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  • DBS: Domain Parking Revenue Plummeting

    1. BY - May 06, 2008
    2. Uncategorized
    3. 14 Comments

    Domain company reports sharp drop in domain parking revenue.

    Domain name portfolio holder, registrar, and parking company Dark Blue Sea today reported a massive drop in parking revenue compared to last quarter. The company generated $1,370,000 from parking its own portfolio, down from $1,661,000 last quarter. That’s an 18% drop in just one quarter. A year ago in the same quarter the company pulled in $1,949,000 from parking its own portfolio of domain names.

    Customers using its Fabulous domain parking service earned about $3,000,000 in revenue last quarter after DBS took its 26% cut.

    The company blames overall economic conditions, increasing transparency of PPC advertising, and the collapse of advertising arbitrage for the drop in domain revenue. Below is an excerpt from its report (emphasis added):

    Industry analysts are now concerned about the cyclical exposure of the US online advertising industry to an economic downturn. Whilst online advertising is still one of the most cost effective methods of advertising, it is also one of the easiest to cancel. And cancelled online advertising can lead to immediate impacts through the keyword auction and Coverage, Relevancy, Quality, Price mechanisms outlined above.

    Over the last four or five months, the Company has observed a general reduction in the ad spend of a number of large advertisers that have historically purchased the Company’s direct navigation traffic. We have observed this through a partial reduction in price but more significantly through a decrease in Click through rate. This reduction in these advertisers appears to be partly due to the weaker economic environment but is also linked to some significant structural changes that the Search Ad Networks have been making.

    Attracting major brand advertisers is a very important strategic initiative for the Search Ad Networks. In an effort to attract these brand advertisers, the Search Ad Networks have tried to make the process of advertising less opaque. In particular, they have given advertisers more flexibility (opt-in and out-out) on which websites their advertisements appear – a very important issue for brand advertisers. This has led to some advertisers opting out of appearing on direct navigation websites.

    This is a great analysis of what we’re seeing in the industry right now, and it comes from a company with plenty of data to back it up. Perhaps the most interesting insight is how easy it is to cancel online advertising. Although online advertising is easy to track and calculate an ROI (something people want during a recession), much of it can be canceled with the click of a button. TV, radio, and print ads are often contracted for far in advance.

    The silver lining? DBS sold $1,003,000 worth of domains last quarter. That’s down from the prior quarter but up 3x from the same quarter last year, and its agreement with GoDaddy should boost sales over the next quarter.

14 Comments
  • I wonder how much the sale of $1M worth of domain names impacted their PPC earnings.

  • @ Elliot – I doubt it was a major factor. They didn’t point that out in their reasoning for the shortfall. They also sold more in the prior quarter while earning more in PPC.

  • Francois says:

    May 7, 2008 at 5:32 am

    I am wondering if this not also outlines a fall down of search type-in. Are not now internet surfers more educated and are stopping to type-in for searches?
    It will be interesting that companies like Fabulous having massive parking data tell us about this type-in traffic trend.

  • @ Francois – I didn’t see anything in the report about the amount of traffic received, but from the nature of DBS’ reasoning, I suspect it had to do mostly with a dropping RPM.

  • David Reiff says:

    May 7, 2008 at 1:40 pm

    Let’s see whether they can come up a user friendly site development business model to make up for the declining parking revenues.

  • Antoinette says:

    May 7, 2008 at 2:03 pm

    Well, at least it helps to know I’m not the only one suffering from dismal parking revenues. Even the big guns are in pain.

  • Great post.

    Some more details are needed like why did the revenue drop – was it due to less traffic or different keywords or ?

  • I think everyone is feeling this drop in parking revenue, is it linked to the unstable state of the economy with business cutting back on their advertising budgets?

  • Yes, I agree to the need for more information.

    I have about 1,000 domains now and my income is on a sharp increase. There are a lot of factors involved, but the most important to me is that the advertisers are getting their money’s worth. I don’t think many that park give a damn about what they are providing in return. Well, you need to give that cash cow some food and water from time to time or it will wither and die.

    I have clients where I have blocked their ads from being shown on parking pages via Google. Why? Massive, blatent click fraud. Those in the industry should think about and request that search providers move to or offer a flat rate adfvertising model, or bid for flat rate model to completely remove any possiblity of click fraud for the advertisers.

  • Deriving revenue from Domain Parking is certainly getting tougher (even for us that do it for a hobby).

    Thanks for the great article.

  • [...] Australian domain name company Dark Blue Sea, which runs Fabulous, reported another drop in domain parking revenue in its latest quarterly update. Just two months ago Domain Name Wire wrote about how the company’s parking revenue from its 600,000 domains was down 18% in just one quarter. [...]

  • I think customers worth money and pay more attention to the ad, where it is placed and what is the quality of a trafic.

  • does anyone know if there is a true and honest easy to read chart on the number of domains and the average parking revenue per domain name?

  • @ johnjuan – completely depends on the type of domains. So the answer is no. But Hitfarm has a relative index.

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