There Are a Number of Variables at Play in Domain Parking Revenue — Hey Michael
There’s a reason each parking firm performs differently.
Alright, it’s time for me to jump in.
Yesterday Elliot Silver wrote regarding parking firms and what they bring to the industry. Then today Michael Berkens wrote a post (rebuttal?) as well.
The discussion is stoked by Frank Schilling’s fresh parking firm.
A few things up front:
1. I think it’s great that Frank is opening up his platform to others.
2. This article isn’t meant as disrespect to anyone, I just want to show the variables at play in domain parking. It’s notable that people understand why parking revenue differs.
3. Yes, I now work with a parking firm. The knowledge I’m sharing below is knowledge I had ahead of working with them.
OK, let’s get started.
In Michael’s article today he writes:
Now IF Frank’s parking venture proves by in sizable to pay out more money to the domain holder’s than the domain holders received at the parking firms for the same domains and same traffic, then there will be only one conclusion, that parking firms are paying a smaller percent of the the revenue they agreed to pay them.
The notion is that a parking firm lied to its clients regarding payout percentages if Frank’s parking firm ends up paying significantly more.
Anyone who has tried multiple parking firms knows that your revenue is very different across platforms. Sure, payout percentage may be part of that, but there are many other factors at play.
So lets review the variables.
1. Upstream ad provider. This is usually Google or Yahoo/Bing. These each perform differently for various types of traffic, e.g. US vs. rest of world, foreign language, sensitive terms, etc.
2. Percentage the upstream ad provider pays the parking firm. This is one of the biggest factors in why the percentage your parking firm pays you isn’t as relevant as you might think. Let’s take an extreme example to illustrate. Let’s say parking firm A and firm B each agree to pay you 80%. But firm A is paid only 50% from its upstream provider while firm B is paid 100%. In this case, firm A clients are only paid 40% of the upstream provider’s take while firm B clients are paid 80%.
The percentage the upstream ad provider pays is largely related to the amount of traffic the parking firm aggregates. This is one big value proposition parking firms provide to you: by aggregating your traffic with others, it can negotiate for a higher payout percentage. If you really think your parking firm is trying to screw you, Google has a self-service parking solution for you. Try it out and see how it works.
3. Percentage your parking firm pays you. See #2.
4. Alternative feeds. Regardless of which parking firm you use, there’s a good chance that some of your traffic can’t be monetized on the primary upstream ad provider. In some cases a sizable chunk of traffic will be sent to so-called “Tier 2” providers. The quality of these providers — and which traffic the tier one provider won’t monetize — at each parking firm can make a difference in your payouts.
5. Optimization. This is a big one. Google and Yahoo/Bing have an ad feed, but what each parking firm does with it is different. Some use one click implementations, some use two. Some optimize keywords for you manually. Some have automated algorithms to do this, or a combination of both. You might suggest keywords that are better/worse than the defaults. All of this has a major effect on how much money you earn with each parking firm, even if the other variables are identical.
As you can see, there are many variables at play. IF you hold all of the others constant, then Michael’s statement that one parking firm paying more than another holds true.
There are also issues with your traffic. Michael did note that he’s suggesting you send the same domains and traffic. But I think that’s not as easy to discern as most people think. Perhaps which domains get traffic fluctuates throughout the year. So if you park with one firm through November and then switch to another ahead of Christmas, you aren’t comparing apples to apples.
Your traffic quality might change from time to time as well as certain domains get more or less traffic.
Which brings up another point. Yes, all traffic is not the same. But for the most part parking firms separate traffic by quality, so your pure type-in traffic is not being lumped together with crap. (And just since your traffic is pure type-in doesn’t mean it’s high quality.)
To summarize, I don’t think differences of even 20% or so mean someone is up to shenanigans, even if both are paying out the same percentage. In a follow up comment Michael writes:
…But what if the numbers are 50% higher?
What will that tell us regarding the numbers we have been getting for years?
I’ll tell you this. If the numbers at Frank’s parking firm are that much higher than all the other parking firms you’ve tried, then Frank is either a master negotiator or the millions of dollars parking firms have invested in optimization over the years has all gone awry.
But it would certainly be great news for the industry.
