There’s a reason each parking company performs differently.
Alright, it’s time for me to jump in.
Yesterday Elliot Silver wrote about parking companies and what they bring to the industry. Then today Michael Berkens wrote a post (rebuttal?) as well.
The discussion is stoked by Frank Schilling’s new parking company.
A few things up front:
1. I think it’s great that Frank is opening up his platform to others.
2. This article isn’t meant as disrespect to anyone, I just want to show the variables at play in domain parking. It’s important that people understand why parking revenue differs.
3. Yes, I now work with a parking company. The knowledge I’m sharing below is knowledge I had before working with them.
OK, let’s get started.
In Michael’s article today he writes:
Now IF Frank’s parking venture proves by in large to pay out more money to the domain holder’s than the domain holders received at the parking companies for the same domains and same traffic, then there will be only one conclusion, that parking companies are paying a smaller percent of the the revenue they agreed to pay them.
The notion is that a parking company lied to its clients about payout percentages if Frank’s parking company ends up paying significantly more.
Anyone who has tried multiple parking companies knows that your revenue is very different across platforms. Sure, payout percentage may be part of that, but there are many other factors at play.
So lets review the variables.
1. Upstream ad provider. This is usually Google or Yahoo/Bing. These each perform differently for various types of traffic, e.g. US vs. rest of world, foreign language, sensitive terms, etc.
2. Percentage the upstream ad provider pays the parking company. This is one of the biggest factors in why the percentage your parking company pays you isn’t as relevant as you might think. Let’s take an extreme example to illustrate. Let’s say parking company A and company B each agree to pay you 80%. But company A is paid only 50% from its upstream provider while company B is paid 100%. In this case, company A clients are only paid 40% of the upstream provider’s take while company B clients are paid 80%.
The percentage the upstream ad provider pays is largely related to the amount of traffic the parking company aggregates. This is one big value proposition parking companies provide to you: by aggregating your traffic with others, it can negotiate for a higher payout percentage. If you really think your parking company is trying to screw you, Google has a self-service parking solution for you. Try it out and see how it works.
3. Percentage your parking company pays you. See #2.
4. Alternative feeds. Regardless of which parking company you use, there’s a good chance that some of your traffic can’t be monetized on the primary upstream ad provider. In some cases a large chunk of traffic will be sent to so-called “Tier 2” providers. The quality of these providers — and which traffic the tier one provider won’t monetize — at each parking company can make a difference in your payouts.
5. Optimization. This is a big one. Google and Yahoo/Bing have an ad feed, but what each parking company does with it is different. Some use one click implementations, some use two. Some optimize keywords for you manually. Some have automated algorithms to do this, or a combination of both. You might suggest keywords that are better/worse than the defaults. All of this has a major effect on how much money you earn with each parking company, even if the other variables are identical.
As you can see, there are many variables at play. IF you hold all of the others constant, then Michael’s statement that one parking company paying more than another holds true.
There are also issues with your traffic. Michael did note that he’s suggesting you send the same domains and traffic. But I think that’s not as easy to discern as most people think. Perhaps which domains get traffic fluctuates throughout the year. So if you park with one company through November and then switch to another before Christmas, you aren’t comparing apples to apples.
Your traffic quality might change from time to time as well as certain domains get more or less traffic.
Which brings up another point. Yes, all traffic is not the same. But for the most part parking companies separate traffic by quality, so your pure type-in traffic is not being lumped together with crap. (And just because your traffic is pure type-in doesn’t mean it’s high quality.)
To summarize, I don’t think differences of even 20% or so mean someone is up to shenanigans, even if both are paying out the same percentage. In a follow up comment Michael writes:
…But what if the numbers are 50% higher?
What will that tell us about the numbers we have been getting for years?
I’ll tell you this. If the numbers at Frank’s parking company are that much higher than all the other parking companies you’ve tried, then Frank is either a master negotiator or the millions of dollars parking companies have invested in optimization over the years has all gone awry.
But it would certainly be great news for the industry.
Michael Berkens says
“”I’ll tell you this. If the numbers at Frank’s parking company are that much higher than all the other parking companies you’ve tried, then Frank is either a master negotiator or the millions of dollars parking companies have invested in optimization over the years has all gone awry.””
Or the numbers they have provided us over the years did not reflect the percentage they agreed to pay us.
Andrew Allemann says
Michael, that’s certainly possible, but you won’t be able to determine it just from having good success with Frank’s parking platform.
Uzoma says
I certainly concur with Berkens, in that there is indeed the third, and most likely, possibility as he eloquently elucidated.
Michael Berkens says
Andrew
I wouldn’t base anything off of solely my results.
I’m talking about multiple domain portfolio owners having the same shared results.
Andrew Allemann says
@ Michael – but even then, does that prove that domain parking companies have been paying you less than they promised? There are a bunch of variables at play.
I’d also find it highly unlikely. If all parking companies were colluding to pay out low amounts, surely one of them would have seized on the opportunity before Frank to offer better payouts.
Michael says
If someone could have done what Frank could earlier, and not destroy their own earnings, relationships, etc… they would have.
It took Frank to make this happen.
Basically, by laundering in all kinds of trash traffic and arbitrage traffic with the great traffic the parking companies could realize greater returns from a bigger pile of traffic. To do what Frank did would have meant less money for any of them, plus alienating themselves from others in the industry, so they continued on, taking more and more each year, and now here we are …..
Hogs get slaughtered.
.
Trico says
All of this would be moot if the parking companies were more transparent.
Andrew Allemann says
Trico, what sort of transparency would you like from a parking company?
C_Sivertsen says
one thing to remember is that new parking solutions are often working with fresh channels or accounts at their PPC providers. these virgin channels often show fantastic payouts initially, because there is no smart pricing in play yet. this is why new solutions always generate buzz initially but then come back to earth if you check back months later, post-smart pricing.
maintaining increased payouts, in the face of arbitrary smart pricing, is the challenge. it literally has nothing to do with the perceived “quality” of the domains either, which adds to the chaos. initial buzz is easy in this scenario, the premise of the parking solution will be tested in the months ahead and how the solution adapts and optimizes itself will determine it’s level of success.
RH says
Complete transparency. What part of complete does anyone not understand ?
Alan says
C_Sivertsen’s comment above is absolutely spot on. If you haven’t read it, read it, and read it again if you don’t understand.
Additionally – how is InternetTraffic calculating their partner’s earnings? Google only pays it’s partners once a month, so the revenue numbers InternetTraffic is displaying are probably only estimates. If InternetTraffic is over inflating their estimates, which I’m sure they are due to these ‘virgin channels’, there is going to be a lot of earnings adjustments at the end of the month (most likely in the downward direction).
Rick and Mike might want to bite their tongues until they receive their first payout.
Michael Berkens says
Alan
I think I used the word IF in my post in caps and also here in the comments. (yes I Did)
I agree we need to wait to see what happens with the numbers and beyond just my portfolio and Rick’s portfolio but IF the numbers that we are initially seeing pan out then we will chat again.
Matt says
I think most people with first-hand knowledge will endorse an explanation along the lines of C_Sivertsen’s comment, and confirm that smart pricing is a much bigger factor than revenue share. And unfortunately even controlling the quality of domains is unlikely to maintain performance; the quality baseline doesn’t come from the domain channel.
Trico says
“Trico, what sort of transparency would you like from a parking company?”
Well Andrew it’s really all about money, isn’t it?
I’m referring to the lack of transparency from the Parking companies many have written about.
I’m referring to the lack of transparency regarding how much $ is earned from parked domains and what percentage is being kept by the ad feed provider, what percentage is being kept by the Parking company and what percentage is actually being paid out to the domain owner.
Am I mistaken?
Is any of this info revealed?
Also I would amend my comment to include not just Transparency but Standards.
Michael Gilmore of Whizbang’s blog did a great write up of these topics back in 2008.
Perusing thru one of the articles I see that the theme for the 2008 Traffic Conference in Las Vegas was “transparency”.
Excerpt from Whizbang’s blog:
http://snurl.com/StandardsAndTransparency
“In a new series of articles I will endeavour to unpack the whole notion of standards as the launching point for transparency. Without standards we won’t have a methodology to measure whether a parking company is being transparent.
I believe that standards will need to be developed and agreed to for:
– What should be reported back to domainers
– Traffic – what is a unique vs. a URL vs. content request etc.
– Clicks – What clicks are counted and what aren’t
– Earnings Per Click – How is this calculated on a click by click basis
– Earnings as a percentage of an advertising partners revenue – How is this measured?
– Pop-under revenue – when is a pop-under counted or not counted?
– RPM – how should RPM actually be counted?
– And the list goes on and on.”
Andrew Allemann says
@ Trico – yep, I’m not challenging you, I’m just curious what transparency you’re looking for. I can understand wanting to know the parking company is giving you to some degree. But they contractually can’t tell you how much Google/Yahoo are giving you, so then you’re stuck with a number that doesn’t mean much. Is 80% at company A better than 60% at company B? It’s impossible to tell.
WQ says
As someone with 10 years experience in this business I’d say Mike is right.
No further comment as Mike sums up the point he is trying to make rather well.
Craig says
I am losing all respect for parking companies. For 3 years I have parked domains. Now at one company ( not naming ) They don’t reply to emails and when they regularly answer the phone they have no idea what they are talking about.
They have not paid any funds , due to low TQ which is fair BUT still allowed me to send traffic their. More than likely keeping all earning for themselves. If they want us to start trusting them they need to release stats .
Andrew Allemann says
Michael, I think a few months should give you a really good data point.
Again, I’m not saying you can’t earn more with Frank. I don’t know. But I don’t agree that if you earn significantly more then that means your previous provider was ripping you off.
Trico says
“@ Trico – yep, I’m not challenging you”
I didn’t take it as such. 🙂
–
“…contractually (they) can’t tell you how much Google/Yahoo are giving you…”
I didn’t know. Thanks.
Andrew Allemann says
@ Trico – Another interesting thing is that some contracts have a sliding scale based on the amount of traffic/revenue earned. So the % paid by Google could go up or down over time.
Tommy G says
None of you understand what is going on. The end result will be a pay per transaction model. All of you that park your domain names are just lazy. Real traffic with real content will result in a pay per transaction model which will eliminate all of the trash traffic. Only a completed sale will be of any use to anyone..
Why pay 30 bucks for a auto insurance click when you could get 100.00 for a sale. Or 1000.00 for a home loan.. Your models are sold old PPC is dead on arrival. The lead or transaction model is coming… Good by ppc. And lazy domainers
Attila says
It’s quite funny that any other industry (selling products or offering a service) no matter how big or small, you will never hear the clients or customers demanding transparency.
In the real world, business is business. Margins is a companies business and not the clients. If the price is no good, the client moves on to another company whose price or offering(s) is good. Never have I heard from a client “I need transparency from you (like how much your making) or I wont buy from you” lol.
Michael Berkens says
Attila
If you sign up for XZY affiliate program and they promise you 5% of sales or 10% of gross or 60% of revenue, you don’t think you should have a way to check if your getting that?
Or should we just go down the line of “we should take what they give us and be happy about it?
Bob Fontaine says
“…contractually (they) can’t tell you how much Google/Yahoo are giving you…”
Do we know that Google/Yahoo for some reason informed the parking companies what they pay the domainers direct? Wh would they give up that proprietary info?
Isn’t the agreement about what Google/Yahoo will pay the parking companies – which would likely be different than what they pay on adsense, for example?
I always thought it strange that a public company like G or Y could derive significant revenues from these affiliate programs, yet keep secret the % of what they pay the affiliates in relation to what the affiliates help them gross.
G or Y could decide they wanted a better number for Wall St, and simply keep a bigger slice of the pie for that quarter.. and nobody would be the wiser. And they wouldn’t even consider it unethical. Since they dont promise a specific % to the affiliates, they can make it what they want. It seems to me.
Andrew Allemann says
@ Bob Fontaine – they pay out a net 68% on Adsense for Content publishers and 50% on Adsense for search.
As for deals with parking companies, that’s a confidential contract between Google/Yahoo and the parking company
Adam says
“But it would certainly be great news for the industry.”
Guess that depends on which company you work for 🙂
Andrew Allemann says
@ Adam – I don’t think so. If Frank brings something unique to the table, others will quickly copy it.
Matt says
Andrew mentioned that the biggest obstacle to transparency is that parking companies are contractually limited by ad providers. I think most would be thrilled to provide more transparency as it would simplify sales and customer service while improving brand perception. Why do they accept such crippling restrictions? Because when there is only one viable advertising provider, anyone selling traffic to that ad provider is in a terrible negotiating position; you have to pick your battles. The weakness is on the demand side, and few are focusing efforts there.
I also wanted to point out that even if all transparency wishes were granted and you received an exact % breakdown of how the advertiser money is split for every click, it wouldn’t be very satisfying or useful. Rev shares are meaningless when the amount earned is determined by a black box system and can vary from pennies to several dollars based upon factors you don’t know, and a formula you’re not given. If that’s satisfying for you, you can always sign up with AdSense direct where the rev share is now public.
Andrew Allemann says
Here’s my take on Googles Black Box:
https://domainnamewire.com/2009/01/15/the-google-squeeze-how-googles-black-box-affects-partners-revenue/
SF says
Domainers have never really been viewed or treated as “Partners”.
Aggro says
What’s Schillster’s motive for doing this?
To help other domainers?
If so, why didn’t he do it 5 yrs ago?
Why now?
It’s all a last ditch effort for all parties (including Schillster) & parking IMO
A few month’s down the line when domainers’ last straw doesn’t work out, they’ll be saying “Frank who?”
Andrew Allemann says
@ Aggro – do you mean what’s Franks motive for opening up his new feed to others? The more traffic you bring to the table, the better the terms you get.
Dan says
Hi Mat,
With all due respect…
Your post #27 is the Whole Problem. Period.
“Rev shares are meaningless when the amount earned is determined by a black box system and can vary from pennies to several dollars based upon factors you don’t know, and a formula you’re not given.”
____
This paragraph totally sums up exactly what I personally think is total “BS”
Advertising revenue for you grows every quarter year over year…and what advertisers pay you for each click thru has not dropped the past 3 plus year, if anything it has increased.
So,
As just an example…
Please explain to everyone why payouts to publishers and/or parked domain(s), why it is for the same ad a company paid say a $1.00 per click through…was maybe paying $0.40 – $0.50+ from 2005 – 2008, is now paying maybe $0.03 -$0.25?
BTW: No one at Google knows how the “black box system” works? Because it sure is not working the same as it was a couple years ago…
Must have been a ‘tune up’ gone bad. 😉
Your a publicly traded company…you should have to give out more detailed information than:
We made 8 Billion in advertising this quarter…up from 7 Billion from the corresponding quarter…last year.
Dan
Dan says
Hi,
Here is My explanation as to why:
Good old “Capitalism” ( I am all for it BTW )
Since Google started its advertising programs almost 100% of its revenue had come from their advertising.
Now today,around 85% of ALL their revenue still comes from advertising.
How do you maintain quarter after quarter and year after year…growing advertising revenue with ‘impressive’ growth rates?
Easy, the first 4-5 years, but then it gets a ‘bit’ harder to keep the pace up.
So what do you have to do to keep advertising revenues from “plateauing”?
Which it looks like it started to do in about 2008.
Answer: Lower what you pay out…
Pure and as simple as it gets. And it all starts and ends at the top of the “food chain”
Put in all of what ‘Mat’ describes, “the black box system & and a formula you’re not given”
And ad revenues continue to go up impressively.
Except its not really just going up that much on its own.
What is really going on is…
What they are paying out is going down at the same time….making it look like ad revenue on its own is the only thing effecting the up-swing of ad revenues, more than it really is.
And ad revenues are going up on their own also, as online advertising spending has been on a steady raise, not decline in the past 3 years.
You combine these two factors together…you keep Wall-Street happy & the Share holders happy…quarter after quarter, and everything is fine a dandy.
Wall-Street would crush the stock, if the advertising revenue did not keep showing its impressive gains quarter over quarter…
1. Google cares about Wall-Street first,
2. Shareholders second.
3. Domainers & publishers…not in the top ten of this list.
I think it would be ‘relevant’ information for share holders and Wall-Street to know this information.
This is all IMHO of course 😉
Dan
Bob Fontaine says
So then, do “they pay out a net 68% on Adsense for Content”, or not? How do we know that.
I’m in a lawsuit right now where i’m claiming, among other things, that the other side was abusing “net” in our “net revenue share agreement”.
If G can simply deduct what they want to before paying out affiliates the “net”… then G can do whatever they want behind the curtain and nobody would knwo the formula.
As an affiliate, I think I very damn well SHOULD know the criteria they use when they are paying me (us). As a publicly traded company, I cant imagine it’s ok to call it advertising growth, when you are actually just paying less out to the affiliates.. type thing.
Adam says
They may copy it but if they end up losing their margin that isn’t particularly good news for one side of the biz
Dan says
Hi,
To my one of my points anyway:
U.S. advertisers spend a record $7.3 billion online in Q1
Online ad spending grows more than 23%, the Interactive Advertising Bureau says.
QUOTE:
IDC’s analysis shows Google Inc. as the market leader for the two major components of online advertising spending: search advertising and display advertising.
Google commanded 59.6% of search ad spending during the quarter, followed by Microsoft (7.9%) and Yahoo (7.0%). Google collected 14.7% of online display ad revenue, eclipsing Yahoo for the first time, which collected 12.3%.
Nearly half of total online ad spending (48.7%) is spent on search advertising and 33.3% is spent on display advertising, according to IDC. The company did not disclose what comprises the remaining 18%.
END QUOTE:
____
I Rest My Case! 😉
Best,
Dan