Mr. Johnson said customers responded well to the O.co advertising, but after watching the spots, “a good portion” of those who sought out the website went to O.com, instead of O.co. (O.com is one of the off-the-market single letter domain names still held by ICANN.)
via O, No! Overstock Backs Off O.co Name Change | News – Advertising Age.
Demand Media’s Q1 Revenue Beats The Street; Up 48 Percent To $79.5 Million.
By now, you’ve read about Demand Media’s results– they beat analyst’s estimates. Calendar Q2 2011 will be much tougher though.
There’s some good data in their filing– RPMs and revenue per domain. They grew their RPMs from around $10 to $15 on owned and operated sites. For their network business, RPMs declined a bit but are around $2-3. Revenue per domain is about $10 per domain– no surprises.
Overall, +1 to Demand Media for this transparency.
Founder of Oversee is working on a new company in the Facebook apps arena:
“ECPMs are pretty high in the social world compared to a year ago,”
ECPMs are healthy in the $2 to $5 range.”
via Domain-Name Vet Launches App For Paid Facebook Content – Venture Capital Dispatch – WSJ.
It is estimated that these parking companies including Adsense for domains (G’s own parking service) generate at least 5% of Google’s income, which is an insane amount of money, and fuels most of the domainer economy.
Now why would Google try so hard to eliminate direct navigation? A practice that generates them so much revenue each year? Because by eliminating URLs they are eliminating the free Internet. They will make more money eliminating the domain industry than by helping it. If everyone uses Google then all alternatives of Google will be killed. There are tons of other search engines available but only few are known. It is because Google is big brother, and they control your eyeballs.
Noteworthy is that a few years ago, there was an interesting article penned by a Business 2.0 writer about how Kevin Ham brokered a deal with the country of Cameroon’s domain extension– “.cm”.
Now, NameJet exclusively started accepting pre-orders for .cm domains.
via Pre-order Your .CM Domain Now, Start Making Money Off Domain Typos Soon!.
In many instances, online advertising driven business that often did a lot of acquisitions valued those acquisitions based on the future cash flow projections of the acquired assets. Similarly, some companies capitalized the cost of marketing and the amount they spent on marketing is often associated with the cash flow that those programs should generate.
But when those cash flows decline, the assets you have on your books need to be marked down, and this is why companies in this space are taking impairment charges. It is easy to see for a company like Marchex that owns domain names. Let’s say I own a lucrative travel domain that throws off $100 a year for the next 10 years and nothing from then on. I sell it to Marchex for $1,000 because everyone knows that that’s how much it’s worth. Immediately following the transaction, we enter into a recession and that domain will now fetch $90 a year for 10 years. Marchex would test it for impairment and then write off $100 of it. Anyhow here is the relevant bit from Marchex’s recent 8K, where they took a $177 million impairment charge (note that their market cap is around $150M right now):
Marchex preliminarily determined to record an estimated pre- tax $176.7 million non- cash impairment charge on goodwill and intangible assets in the fourth quarter of 2008. The impairment charge resulted in part from adverse equity and credit market conditions that caused a sustained decrease in current market multiples and Marchex’s stock price, a decrease in valuations of U.S. public companies and corresponding increased costs of capital created by the weakness in the U.S. financial markets and decreases in cash flow forecasts for the markets in which Marchex operates. Certain technology and domain assets were written- down due to the decreased cash flow forecasts. The impairment charge will not result in any current or future cash expenditures.
From Kesmodel's book, The Domain Game:
In the fall of 2002, a thirty-three-year-old man living in the Cayman
Islands made a rather unorthodox financial decision. He took all of his
family's savings, which totaled about $200,000, and invested it in thousands
of Internet domain names.
The move terrified his wife, who phoned her in-laws to warn them that
something might be wrong with him. But the man, normally conservative with
money, kept remarkably calm throughout his domain-buying binge. He'd done
lots of research and was convinced he was doing the right thing. "Don't
worry, honey," he said repeatedly.
At the time of Frank Schilling's big bet on Web addresses, the Internet
economy was in the doldrums …
I have not read it yet but I'm sure domainers and anyone interested in the economics of domain names and direct navigation will pick it up.
Another domain name play that’s trying to build up destination sites around their URLs.
Communicate.com, a Canadian company that owns about 800 domain names
including Perfume.com and Cricket.com, is expected to relaunch itself
on Wednesday as Live Current Media, with plans to become a network of
media and e-commerce sites. To buoy its relaunch, the company bought
tech upstart Auctomatic for $5 million–paid with $2 million in cash
and the rest in stock, according to company CEO Geoff Hampson.
Auctomatic, a start-up fostered by Y Combinator, was also backed by
former Google employees Chris Sacca and Paul Buchheit.
"At some point, we want to offer every Web site the ability to get
social media tools and content integrated into their site," he added.Demand Media’s first product with Pluck tools will be a social media
site launched in partnership with Lance Armstrong, called
Livestrong.com. Demand Media plans to introduce a beta of the site in
May.
