JohnDeMayo.com: Internet Advertising Insight

History of consumer incentive/co-reg/sweeps/related programs

     My friend Mr. Jay has a great post on consumer incentive promotions campaigns here, if you haven't seen it yet.  As a result of reading his post, I had a very amusing conversation with a former co-worker the other night, as we discussed the history and evolution of these types of consumer advertising sites over a few bottles of wine.
     One of the first messages I remember seeing in the genre was the old colonize "you have one message waiting" banners that drove to various sweepstakes sites, that derived revenue primarily through co-registration.  Jay was one of the leaders in the next evolution of offers in this genre, with the "prize package", where you needed to enter your email and navigate through various offers to receive your "prize package" ($225 value ;) -- as he engineered and managed this highly effective consumer promotion for a couple of years or so for our former employer.
     Eventually the sweeps sites and "prize package" sites were beaten by the "you have won" sites, as described in Jay's post referenced above.  Instead of promising a chance to win something, or instead of promising some not-so-well defined prize package, consumers are told they have "won an ipod*", a much stronger consumer message....until the consumer later finds out they are required to fill out certain offers in order to qualify.
        So anyways, since Jay didin't give himself any credit for creating a winning piece of the evolutionary chain that eventually became the consumer incentive promotion model, I figured I'd jog his memory and touch on a few of the business models that lead to the one that dominates today.

A Domain Name Valuation Primer

    The domain name space seems hotter then ever these days, and lots of my friends and contacts from the internet advertising industry seem very aware of this space, as compared to just a year or two ago.  As companies like iREIT ramp up significantly, and as other potential acquirers like march-ex stay in the game, competition for purchasing already-registered names and portfolios is really heating up.  Additionally, the market for purchasing recently-expired domains has really become efficient with a large number of smaller players bidding snap prices right up to what I believe to be their immediate resale value in many cases.  The number of companies pursuing new registrations has grown significantly too over the past 6 or so months, with more and more companies taking advantage of the trial period through various registrar partners.  Only those with the best and most timely data sources combined with very efficient operations seem able to make a buck here.

    I’m not an expert in the domain name space compared to many of the more-knowledgeable people out there.  I am however reasonably informed as compared to people that don’t have a lot of background in the space, and as such have been fielding a lot of inbound inquiries and briefing a significant number of people on some of the basics of the space.  As such I thought it might be interesting to talk about some of the characteristics of a domain name, and how they relate to a domain’s resale valuation.

    When trying to value a domain name for resale, I normally start by trying to understand it along following dimensions:

1)    What is the traffic and revenue to the domain?
·    How is the domain being monetized, and does the methodology appear optimal?
2)    How likely are you to lose the domain name due to TM issues
·    Domain names with potential trademark issues typically sell at a significant discount.
3)    How permanent is the traffic to the domain name?
·    A domain name that used to have a site on it will typically lose traffic quickly, as inbound links and repeat visitors disappear
·    A domain name that is a misspelling of an existing site may quickly lose traffic if the existing site becomes less popular.
·    A domain name related to a recent event, seasonal event, or new term may lose traffic if that event or phrase receives less attention moving forward.
·    A domain name that receives it’s traffic simply because it’s composed of generic words, that has never had a site on it, that is not receiving traffic because the name is similar to that of an existing site, is likely to have little or no loss of traffic over time.
4)     What development potential does the domain name have?
·    Not all generic word type-in domains are created equal.  While its possible eExams.com and eTests.com might get a similar amount of traffic of similar value, eTests is probably more valuable from a development perspective as it looks more natural then the double-e present in eExams.

    Considering the above criteria, one can start to evaluate the potential resale value of a domain or portfolio of domains.  Domains without TM issues, composed of generic words, whose traffic is stable and permanent per #3 above and that are not very brandable, might sell for 6-8 years revenue in this market, if the proper buyers were found and the deal was of appreciable size.

    Domains with TM issues, or domains that had sites on them very recently where one might lose the domain quickly or where traffic is declining quickly, often sell for as little as 1-2 years revenue based upon the existing revenue run rate.

    In the end valuing a domain or a portfolio is a fairly complex art, but I hope the above helps get some folks thinking headed in the right direction.

    And on a more personal note, a plug for one of the domains I am entertaining offers on and thinking about selling.  FreeEssays.com.  Averages 337 visitors per day and $56 revenue per day over the last month or so.  No TM issues, very stable and permanent traffic.  It’s a somewhat developable name, although the three consecutive “eee”s make it a little hard to look at.  Looking for offers around $200,000 or 10 years revenue (net to me).  Since most potential acquirers have better revenue share deals with whomever they monetize their domains through, 10 years revenue to me may only mean 7-8 years revenue for them.  Not a bad potential return on investment if you pick up a stable domain at 7-8 years revenue….that’s an anticipated annual 12.5% - 14.3% return on your money if traffic and revenue stay flat – and to date traffic and revenue to the domain and many with similar characteristics have only been increasing.

From spyware to gold for Olympian Dale Begg-Smith

     I've been following various threads with some amusement, after a name I certainly remember from the industry won gold in this year's olympics.  While my memory dredges up only vague memories of Mr. Begg-Smith related to non-payment and questionable business practices, other sleuths have dug up quite a wealth of information.  This thread at the Geek/Talk message board is a good start and links to most of the relevant articles and info that the 'net community has gathered.

      See:

The Age
Real Tech News
ZDnet
Spam_Kings

Adchemy

After a good while in stealth mode, Adchemy is showing a public face.  Please check out the careers section if you work in the DR internet advertising space.

Geoff Ramsey and OMMA: Thank you very little.

  It's after 10 PM here on the west coast, and I really, really didn't appreciate an automated recording of Geoff Ramsey's voice-spam-call promoting OMMA's upcoming event.  I would have been even less happy had I happened to have been on the east coast and been awakened by a call on my cell after 1 AM.  I'm not entirely sure what list they plucked my cell phone number from, but I am pretty sure I didn't request being bothered this late at night by automated call-spam.

  Now it's probably legal to call my number with a solicitation given I didn't add my cell to the national DNC registry.  But it's probably not a good idea.  Not for Geoff's reputation, nor OMMA's.  I can say they've turned me off in a big way, and I am unlikely to believe in or rely on their respective marketing opinion, given how they have abused their relationship with me in a big way tonight.

  I'll be giving them a call tomorrow morning at the number they mentioned, 212 204 2006, to complain about this rude and poorly planned intrusion on my night.  It shows they have no respect for the time or preferences of their prospective attendees.

Friendster recapitalizes at $3m pre.

I am absolutely floored, reading on TechCrunch about the valuation Friendster apparently just recapitalized at.  Having some understanding as to their page views and unique user base, seeing how obtrusive they are willing to be with advertising, and guessing at the fact that it probably shouldn't take much in the way of staffing to maintain this site (given how few features are being added)......something just doesn't make sense.

If I had to give some advice to the folks over there, specific to the revenue (not cost) piece of their business:

-License your behavioral and demographic data.
-Work with partners that can help empower you to use your behavioral and demographic data on behalf of your advertisers.
-Build an opaque, manual, bidded model like those employed by MSN, Y!, and AOL to clear excess remnant inventory to direct marketers efficiently with a minimal amount of headcount and no additional technology.
-Better and more thoroughly integrate classifieds, jobs, and related into relevant and applicable areas of other sections.