DomainMart Introduces Domain Monetization Allocation Analytics

Presenting a forward-looking methodology to allocate domain names among traffic monetization service providers.

Berkeley, CA (PRWEB) August 18, 2005 --- DomainMart, a leading provider of quantitative and analytical domain-name services, introduced today a forward-looking methodology to allocate domain names among traffic monetization service providers.

Unlike current trail-and-error techniques, our methodology is based on a predictive model and uses statistical tools to measure superior service performance," say Alex Tajirian, DomainMart President & CEO.

Domain monetization (DM) is a process of converting a domain names traffic to money. A monetization company places ads on domain name webpages. Advertisers pay the monetization company a fee, which is currently based on pay-per-click (PPC), i.e., every time a visitor to the domain name clicks on a link, the domain name owner earns money.

How to Allocate Domain Names AMong Monetization Service Providers?

A number of domain monetization service providers (DMSPs) have emerged. However, predicting the highest revenue generating service for a specific domain name is not a trivial process. DMSPs do not publish performance data or their search engine optimization tactics. Moreover, the prevailing methodology used by domain owners and domain allocation service providers is based on an ad hoc trial-and-error process, which is sub-optimal unless one gets lucky.

The Previling Solution

The current solution to the allocation problem involves the following steps:

Step 1: Park domain names across a number of service providers.

Step 2: Observe performance.

Step 3: Rebalance allocation of domain names among DMSPs based on relative performance of similar" domains. Allocate similar domains to the highest return generating DMSP during the experimentation period.

Step 4: Repeat Step 2.

Some allocation service providers claim that allocating similar domain names among various DMSPs can enhance revenue. This is simply wrong, as portfolio diversification works only if there is negative co-movement between returns. In the PPC world, CPC are expected to and have been increasing over time. Thus, the only possible source for negative co-movement is that traffic is decreasing, which is a bad sign for the DMSP.

Limitations of the Prevailing Solution

The current solutions have the following drawbacks:

1. To derive meaningful performance data, a very large portfolio is needed to allocate among expanding DMSPs.

2. Allocation analysis is based on ex-post performance. If your initial allocation turns out to be disappointing, without a predictive model there is a good chance that you will make another inefficient choice. A predictive model is necessary to avoid low performing services from the start. Moreover, it can be used to evaluate performance of a new entrant. Furthermore, past performance is not necessarily a good predictor of future performance.

3. Current criteria for grouping similar" domain names are too broad. Typically groupings are based on adult, country of traffic origin, and gambling. There may be other sub-factors that need to be controlled when making allocation decisions.

4. Superior performance" among DMSPs is not being identified properly. For instance, if revenue increases by 20% over the previous month, does that justify shifting domains to the superior" SMP?

Does Allocation Optimization Matter?

Yes! Performance variations are over 400 percent. Thus, if you are making $100 in monthly revenue, an optimized allocation may generate over $400 a month.

New Solution

When a domain name is accepted by a DMSP, you are provided the URL of the landing page that visitors to your domain name see.

We have developed a model to predict pre-tax profits based on expected cost-per-click (CPC) revenue from the landing page. The model has three components: revenue per visitor, traffic, visitor conversion rates, and costs. The traffic components take into account landing-page design and sources of traffic. There are three cost components:

1. Percent of CPC that is payout by a PPC manager to a DMSP.
2. Percent of (1) paid out by a DMSP to the domain name owner.
3. The fee charged by the allocation management service providers.

To test and refine the predictive model, we use actual performance data.

We use statistical models to measure superior performance. We shift our allocation to other DMSPs, only if we detect statistically significant performance improvement for a class of domain names.

Advantages of Using an Allocation Management Service

Below are the advantages of using a DMSP to managing the allocation process instead of doing it yourself.

1. Superior analytical capabilities and resources.

2. Economies of scale:

a. We are able to spread our research and development costs over a number of clients. Thus, our fee per client is reduced.

b. We can negotiate better deals with DMSPs.

c. Some DMSPs require a large number of domains or traffic. We are able to pool owners with few domain names.

d. We have developed personal relationships with the DMSPs to improve customer service and are able to work closely with them on landing page customizations when necessary.

3. Economies of Scope:
A number of parked domain names are for sale. We facilitate sales through an integrated appraisal, transfer, and escrow service.

4. Timesavings associated with analysis and the cumbersome process of frequently changing domain name hosting settings to that of a new DMSP.

An optimized allocation can increase your monthly revenue by 400 percent," notes Tajirian.

Future Improvements

1. Our predictive model improves over time as additional historical performance data is incorporated.

2. We use a statistical clustering model, similar to the methodology used in our appraisal, to identify factors that significantly influence clusters of performance.

3. We expand performance measures to include volatility of return, in addition to expected return.

About DomainMart
DomainMart is an industry leader in providing domain-name secondary-market products and consulting services, including appraisal, leasing, escrow, parking, private investment management accounts, protection, valuation, and traffic monetization management since 1996.

For more information, please visit http://www.domainmart.com/broker/parking/parking_enter.htm or contact:

Tom Saitori, Marketing Specialist
DomainMart
e-mail: TomSaitori@domainmart.com
Tel: +1 (415) 905-4234

# # #