you have 5% vacancy. If you have more you are charging too much. If you have less you are not charging enough. Back to commerce, if the standing partner start to reduce payouts, ideally they could go on and on until they are at 5% deduction without worrying much about it. And who’s to leave if there are no viable alternatives?
2. As we all know, both Goolge and Yahoo are black boxes. Very little information is shared with their downstream providers and less with you. Worse, even if all information is shared you would never know the contracts in place as well as what Google/Yahoo are doing behind the scenes. One would think that can never happen but we don’t need to look far to know better.
So the question of the day, what would you do if the PPC train stops at its tracks right this moment? Say you wake up and your provider says Google or Yahoo shut down the channel. Worse, they are not paying you for business provided claiming channel is closed due to channel fraud? I know, it will never happen (right?), but hypothetically speaking of course. What would you do? Where would you be? How will this affect your life, family, and business?
By failing to prepare, you are preparing to fail.
-Benjamin Franklin
I had these questions and more in my head since the days I started in the business. I spent many years building alternative revenue streams, businesses, as well as put systems in place for that day that “will never come”. From all I’ve done, since like you, we own domains (assets), the most important part of the equation is to be able to liquidate when needed for the most possible. This is not to say I will get end user prices for those names, it means if I need to liquidate tomorrow morning, I will get the most I can tomorrow morning. How you may ask? We built Bido of course. Bido has a strong pool of buyers, reach, and technology in place to accommodate such needs. But more important than Bido here is what you can do about it. For liquidity to be strong it has to be exercised regularly. If liquidity is something that isn’t happening than when the time comes that you need it, potential buyers won’t understand the message and benefits quick enough. No pressure (buyers) in your liquidity channel means weaker sales prices.
So while you may think liquidity is only needed when you need it, that is just not the case. Preparing for liquidity is as important as liquidity itself. But why am I wasting your time here with this nonsense anyways? Life is still good, while we make a little less it can never get worse. Right? Right! We all know, THIS can never happen to us... right??
Flavius Renatus Vegetius said:
Let him who desires peace prepare for war.
My adjusted version for the above is “Let him who desires financial stability prepare for bankruptcy.”
Have a great day!
Sahar
Great stuff Sahar! You never say a thing which doesn’t make me… think.
Roy
—-answer—-
Doing my best. Thanks Roy!
Sahar
Sahar,
It has been widely reported that PPC revenue has dropped, yet Marchex and Google’s revenue has not dropped, red flags should be rising.
Honestly, if PPC was eliminated than all but a few domainers would be completely whipped out! Along with registrars!
If you’re doing arbitrage or parking, PPC is an integral part of your business but if you’re developing Domain Names then there are other avenues. Either way liquidity is important when you try something that doesn’t work and want to change tack or are looking to take advantage of a bigger oppourtunity.
as to alternative income streams, affiliate links and sales are one avenue. Delivering services through your sites are another. And some sites just lend themselves to advertising your other sites where you do have some revenue streams building.
Whenever I get this system I’m building finished there will be diversity all over. PPC, sales, services, and some internal advertising. I’ve been working at this business model for two years now and am just getting started.
There’s two banner exchanges (one niche market and one for just our web hosting clients) and there may be a third soon. There’s two different web hosting systems. five geo sites and more being planned. Some help and information sites. A humor site. A test web board and several trading centers based on that web board. And more planned yet.
I may not have much traffic yet but I’m diversified and working toward my ultimate goal. Just wish I had more time.
I wish they’d do away with PPC. There is clearly way too much fraud going on in that domain world. Too many people making money, but not know how or why. Too much money being made by Google, selling advertising like “teeth whitening secret discovered by single mom in “….. as if. Or, the other stupid ads which are clearly lies: debt relief, flat belly, Obama wants you to go back to school/get a refinanced mortgage/buy a house and the slew of others that scream LIARS!
The domain name world is one giant black box and it needs to be investigated and exposed. I am hearing, and hoping, that such will be done soon. The sooner the better. Too many people have lost tons of money at the expense of a handful who are at the secret controls.