New Exchange Gives Advertisers Direct Access to Domains

Back in the days of the domain name gold rush, folks hoping to get-rich-quick snapped up thousands of generic domains in the hopes of flipping them for profit or starting lucrative e-commerce businesses. Bulk domain buying continues, but the profiting prospects have changed as users alter Web behavior. Sendori is hoping its new Google-like auction-based system attracts quality advertisers, and domain name owners in search of new ways to monetize their properties.

Sendori is a third party marketplace allowing advertisers to place bids on traffic to generic domains. When advertisers win bids on generic domains or domain categories, the system redirects user traffic to those domains to advertiser sites for a given period of time. Right now, there are about 100,000 domains in the database to choose from.

“There are a lot of very attractive keyword domains that get significant traffic, but that traffic isn’t readily accessible to advertisers,” said Ofer Ronen, co-founder and CEO of Sendori. Advertisers bid on a cost-per-visitor model through the system, and can set daily bidding budgets and target domain redirects by location. The system also can track conversions for advertisers.

Currently, advertiser links show up on so-called “parked domains” through buys on search ad networks like Google AdSense. This has become a primary means of monetization for generic domain name owners, and for affiliate marketers looking to drive traffic to ad partner sites. But those link-laden sites can annoy users, leading them down wild goose chases from one search ad-filled site to another. Because of the perceived lack of quality, these types of sites have earned a reputation as bottom-feeders among some industry insiders.

Rather than relying on search marketing to take advantage of traffic to generic domains, said Ronen, “We want to make it a more direct approach.” The firm is focusing on attracting real estate, consumer electronics and education advertisers directly and through ad agencies.

Susquehanna Financial Group Analyst Malindi Davies thinks a domain exchange makes sense for domain portfolio holders looking for new ways to profit from their properties. “A lot of them see they might have a hard time monetizing in the future as Google and Yahoo clean up their algorithms,” she added.

Sendori is counting on a significant portion of user traffic to arrive through direct navigation, which takes place when users enter a URL directly within their browsers or click a bookmarked site. Many companies owning large portfolios of domain names rely on direct navigation to bring in traffic. Marchex, for instance, claims about 90 percent of traffic to its domains arrives through direct navigation or browser bookmarks. The company owns about 220,000 domains and derives most of its revenue by feeding Yahoo search ads and business reviews onto its sites.

Marchex is not currently working with Sendori, according to its VP of Public Relations Mark Peterson. But firms like it that own several domains would make likely partners. Domain owners can set a reserve price in the exchange system, making their domains available for redirects to an advertiser’s site only when a minimum bid is made.

Sendori will probably attract direct response and lead generation marketers, but may also attract brand advertisers looking to send traffic to a temporary campaign micro-site or special product pages. Purchasing coveted domain names can cost thousands of dollars. For instance, domain name portfolio company and marketplace NameMedia is currently selling for $18,000 and for $132,000. Today, there are “easily over a million” generic domains available from owners, estimated Susquehanna’s Davies. “There’s always room for third party exchanges in this kind of market,” she added.

UPDATE: Although this report states that Sendori’s system redirects user traffic to the exchange’s domains to advertiser sites for a given period of time, there is no time limit on domain redirects. Rather, advertisers receive traffic as long as their bids are competitive. The original statement was intended to indicate that advertisers can bid for access to the domains as long as they choose to.

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