Click Forensics, Publishers, Ad Networks Facing Traffic Quality Challenge

Meeting in Austin brings together constituents to discuss improving online advertising results — for everyone.

The long term survival of domain name monetization — be it domain parking or otherwise — depends on giving advertisers bang for their buck. The past two days I attended a closed-door summit led by traffic quality experts Click Forensics that addressed delivering value to advertisers. The group discussed how everyone can work together to improve all parties’ fortunes in pay-per-click advertising. It included representatives of ad networks and publishers including a prominent domain name parking company. So that my presence wouldn’t quell lively discussion, I agreed to not disclose the attendees.

Based on what I learned from others at the meeting and conversations I’ve had with a broad range of online advertising constituents over the past several months, here are some key points that are important to the future of domaining:

All traffic is not created equal. A lot of domainers complain that they get low “quality scores” on their traffic. How can that be if they aren’t clicking on their own ads? Keep in mind that traffic is of high quality if it tends to convert for advertisers. You can measure conversions in many ways, but some traffic does better than others. Even similar visitors may convert differently if they are targeted better (e.g. no ads for mortgages on an unrelated domain).

Publishers are obsessed with “smart pricing” and their network quality scores. Most domainers park their domain names with parking companies (publisher networks). These parking companies get reduced payments from ad networks such as Google and Yahoo if the quality of their traffic is low. But figuring out what is and isn’t good traffic (beyond outright fraud) is difficult. Domain parking companies face a quandary. Do they kill “bad” traffic that still earns money from Google or Yahoo in the hopes that this helps the domain channel in the long run, or do they soak domain parking for all it’s worth right now to make a quick buck? It’s a tough question, because “in the long run we’re all dead”.

Fraud is rampant on parked domains. I’m convinced that parked domains can convert extremely well. I’ve seen data to suggest this. However, there’s a lot of click fraud on parked domains (just like on content networks). You should care about this. Even if you’re delivering good traffic, if other people on the network are committing fraud it brings everyone down.

Someone will always want domain traffic. I’ve speculated that Google and/or Yahoo may pull out of the domain channel, or at least eliminate long-tail domains and non-direct partners. If Google weren’t public it probably would have exited already. But advertisers will always want traffic from good domains that convert. There were a couple second-tier ad networks at the summit that would be glad to pick up what Google and Yahoo don’t want. Granted, they don’t have the number of advertisers and as high of click prices as the big guys, but there will always by PPC options for domains.

Arbitrage was bad for domain parking’s image. As painful as it was for people who bought traffic on one network to send to parked pages to lose those arbitrage privileges, there are several reasons most arbitrage traffic delivers comparatively low value. Just because someone clicks on a Google ad, lands on a parked page, and clicks on a Yahoo parking feed ad, doesn’t mean that visit should be valued as highly as someone clicking directly on an ad at Google and going to the advertiser’s page. Also, it’s really hard to explain to advertisers why they’re getting so many hits from carloans-123-now.info.

To reiterate, these are not the opinions of everyone in attendance nor necessarily Click Forensics. These are my observations based on the frank group discussion and discussions I’ve had over the past year.