It’s a new year and I’m back (well almost) from taking a break since Christmas. Blogging is in my blood so I thought that it would be worthwhile reflecting for a moment on my last post about the charity that supports children that are HIV positive that my wife and I support called “Acres of Love”.During the previous year I invited domain owners to support the charity with donations and about $2,500 was raised. This year the total has been $0. I could rant and rave about this being a sad indictment on our industry but I believe that it has nothing to do with people’s hearts and more to do with their wallets.
Since the economic downturn through 2008 domain owners have typically experienced a 30% decline in parking revenues. This downturn has meant that there is less money to go into purchasing domains and this has caused a decline in domain valuations.
As fear grips a relatively new burgeoning industry like domains we can often lose site of the true reason for the value of our assets. We bring traffic or brandability to advertisers and in the past the amount that they paid was largely determined by the market for traffic domains or their own perception of value for brandable domains.
The online advertising market has continued to grow in 2008 therefore logically we should have all experienced an increase in earnings per click. The only reason why we haven’t is that the advertising aggregators (Google/Yahoo) have devalued domain traffic in order to retain greater revenue for their own traffic from advertisers.
This is not the market reacting to the quality of domain traffic but a third party acting in their own self interest. I often hear domain owners complain about this but if you were Google or Yahoo would you do anything different? If you have a stratospheric share price you need to continue to bolster your quarterly earnings reports in any way possible. Reducing the smartpricing or quality score of domain traffic is a relatively easy solution to drawing additional revenue into your own traffic channel. I believe that this is the reason for the downturn that many of us have experienced in PPC revenue.
On the brandability value of domains the global downturn has negatively impacted marketing budgets to the extent that domains have dropped down the priority list for many companies. For example, when you look at the US automotive industry, banking and finance industries I wouldn’t see many marketing directors rushing out to invest a million dollars in a domain.
Ultimately, what does this all mean? It means that there are less discretionary funds for children with HIV and charities such as “Acres of Love” that provide a better life for these kids. This is sad but true.
Source: Posted on WhizzBangsBlog by Michael Gilmour -- Reprinted with permission -- January 5, 2009