The following applies to any company in the search space that works in direct navigation, parked URL and what.
I am using Marchex because they’re publicly traded and the data is available… but technically it would also work for NameMedia, too. Bear in mind, these companies would scoff at my suggestion because they are cash generating machines, but:
Today comScore came out and reinforced the fact that Google is creeping closer and closer to owning the search market. Over time, I also think that the parked URL and direct navigation industry faces some major challenges (I won’t name them here), so if you are running one of those companies, what do you do?
Do you continue running a direct navigation, domain parking company or do you leverage your traffic and move into a new direction?
I am a content guy, so I am biased, but I suggest that these companies should add content ASAP. This would boost their SEO ranking (because they’d have content), but by adding content, it would also open them up to display/banner and video advertising opportunities.
But what about a more crazy idea: what if it simply yanked its contextual text links and added video pre-roll advertising before video content (gee, I wonder where they can get the video content?)
I’d be the first to admit that by adding content, any content, overnight the revenue from text links would fall a bit. Over time, these sites would come to life and they’d get more traffic, more revenue, and more importantly, better quality revenue.
But you know what, if any of these companies really was progressive and could see what was ahead in 1, 3, 5 years, they’d shift their business to actually licensing content and selling ads, that would be the new kind of traffic arbitrage.
In fact, if a site like Marchex would swap out its text links (how it makes revenue) and ran video ads before video content, overnight it could create a company three times more valuable.
All I am doing here is extrapolating online video viewership stats and behavior to Marchex’s internal stat of 31M unique users per month.
Today Marchex closed at $385M in market cap, but a little bit of corporate restructuring and financial engineering would yield a company three times as valuable.
In this case, I used 100% pre-roll frequency, which is madness on any other site, but if its sites remain of the direct navigation nature (aka, users don’t return more than once), then this works. Also, the idea of the $20 CPM is simple: with high quality, generic domain names, it’s easy to argue that someone typing in for sushi.com for example is a very targeted user, hence the decent CPM rate.
You can send my consulting fee by mail, cash works fine.
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