- Impact
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The following is a repost of an article from the Sedo newsletter for any of you folks who don't read it. If the author's predications are correct, the future is very bright for good keyword domain holders.
FEATURE ARTICLE
New Tactics for Combating Click Fraud
By Christian Kalled, Director of North American Brokerage
What may turn out to be a major revolution in our industry went largely unnoticed by the domain community earlier this month: it was reported that for the first time in its history, Citicard (a division of Citigroup) acquired the majority of its new client base in 2005 via search engine marketing (SEM), a relatively new department which outperformed the traditional and long-standing practice of direct mailing (DM).* While you might be left wondering “what does this have to do with today’s domain aftermarket,” allow me to quote from Simon West’s 1997 film Con Air: “My first guess would be: a lot.”
If Citigroup and its contemporaries are just discovering the cost efficiencies of internet advertising and the power of leveraging domain portfolios as proprietary content networks to deliver their message more effectively than before, this can only mean good things to come for premium, generic domain holders and highly-targeted keyword junkies. Major Fortune 500 companies are taking the lead. Johnson & Johnson™ uses baby.com as a content rich site with helpful information and resources while integrating their related products.
For a long time the argument has been that the value of domains—at least from an advertiser’s prospective—is intrinsically tied to the volume of natural traffic they receive. In the context of the recent past, this has largely held true when advertisers only had two real choices for investing in online traffic campaigns: they could either pay-per-click on Yahoo!’s transparent Search Marketing network (formerly Overture), or “guestimate” as to what their competitors might be paying on Google’s AdWord network and then attempt to counter those positions.
Today, the paradigm is beginning to shift. Major brand holders like Citigroup and The New York Time’s online “Guides” network, About.com, are beginning to take SEM into their own hands. The growing number of dedicated “SEM strategists” and online brand managers at the executive level is a trend that is likely to increase according to an article recently published by SearchEngineWatch.com.* If this prediction holds true—and they continue to see positive returns on investment—we can expect more aggressive network-building through domains in the future by content providers and brand-holders who are eager to increase their exposure to online markets not only through SEM but also by acquiring domains with intrinsic traffic.
Another factor that may accelerate this trend is the ongoing click fraud issue that continues to bedevil search. As new and sophisticated means of defrauding paid search evolve daily, it is likely that more and more advertisers will be dissuaded from investing in this channel, and may instead choose to leverage their budgets by diversifying their online marketing efforts and building their domain portfolios. It isn’t hard to understand how the added security and accountability of this strategy might be attractive to cautious advertisers, and it wouldn’t be surprising if more of them began to turn away from PPC as a result.
The more search becomes a vital part of our consumer behavior, the greater the need will be to more clearly define and target specific user needs and market segments. It is not unreasonable to imagine that the more fierce competition becomes in trying to leverage the Internet for marketing purposes, the greater the need will be amongst advertisers to distill and extend their message to highly defined sub-segments. By targeting potential consumers in a more interest-specific way, advertisers are likely to be more successful in turning prospects into clients. This “long tail” theory in online retailing has already been vindicated by the success of Amazon.com, and is likely to continue to manifest itself in new and exciting ways as the Internet matures.
Should more and more Fortune 500-types embrace the marketing power of the Internet, you can expect the demand for industry specific, highly targeted domains to increase proportionally. After all, the image and character of your domain network ultimately defines your user base, and let’s face it: we are a keyword driven culture.
We’ve already begun to see this trend emerge from big ticket sales here at Sedo: Bike.com ($500,000), Blue.com ($500,000), Hotels.eu (€257,000), Wifi.com ($225,000), Nasty.com ($200,000), and Shopping.eu (€153,500) are all testaments to the value of the Internet and its addressing system as a means of driving targeted campaigns and increasing market exposure, brand awareness and industry presence.
It is clear that brand holders and brand builders will continue to explore and invest in our industry because they have discovered, along with the rest of us, that domains are inextricably tied to search, and that search is a highly effective vehicle for successful marketing. What’s more, it is the ONLY advertising channel that is truly global in scope. However, with click fraud developing we need to look for new ways to diversify our online marketing efforts. Building networks of highly targeted domains with intrinsic traffic is becoming more and more popular and has proven to be a wise investment.
*Sara Holoubek, “Your New Title: The VP of Search,” September 13, 2006, www.searchenginewatch.com.
FEATURE ARTICLE
New Tactics for Combating Click Fraud
By Christian Kalled, Director of North American Brokerage
What may turn out to be a major revolution in our industry went largely unnoticed by the domain community earlier this month: it was reported that for the first time in its history, Citicard (a division of Citigroup) acquired the majority of its new client base in 2005 via search engine marketing (SEM), a relatively new department which outperformed the traditional and long-standing practice of direct mailing (DM).* While you might be left wondering “what does this have to do with today’s domain aftermarket,” allow me to quote from Simon West’s 1997 film Con Air: “My first guess would be: a lot.”
If Citigroup and its contemporaries are just discovering the cost efficiencies of internet advertising and the power of leveraging domain portfolios as proprietary content networks to deliver their message more effectively than before, this can only mean good things to come for premium, generic domain holders and highly-targeted keyword junkies. Major Fortune 500 companies are taking the lead. Johnson & Johnson™ uses baby.com as a content rich site with helpful information and resources while integrating their related products.
For a long time the argument has been that the value of domains—at least from an advertiser’s prospective—is intrinsically tied to the volume of natural traffic they receive. In the context of the recent past, this has largely held true when advertisers only had two real choices for investing in online traffic campaigns: they could either pay-per-click on Yahoo!’s transparent Search Marketing network (formerly Overture), or “guestimate” as to what their competitors might be paying on Google’s AdWord network and then attempt to counter those positions.
Today, the paradigm is beginning to shift. Major brand holders like Citigroup and The New York Time’s online “Guides” network, About.com, are beginning to take SEM into their own hands. The growing number of dedicated “SEM strategists” and online brand managers at the executive level is a trend that is likely to increase according to an article recently published by SearchEngineWatch.com.* If this prediction holds true—and they continue to see positive returns on investment—we can expect more aggressive network-building through domains in the future by content providers and brand-holders who are eager to increase their exposure to online markets not only through SEM but also by acquiring domains with intrinsic traffic.
Another factor that may accelerate this trend is the ongoing click fraud issue that continues to bedevil search. As new and sophisticated means of defrauding paid search evolve daily, it is likely that more and more advertisers will be dissuaded from investing in this channel, and may instead choose to leverage their budgets by diversifying their online marketing efforts and building their domain portfolios. It isn’t hard to understand how the added security and accountability of this strategy might be attractive to cautious advertisers, and it wouldn’t be surprising if more of them began to turn away from PPC as a result.
The more search becomes a vital part of our consumer behavior, the greater the need will be to more clearly define and target specific user needs and market segments. It is not unreasonable to imagine that the more fierce competition becomes in trying to leverage the Internet for marketing purposes, the greater the need will be amongst advertisers to distill and extend their message to highly defined sub-segments. By targeting potential consumers in a more interest-specific way, advertisers are likely to be more successful in turning prospects into clients. This “long tail” theory in online retailing has already been vindicated by the success of Amazon.com, and is likely to continue to manifest itself in new and exciting ways as the Internet matures.
Should more and more Fortune 500-types embrace the marketing power of the Internet, you can expect the demand for industry specific, highly targeted domains to increase proportionally. After all, the image and character of your domain network ultimately defines your user base, and let’s face it: we are a keyword driven culture.
We’ve already begun to see this trend emerge from big ticket sales here at Sedo: Bike.com ($500,000), Blue.com ($500,000), Hotels.eu (€257,000), Wifi.com ($225,000), Nasty.com ($200,000), and Shopping.eu (€153,500) are all testaments to the value of the Internet and its addressing system as a means of driving targeted campaigns and increasing market exposure, brand awareness and industry presence.
It is clear that brand holders and brand builders will continue to explore and invest in our industry because they have discovered, along with the rest of us, that domains are inextricably tied to search, and that search is a highly effective vehicle for successful marketing. What’s more, it is the ONLY advertising channel that is truly global in scope. However, with click fraud developing we need to look for new ways to diversify our online marketing efforts. Building networks of highly targeted domains with intrinsic traffic is becoming more and more popular and has proven to be a wise investment.
*Sara Holoubek, “Your New Title: The VP of Search,” September 13, 2006, www.searchenginewatch.com.
