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Oversee.net Acquires ShopWiki

Andrew Allemann — Fri, 28 Jan 2011 15:46:51 +0000

Oversee jumps into retail vertical in big way.

Oversee.net, parent company of DomainSponsor, Moniker, and SnapNames, announced today that it has acquired shopping comparison network ShopWiki Corp.

The network of 11 country-specific shopping comparison sites will be the cornerstone for Oversee.net’s entry into the retail vertical. Oversee.net already has comparison engines in the travel and financial services sectors with LowFares.com and CreditCards.org.

ShopWiki.com is ranked #527 on Compete.com, which estimates the site receives over three million unique visitors per month.

ShopWiki Corp was backed by investment firm Generation Partners, a company that “gets” the online content space. The firm also invested in Demand Media, which owns eHow, eNom, and Hotkeys. Demand Media went public this week.

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Demand Media Pops On Open, Great News for Domain Industry

Andrew Allemann — Wed, 26 Jan 2011 15:00:32 +0000

Domain name company gets nice lift in initial public offering.

Shares in Demand Media (NYSE: DMD) have popped 40% on open to just over $23 a share after pricing yesterday at $17, above the anticipated range of $14-$16.

This is good news for the domain name industry. Demand Media owns domain name registrar eNom, parking company HotKeys, part of NameJet, and a large portfolio of domain names. It’s true that much of the company’s growth is coming from its content businesses such as eHow, but the underpinning and stable revenue base comes from domain names.

Demand Media pulled this off despite recent questions about its accounting practices as well as rumblings from Google that it will look into “content farms”, which many people say was a direct attack on Demand Media.

Public companies trade for larger multiples than private ones, which means the economics of acquisitions change. While Demand Media focuses on growing its eHow-like properties, don’t be surprised if it flirts with acquisitions of other domain registrars, parking companies, and more domain portfolio owners.

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Avoid This Domain Parking Scam

Andrew Allemann — Mon, 27 Dec 2010 15:21:20 +0000

A domain parking scam to avoid at all costs.

Over the past year several Domain Name Wire readers have forwarded emails to me from someone promising to boost revenues to parked domains that didn’t receive any traffic.

I received one such email on Christmas with the title “Merry Christmas to domainer!”

The email promised:

without any extra cost needed and no complicated development work, we can help you increase your no-traffic and non-earning parked domains. In some cases, by using our exclusive and proven techniques, revenue can grow by 5000%+

So how do they do this? They pump traffic to your parked domains. In 99% of circumstances, this is against your parking company’s terms and conditions. Odds are you won’t get paid out by your parking provider.

Whenever someone pitches you something too good to be true, just hit the delete button.

Does this sound too good to be true?

With our service, You can earn hundreds if not thousands of US dollars per day with only 150 No-traffic and useless domains! If we fail to increase your earnings, we will pay you $1000.

I played along with one of these emails, and was told that if I opened an account at HotKeys and parked my domains there I could earn $800 a day.

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Demand Media Adds Two Board Members

Andrew Allemann — Mon, 19 Apr 2010 16:43:19 +0000

Demand Media bolsters board with media and web analytics talent.

Demand Media, parent company of eNom, has added two members to its board of directors.

Peter Guber, chairman and CEO of Mandalay Entertainment Group and Josh James, who co-founded Omniture, have joined the board effective immediately.

Guber founded Mandalay in 1995 after leaving Sony Pictures Entertainment, where he was CEO. James founded web analytics firm Omniture in 1996 and took it public in 2006. Adobe acquired Omniture in 2009 for $1.8B.

Demand Media produces over 4,000 pieces of content every day including articles and videos. Its content is distributed to a number of its web properties including LiveStrong, eHow, and Trails.com. It also owns eNom, BulkRegister, and domain name parking company HotKeys.

The company is rumored to be considering its IPO options, with a possible initial public offering later this year. The appointment of a major media executive and a successful serial entrepreneurto its board seem to reinforce this rumor.

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A Demand Media IPO Could Disclose Guts of eNom Operation

Andrew Allemann — Fri, 16 Apr 2010 02:42:54 +0000

Demand Media contemplating IPO — which could mean an open book on the company.

Financial Times is reporting that Demand Media is exploring an Initial Public Offering and could file as early as August.

Demand Media is a fascinating story. What started as a domain startup quickly acquired eNom and Bulk Register, then found itself creating content through a massive and efficient supply chain.

As when any company files to go public, an S-1 from Demand Media would show us a lot about the inner workings of the company, including subsidiary eNom.

When Go Daddy filed to go public (it later ditched its plans), we learned a lot about its profit centers and operations. It also connected the dots to its Standard Tactics subsidiary.

When NameMedia filed to go public (it also ditched its plans), we learned how much it paid for a number of its acquisitions.

A Demand Media filing could potentially tell us:

-Details of eNom’s partnership with Network Solutions for NameJet
-How many domains the company owns and the parking revenue it makes
-Revenue or operations of Acquire This Name
-How much it paid for domain parking company HotKeys and for its other acquisitions

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In Demand (Part 2): How the Domain Business Can Benefit from Demand Media

Andrew Allemann — Wed, 03 Feb 2010 20:45:18 +0000

What Demand Media can do for the domain name business.

[This is the second part of a two-part story on Demand Media. See part one here.]

For many years, Demand Media has been a mystery to the domain name industry. It’s a big player, for sure. It snapped up eNom and then BulkRegister, making it the second largest domain name registrar in the world. Its registrars have 10 million domains under management, and Demand Media owns a nice portfolio of its own. The company also acquired domain parking company HotKeys.

But what does that have to do with Demand Media’s burgeoning content business?

Demand Media is creating the tools that will help the domain industry do what everyone is talking about: develop their domains.

In a blog post last November, HotKeys founder and Demand Media VP Michael Blend explained the connection. Demand wants to take the same tools it used to create a top 20 online media network and bring the magic to domain owners. It believes there’s an opportunity to bring value to the 100 million undeveloped domains.

Will it work? When Demand was just a collection of media sites and domain registrars, it didn’t add up to much. But now that the company has a full fledged content army and social tools, it is beginning to show the potential to make it happen.

It’s not as simple as just taking a few articles that would have been published on eHow.com and publishing them on a virgin domain name. There’s no search engine juice, and the revenue model breaks down. But RichContent gives us a hint of what’s to come. Demand Media has good social media tools, which, when combined with good content, can power the web.

Here are two ways Demand Media could enable domain name owners to get more out of their domains in the near future:

Fast content - as domain owners launch web sites, they need content. It needs to be compelling, too. Demand Studios can offer content targeted to individual domains, as well as provide the tools to quickly publish it. It can also create a syndication network, driving SEO value back to the new web sites.

Perpetual parking - domain parking companies only focus on today’s click. The real play is to captivate visitors and turn them into long term revenue sources. One way to do this is to get their e-mail address and send them follow up newsletters with ads. Demand Media has the scale (and tools via Pluck) to create relevant content-based newsletters across tens of thousands of topics, bringing recurring revenue to domain monetization.

Demand Media doesn’t yet have the magic bullet for domainers who park their domains. But it is building the engine, and certainly ranks at the top of the list of companies that could turn domain monetization on its head.

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Domain Name Industry Acquisition Watch

Andrew Allemann — Wed, 11 Mar 2009 17:55:44 +0000

2009 could include more mergers, acquisitions, and outright closings.

Domain name companies including registrars, parking companies, and portfolio holders are considering their strategic options in 2009.

Domain Name Wire has learned that Dark Blue Sea (ASX: DBS) has been shopping its services businesses, including Fabulous parking and registration. Dark Blue Sea CEO Richard Moore wouldn’t comment directly on what the company is considering, but he did refer me to the company’s third quarter release:

In the context of the expected industry consolidation, the Company is currently exploring a range of strategic options with other domain industry service providers. Whilst it is a difficult time to consummate transactions given the industry-specific and general economic uncertainty as well as market volatility, discussions with other industry participants suggests the timing is appropriate.

Whether or not Dark Blue Sea sells any of its businesses or enters into other agreements, 2009 will be an interesting year for domain companies. Based on conversations with a number of domain company executives and sources over the past four weeks, here’s how I see the playing field.

Services businesses’ margins are small and getting smaller. Domain services, such as registration and parking, work on fairly slim margins. These are under increasing pressure. Companies are considering what, if anything, to do with their service lines. Under particular pressure are small domain parking companies.

There are fixed costs and variable costs at parking companies. The fixed costs include the cost of initial servers, technology/software, and enough people to service accounts and keep the lights on.

Small domain parking companies get less revenue from Google and Yahoo than their bigger counterparts (perhaps 10%-15%), but still have the same baseline costs. At some point, small parking companies become unprofitable.

With a fall in parking revenue, some of these parking companies may have slipped below thresholds required by Google and Yahoo and may not have their contracts renewed.

Fabulous generates $2M-$3M USD quarterly in gross revenue from parking customers’ domains and about $1M USD from parking its own domains. It hands over roughly 80% of the gross from customer domains to its parking clients.

You can expect to see smaller parking companies selling themselves to big players and at low earnings multiples, or simply shutting their doors.

Outsourcing is in. Look for Directi, parent company of Skenzo, to reap benefits of its lower cost operations in India. Skenzo already provides the back end for a number of parking operations (including those of domain registrars) and registrars. Perhaps existing parking companies will outsource some of their operations to Directi.

Who’s in a good position?

Sedo – although its domain parking revenue has taken a hit, the company remains strong. Its brokerage business is holding steady, even though it’s a small part of the company’s revenue. It can also tap into the resources of its parent company Adlink.

Oversee.net – buoyed by a $150M investment and no debt, Oversee may be opportunistic in 2009. The company has been burned by its two big acquisitions (SnapNames because it lost Network Solutions and Moniker because it bought at the top of the market). But lessons learned may lead to smart buys at the bottom of the market rather than the top. And although SnapNames isn’t performing as planned, more drops in the coming year may boost its revenue.

Directi – I have less knowledge of Directi’s positioning, but it does appear strong. It received an investment in its Skenzo unit and remains an outsourcer of choice.

Demand Media – Demand Media, parent of eNom, NameJet, and HotKeys, is a wildcard since it’s hard to understand its strategy. But I expect the company to be opportunistic in the downturn.

In general, companies that own more of the value chain should hold up better than one trick ponies.

Specific acquisitions

Here are a couple ideas:

Existing Google partner buys Fabulous – existing Google (NASDAQ: GOOG) partners include NameDrive, Sedo, Oversee.net, and this little company called GoDaddy. Perhaps GoDaddy should form a serious domain parking unit to take advantage of its massive scale. GoDaddy already has a partnership with Dark Blue Sea to sell domains. Maybe GoDaddy could pick up a true domainer’s registrar and create a new brand around it.

Oversee goes international – it’s no secret that DomainSponsor is the dominant Google U.S. partner and Sedo the dominant Europoean/international Google partner. Although buying domain parking companies can be a tricky business (no long term customer contracts), it will be interesting to see if DomainSponsor makes a play here to bolster its international capabilities.

[Update: DBS CEO Richard Moore e-mailed me to suggest that the paragraph I took from the company's third quarter report should be read in the context of the entire section. You may read the report here (pdf).]

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