|
Webwork -> A buying opportunity in the domain aftermarket (12/12/2005 22:14:39)
|
At present domains are selling in the aftermarket, based upon validated traffic stats, for anywhere between 2-10 years of forward looking PPC revenue based upon current domain traffic/revenue stats.
Current revenue, in this equation as now applied, is the money received/month by the domain owner from any of the various sponsors of PPC "domain landing pages": Revenue.net, Fabulous, Sedo, Traffic Club, etc.
In this equation the current revenue, that is used at "the multiple" (years x revenue) is typically the domainer's revenue share.
What is the domainer's revenue share? The domainer's revenue share is, quite often, 50% of the revenue paid to the PPC landing page host by the PPC feed provider.
Who are the PPC feed providers? Typically, Google, Overture and some filler.
What percentage of the fee, charged to the advertiser by the feed provider, is paid to the PPC landing page service providers? Estimates are 50-70%.
Do the math.
You are an advertiser.
You pay Google/Overture - "the feed provider" - $1.00 for a click.
The feed provider, on a click on a parked domain, pays over to the PPC landing page host $.70 (on a good day?)
The PPC landing page host pays over to the domainer 50% of that revenue, or $.35+/-.
The savvy aftermarket domain buyer is paying 2-10 years max Xs $.35/clicks. You know what? After market domain sellers are falling in line with the mantra. "Okay, yeah, 2,3,5,8x 'my revenue'? Okay, we got a deal."
So, if you are an end user or beneficiary of traffic would it make sense to wade into the aftermarket and look for opportunities to buy clicks for 35% of the cost you are now paying?
Especially if you can get them for only 2-5+ years forward looking revenue.
Especially if the type-in domain is "the industry word": A generic word or phrase. You sell red, green and blue widgets? RedWidgets.com, BlueWidgets.com, GreenWidgets.com.
Will the costs for targeted web traffic go down in the future? Unlikely. So, you are locking in the cost of PPC traffic but buying at today's prices, which are discounted by 50-65% of the actual advertiser's cost-per-click.
Is there some risk in the equation? There is always the unknown. However, given the breadth and depth of the status quo what's the chance that the system will be ripped apart and torn down anytime soon?
I submit for your consideration that there is a buyer's market right now for an end user/beneficiary of direct navigation traffic. Savvy domain traffic aggregators are working the waters. End users should too.
In the realm of buying type-in traffic domains - in lieu of endlessly financing PPC buys - the year 2005 will look to PPC people paying for clicks in 2007 or 2008 like 1998 or 1999 looks to people who just entered the domaining space in 2005. The lament of some domainers in 2005? "Boy, I wish I would have known in 1998 then what I know in 2005." The lament of people paying by the click for traffic in 2008? "Man, I could have locked up that domain forever, based on traffic values, for only $$$$ - which I'm spending every year.
I'm suggesting that today's aftermarket prices for "traffic domains", which sales are frequently based upon a model that pegs the sale price to approximately 35% of the advertiser's annualized cost per click, will look cheap a few years from now . . when more people catch on to what I am talking about right now.
Don't count on this opportunity to last much longer. Aim for some targets. I suggest you focus on parked domains.
And no, my domains are not for sale. :)
|
|
|
|
