lonecity.com

I probably haven’t mentioned it on my blog yet, but I happen to dabble a bit with domain parking.  Basically I’ve bought up a few doman names that recieve regular type in visitors and I am selling the traffic to advertising companies.  I watch the domain name auctions closely, because from time to time a fantastic name comes up and occasionally I think it might be worth buying.  This domain was one I bought that didn’t turn out to be worth what I expected.  win some/lose some

Anyhow I thought I’d write today about the biggest thing to happen to the domain parking industry in the last two years.  Google has decided to enter the domain parking business.  Well actually google has been there all along, but the way it worked is a third party ad company would purchase your traffic and match it with google or yahoo’s advertisers.  Essentially google was behind the racket but as a domain owner you never really delt with them.  Last week google announced they are going into direct competition with the parking companies and allowing you to park your domains directly with google.

Now when I say its the biggest thing to happen to parking I mean it, but I don’t mean its the best thing.  Realistically its a huge step for google twards monopolizing the online advertising industry.  The domain parking industry is a complicated web of buying and selling.  Its heart is similar in nature to that of the stock market.  People bid high or low from one day to the next based on trends and magic numbers they seem to pull out of the air, but in essence beneath it all there is real physical property.  (the domain name)  Each property has a real base value which equates to the number of people who visit that domain multiplied by the amount of money you can soak out of each visitor. 

Take for an example yacht.com  I didn’t even bother to look and see what is there, but I can already tell you that name is worth oodles of coinage.  Why?  Its simple.  If you are John Doe Rich F*c(R and you are looking to buy a yacht you might think to do a bit of research on the internet first.  You might just stumble on Yacht.com.  With a name like Yacht.com and a half decent looking website you almost instantly trust their oppinion on what makes a good yacht, and better yet you trust their oppinion on who to buy one from.  So now Joe’s yacht company pretty much has to pay $20 - $100 for a lead from you if they want to be the company you tell everyone makes the best luxury yachts.

Prior to now, Google set the pricing of what a click would cost joe’s yacht company.  They’d use active bidding between Jims Yacht and Joes Yacht and Teds Yacht and come up with a price strategy where whoever was willing to pay the most got the most clicks and when they ran out of money the next guy gets what is left.  (there’s a finite number of people looking to buy a yacht each day)  So if google decided that Jim was willing to pay $8 for a lead and Joe was willing to pay $10  Leads would cost $10 until joe ran out of money then they’d drop to $8.  Now google takes the $10 and keeps $6. (ever wondered exactly why their stock is so damn valuable)  They pass on $4 to the parking company who recruits the owner of Yachts.com at whatever cost they can get away with.  He could get anywhere from $1 to $3.50 from the parking company depending on how hard they have to work to keep his valuable traffic, and on how valuable his traffic is.

So how is google cutting out the middleman a good or a bad thing?  Well the owner of yachts.com may only get 10 people a day visiting his domain.  Its a fantastic domain, but when you look at the big picture $35.00 a day isn’t enough money that google is going to bend to the domain owners will.  If google only wants to give hime $.10 a click and google wants to keep the other $9.90 all he can do is advertise elsewhere.  Now google has made a move in an attempt to bankrupt all of the “elsewheres” he could go to.  They guy who owns yachts.com doesn’t have much to worry about because he has a valuable enough domain that he could approach Jims Yacht directly and still get his $3.50 per visitor pretty easily.  Its just alot more work.

The little guy is the one going to get stamped out in all of this.  While yachts.com might survive, concider the owner of a lesser domain like say wheatflour.com  They probably only were getting $.10 to begin with, and its likely they don’t see enough traffic to make it worth the time for Jim’s mill to deal with them direct.

Earlier this year google already nearly stamped out Yahoo in the failed Microsoft Yahoo merger.  Now google is stomping out all the smaller online advertising companies.  It won’t be long before google is truly a monopoly.  Things don’t bode well for online advertising’s future.  Pretty soon Jim’s yacht company may find themselves being charged ten times as much for a lead because there is no other way than to pay what google asks.  In turn the owner of the property who provides the lead will recieve pennies and google will keep all the reward.  Googles monopolistic instinct is similar to Walmart in the retail trade.  They’re your best friend now, but soon they’ll be your undoing.  Be prepared for the future everyone here comes Google-Mart.  Once they merger we will have officially been bought out and no longer a democracy at all.  We’ll be a dictatorship with king GooMart controling our every move. 

Perhaps someone wants to run out and register GooMart.com!