Domain Buying Slows as Parking Payouts Falter

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If you’re one of those people that’s annoyed by all those ad-packed domain “parking pages,” you may be seeing fewer of them in the future. Domain monetization is becoming more difficult as ad payouts decline, which is translating into a slowdown in new domain registration.

VeriSign said yesterday that 11.5 million new domains were registered in the third quarter of 2008, a decline of 2 percent from the previous quarter and well off the high of 14 million in the first quarter of 2008. The renewal rate for existing domains slipped to 72 percent, down 1 percent from the second quarter and down from the high-water mark of 77 percent seen in late 2006.

The data was included in VeriSign’s quarterly Domain Name Industry Brief (PDF), which cited the tightening of ad policies at Google as a factor. ”The number of new .com and .net domain names registered with the intent of generating online advertising revenue saw pronounced weakness again in third quarter due in part to changes in Google’s AdSense program and lower spending trends in Internet advertising,” VeriSign noted in its analysis.

The domain advertising industry experienced huge growth in recent years due to speculative domain buying and moves by registrars and web hosts to display pay-per-click (PPC) advertising instead of house ads. The “domaining” boom boosted the fortunes of registrars, as well as central registries like VeriSign, which maintains the .com and .net top-level domains. But the parking boom irked many Internet users, who grew weary of encountering the ad-filled pages when they mistyped a domain name.

Domain professionals often switch between different domain parking services seeking higher payouts. But the recent decline in PPC rates has muddied those distinctions, according to Leonard Holmes, who tracks parking rates at his Name Monetizer newsletter.

“By now it is obvious that income is down from PPC parking companies,” Holmes wrote in his December newsletter. “It is also becoming more difficult to track which companies are paying the best, because comparing this month’s revenue to last month’s revenue almost always results in a decrease – whether domains are switched to different companies or not.”

VeriSign expects the decline in new domain registrations to become more pronounced in the fourth quarter. “The base of .com and .net domain names is estimated to increase one to two million domain names in the fourth quarter,” VeriSign says. That compares with quarterly growth of 2.3 million names per quarter in the first nine months of the year.

About the Author

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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  1. Domaineering Profits Up

    As identified by Prof. William Lorenz, "Domaineering" is the web-based marketing business of acquiring and monetizing Internet domain names purposely focusing on their use specifically as an advertising medium rather than primarily speculating on domains as intellectual property investments for resale as in domaining where generating advertising revenue is considered more of a bonus while awaiting a sale. In essence, the domain names function as virtual Internet billboards with generic domain names being highly valued for their revenue generating potential derived from attracting Internet traffic hits. Revenue is earned as potential customers view pay per click ( PPC ) ads or the Internet traffic attracted may be redirected to another website. Hence, the domain name itself is the revenue generating asset conveying information beyond just functioning as a typical web address. As the value here is intrinsically in the domain name as an information carrying vehicle and not in a website's products or services, these domains are developed for advertising, ( i.e, "parked" ), and not into "conventional" websites. As with traditional advertising, domaineering is part art and part science. Often to be the most effective as an advertising tool, the domain names and their corresponding landing pages must be engineered or optimized to produce maximum revenue which may require considerable skill and keen knowledge of search engine optimization ( SEO ) practices, marketing psychology and an understanding of the target market audience, including demographics and buying habits. Domaineering generally utilizes a firm offering domain parking services to provide the sponsored "ad feed" of a word or phrase searched for thus creating a mini-directory populated largely by advertisers paying to promote their products and services under a relevant generic keyword domain. Occasionally content is added to develop a functional mini-website. Ethical domaineers contend that their product, i.e., "domain advertising", is a bona fide offering of goods or services in and of itself which provides rights to and legitimate interests in the generic domains they use. This serves as a rebuttal or defense in addressing occasional spurious accusations of cybersquatting on trademarks. Domaineers and some of those who advertise online using generic keywords believe domaineering provides a useful, legal and legitimate Internet marketing service while opponents of domaineering decry the practice as increasing the ubiquitous commercialization of the world wide web. Domaineering aka "domain advertising" is practiced by both large organizations which may have registered hundreds or even thousands of domains to individual entrepreneurial minded domaineers who may only own one or a few. The earliest known verifiable identification and defining of domaineering as a distinct Internet advertising practice is attributed to Canadian Professor William Lorenz.