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Domainers Can’t Get No Respect

Last week the second part of my “Domaining & Subdomaining in the Local Space [1]” pubbed on Search Engine Land, and I’m particularly pleased with it, although my friends can deservedly kick me around a bit for writing articles too long. I did quite a lot of research for the two-part series, most particularly for this second segment which was focused entirely on Local Domaining.

One of the main things that I’m pleased about was my effort to be as objective as possible in writing the article — not only did I want to report on what is going on in local-oriented domaining, and who’s involved, but also to provide some concrete conclusions and recommendations which people could take away. I was upfront in disclosing my past negative bias about domaining, and in the course of writing the article I found that I had to revise my assumptions a few times over – in favor of Domaining, actually. Working off and on, I wrote the article over the course of about two months.

While doing the research, I became aware that the Domaining industry seems to have a bit of “younger sibling complex” — as an industry, they wish to be considered a respectable, bona fide line of business. Unfortunately, they have a few things which have been hampering that aim to some degree:

  1. Many people have been exposed to cybersquatting, typosquatting, and trojan-horse sites which have damaged the public’s perception of domainers. While a number of companies have been springing up which have highly ethical practices and do only high-quality domaining, the industry’s been sand-bagged by the past sins of a lot of anonymous individuals who have exploited domain names for a fast buck.
  2. The industry has been disrespected by a degree due to the perception that domaining isn’t very sophisticated. This isn’t really accurate, since the top domaining companies frequently have very sophisticated tools and processes for selecting domains, registering domains, hosting and deploying content on domains, and algorithms for estimating the traffic potential of domain names. Further, on the face of it, that bias isn’t really fair — someone who’s developed an elegant, simpler method for making money should be admired so long as it’s not a criminal method.
  3. There’s little independent reporting of domain industry traffic figures. This is a case where there are significant challenges to independent reporting agencies in identifying “domaining” traffic from other types of traffic, since one has to assume varying amounts of user motivations in going to domains directly — this is something that Danny Sullivan mentioned in my article’s comments in reference to the Visual Sciences statistics — and, there are tech reasons why traffic sometimes has referrers stripped out — so, the few figures currently published on direct domain traffic are not clearly all attributable to domaining. In addition, a number of the top domaining companies have valid reasons for avoiding the disclosure of all the domain names in their portfolios since that could reveal some competitive intelligence about their strategies and proprietary processes.

Since the domaining industry is a bit defensive/insecure about how the public perceives them, it wasn’t really a surprise that my article immediately attracted some criticism from folks. Frank Schilling, in his Seven Mile blog, posted a write up about my article called “Search Engine Land of Make Believe [2]“. In it, he mentions a number of positive figures about direct navigation traffic, but none of the figures are very reliable.

He mentions one figure about large amounts of Yahoo ad usage coming in from domain name traffic, though it’s apparently from an analyst’s estimate — and Wall Street analysts typically do not understand how internet metrics are computed, and particularly don’t understand the issues involved in lumping all types of apparent direct navigation traffic in together (no independent traffic reporting agency I know of can differentiate between traffic coming in from a user typing in a domain name versus clicking on one of their favorited bookmarks, and we won’t even go into all the situations where referrers are not being passed due to browser/platform security settings).

Another figure he cites is an Efficient Frontier report on direct navigation [3], though others have already pointed out [4] a number of issues with accepting that report at face value. The graph I see in the report actually shows a pretty sharp degradation in conversions after a few months of the ads running — a normal enough progression since CTRs typically drop off as users become more familiar with the ads, though not not a progression that I would expect if the majority of the traffic on those sites were from new users visiting them for the first time through directly typing in assumed domain names.

Finally, he cites an anecdotal mention from someone within Google quoted on how AdSense was seeing 5 million unique visits per day from the domain distribution channel, but if we assume that number is still accurate today and compare it with comScore’s estimated number of Unique Visitors to Google for May [5] (120,010,000), it’s not all that significant. It’s also not all that interesting if you compare it to the total estimated number of worldwide internet users [6]. So, Frank doesn’t really convince us that things are fantastic with these figures.

So, the reason why I or any other informed analyst or tech reporter would write a cautious and conservative article about domaining is that there’s just a lack of independent validation of the traffic figures, along with something of an inability for collective assessment of true conversion quality. As Danny noted in his comment on Frank’s posting, advertisers can’t opt out of this subset of Google’s nonsearch traffic, and parked domains are not segmented out in reporting stats.

My conservative assessment is merely based on the amount of independent data at-hand, and not on a bias in favor of search traffic. For all of us who lived through all the hype associated with the radical new business models that were promoted during the dot-com boom some years ago, we remember all too well the implosion of the dot-com bubble. The lesson we learned was to focus on the business model and on good statistical evidence from objective sources.

Frank’s hope that:

“Perhaps one day I will visit ‘Search Engine Land’ (the website) and read a less cautious piece that accurately portrays the domain name traffic industry and gives it much deserved respect….”

isn’t all that likely to happen until there is a greater degree of transparency and more solid, independent reporting on traffic and collective conversion rates.

I conclude in the article that there’s significant traffic in domaining networks of sites, and that there’s good money to be made from it for local business companies. But, I suggest caution in monitoring of the quality of that traffic and its associated conversion rate (real conversion rates – not just CTR). I should have also suggested that not all domainer companies should be considered the same — some are great, while others have portfolios full of scummier sites that publicly-traded companies would want to avoid. I actually am impressed with some of the businesses in the industry such as SEDO [7] (who were quite admirable in their recent efforts to police the domaining of names purchased by the unscrupulous in the wake of the Virginia Tech shootings), and REIT [8] impresses me as well. In any case, I didn’t beat anyone up in the article, and I gave the whole thing as fair a shake as I could.

The domainer industry doesn’t need unqualified, glowing reports from analysts and reporters like me — they can continue to laugh all the way to the bank with the money they’re likely generating. But, if they do wish to get more approval and admiration as an industry, there is a way to accomplish it.

Independent traffic reporting companies are currently unable to assess and report on the traffic for the overall industry, or for particular large companies within domaining.

So, Domainers, if you want to prove to everyone the amount of traffic going through your industry, I suggest that you partner with comScores, Nielsen/Netratings, and Hitwise and talk to them about how they might be able to better identify and report upon your traffic. Most likely, this would require that a number of domaining companies would need to team up in order to report all of their domains to those metrics companies after which the traffic reporting firms would be able to group together usage data collectively. Perhaps the domainers could supply their domain portfolio lists to an independent agency, such as the Internet Commerce Association, which could then privately provide the collective list to the reporting agencies.

So, how about it, domainers?  If you want to really make the eyes of CEOs and investors shoot open everywhere, move out of the shadows and get some more independent reporting on what’s going on with all of your many sites!