Is Google’s Revenue Problem Directly Related to Domain Channel Losses?

Morning Folks!!

Has Google let the Golden Goose out of the cage? I am sure as hell going to make a case that is exactly what has happened. Let's be blunt, because domainers have been financially raped by Google over the past 5 years, domainers have abandoned parking in droves. The best domains have left. The most trafficked domains have left. And that has left Google holding the bag. Now domainers are not without blame, they allowed themselves to take less and less because we were spoiled by the easy money.

It was a great model for us back then. But when the dollars started drying up on payouts even tho Google kept charging the end user more and more, it was only a matter of time before resourceful domainers looked for other options. And so we did and so the BEST traffic has left Google for greener pastures. For bigger opportunities. For bigger payouts.

In 2007 nearly 100% of my revenue was through Google/Yahoo and parking. By the end of last year I was down to 50% and by the end of this year it will be 33% and declining. When you own the land, you get to build what you want and how you want. Each time a domain leaves the confines of parking, quality of Google traffic suffers and that traffic can NEVER be replaced. NEVER!

Let me be clear. Type in traffic is THE most potent traffic on the Internet and I will be DAMNED if I will change my view on that because the evidence is there. Now of course there are only a few hundred domainers that have this golden traffic and we are up against legions of MILLIONS of SEO and others that will feverishly argue against that. What else would you expect from them? They must protect their turf or we will all find out it is a bunch of smoke and mirrors.

See where I come from, one SALE has more value that 1 MILLION visitors and many will argue for the 1 million. Matter of fact, most will. 1 Million visitors have COSTS associated with it. One type in visitor that turns into a sale has virtually no cost in comparison. Those that ignore sales will be looking for a new profession in time. No company can exist without some form of sales.

For 17 YEARS I have argued with techies. Guess what? They lose and NOW it will soon be recognized. It takes 20 YEARS to bust a myth this big and wide that so many have bought into. But rest assured that myth will and IS being busted. The end user is not an idiot. He KNOWS it is all about sales.

Google messed up by letting PURE domain traffic out of the cage. Google messed up by overpaying for SHIT for so many years. Google put folks into business because they bought WORTHLESS traffic and mixed the shit with gold and then lost track of which was the shit and which was the gold. They paid for trademarked traffic they had no business paying for. They paid for invented traffic of mini sites that would use SEO to gain the system. They outsmarted themselves and I am here to tell you there are long term ramifications for short term gains and that is what we are seeing.

They once owned all the gold and now they don't. Type in traffic is Destination Traffic. Folks that have been failed by search looking for a direct alternative. Type in traffic has no equal. It's a fact few recognize but a FACT it is. Just like water runs down hill, PURE and specific type in traffic turns into sales more than any other traffic. It is not a debatable subject for me. You are free to disagree but I am also free to reject it as I have for so many years. Point is, I will soon be recognized as being right all these years and THAT is a problem many will have to deal with.

The traffic from the best domains in the world no longer go to Google. Instead they let the birdie out of the cage and they will never have an opportunity to get that traffic back. Of course some of those domains are now full fledged businesses that might or might not use Google. As time goes on we are seeing more and more options and Google just may be the last on the list for us. We are shit bums to Google and as such have been treated like we are toe jam.

Somebody at Google fucked up and they fucked up bad and fucked up long term. They can NEVER get this traffic back again. Arrogance has a cost. When an end user pays Google $5 and we get 1/2 a penny that is getting fucked because they can. No other reason. Now there are alternatives and in the coming year we are going to see more and more BLOOD spilled by Google.

Just as a refresher.....when the market crashed in 2007-2008 Google was at a high of $750/share. Now they finally got back to par while other stocks have doubled and tripled in value. $750/share? Not any more. Apple at the time was under $200 a share. Amazon under $100. Sirius Radio was pennies. That makes Google one of the worst performing stocks over this time and it may not be that rosey from here.

And in the next 5 years some think Google will lose the reign....Read this. I don't know if that will happen but there are indications of very strong headwinds ahead. So far Google has survived by buying the threats. That was why I was happy Groupon said 'No'. I don't care about Groupon. I care about competition. And while Groupon may not be a huge threat, Apple most certainly is.

Nobody has to believe me or agree with me. But on the same token, NOBODY can make me change how I see things unfolding. NOBODY can derail my 20 year plan. NOBODY can force me to abandon a plan I have stayed staedfast to for all these years. During that time theroy has turned into fact and I have used those facts to build on and to illustrate what I see, why I see it and how it all unfolds from here on out. I just ask a simple question. Is my vision today closer or further from reality then it was in 1995? Nobody has to get it 100% right. But certainly many along the way got it 100% wrong.

Have a GREAT Day!

Rick Schwartz

24 thoughts on “Is Google’s Revenue Problem Directly Related to Domain Channel Losses?

  1. Nick Capece

    Really appreciate your insight and knowledge. Great stuff.
    Do you think G’s off target Q3 correlates to the Penguin and Panda shift that has been culminating in all of 2012? Just for the fact that Wikipedia and other non revenue sites have moved up closer and closer to above the fold page one SERPS. While squashing all the smaller sites that have been”optimized for adsense” (not necessarily”Made for Adsense” junk) on such a massive scale, I imagine that it meterially affects direct profit in aggreagte for Google. Maybe shareholders will agree the efforts to improve user experience by targeting some of the most successful Adsense generating sites has gone overboard?

  2. Rich

    Probably most of Google’s woes can be attributed to less demand for services, i.e., less people shopping for goods due to the general economic situation. Across the board, companies are witnessing less demand due to the fact that the average American family is bringing in the least amount of income since the 1980s. Some companies, such as Apple can continue to have revenue growth for a variety of reasons (the iPhone has become the defacto”luxury” item for people replacing traveling, etc.), but most companies are negatively affected by the general economic situation.

  3. Puckerhuddle

    Thanks for your clarity. Googles Q3 should be a warning to investors. Here is a company that dominates in a rapidly growing industry and earnings are not reflecting that fact.
    I’m relatively new to the domain business and most of the names I own were purchased with a business model in mind. It did not take me long to surmise that building a web based business that relied on Google’s search engine or adsense revenues was like building a house with no foundation. It took very little research to conclude that Google is not a reliable partner.
    If I do a little work, I can sell my own advertising on a web site and cut Google out of the equation. Doing some work is the key factor.
    Google is looking at a trend that has started and is probably not reversible.
    All their bullshit will eventually leave them only pigeon shit web site to sell their advertising on.

  4. ScottM

    The fuckup at Google probably leads nearly to the top and their former VP of Search Marissa Mayer who was pretty much demoted to local and then ultimately pushed out and is now CEO at Yahoo. Her job is probably similar at Yahoo and perform miracle alchemy and turn shit into gold there and then ultimately find a suitor to unload Yahoo on, ideally Microsoft if the Federal regulators would ever allow such a merger. It probably didn’t help Mayer either to be donating $200,000 to Obama’s campaign and hosting him at her home while at the same time Sergey and Larry were hedging on big Republican change coming to Washington and hiring former Republican Susan Molinari to head their Washington office.

  5. Max

    Very important article
    A milestone
    As I said once before the n.1 enemy is Google and companies like its partner Sedo …
    Then the ignorance about web marketing of many entrepreneurs
    Finally, SEO”experts”… that Google indirectly exploits and forages because they are his allies
    Domainers are alone
    The battle has always been for Freedom, honesty and freedom in competition, that is even Freedom in Life, at least for those like me who were terrified thinking about the future (which has yet to be fulfilled in its worst part …), seeing as Google erased Altavista (a very good search engine) in just the first six months of 2000 year
    When I find time I will too a landing page to which point my domains. Sedo has broken my balls with its partnership with Google …
    I hope everyone will do something like this.
    Lease and partnership are the keys.

  6. craig

    Lower earnings are just the beginnings of Google’s trouble….Many agencies have them in their sights, and are just now starting to squeeze the trigger!
    What goes around……………..good post!!

  7. Workwallet

    My take: Google itself takes a hit for getting rid of the junky traffic with its updates; also, for separating itself from search engine”partners,” which supplied results based on keyword, which totally slanted the results. Low quality.

  8. Anunt

    Google does NOT need none of the domainers type in traffic to be successful.
    Google is number one search engine and makes tons of profit and will continue with or without your little type in traffic.
    Type in traffic will continue slowing down while more and more people go directly to GOOGLE especially when the new gTLDs create so much confusion…write this down in your 20 year plan…
    You have to look at the Average Joe to understand ALL this.
    Go ask around…or goto college campus, library, or anywhere where there are lots of computers and watch people what they are doing on the computers…..its either facebook, google, email…
    Goto an apple store and see what ALL the”John Jones” are doing on the computers…
    When you look at John Jones thru John Jones eyes, you will sell John Jones what John Jones buys.

  9. Anunt

    Rick, go ask your boy Mitt…his in your town debating a bunch of bull shit…looks like he’s sweating his ass off …lol
    Go ask him what a domain name is…i bet he doesnt even know…lol
    He might know what google is…lol

  10. Anunt

    America hates Obama
    America hates Romney
    The People hate both candidates.
    So why again…are these liars and theives allowed to run for president?
    Can somebody explain???

  11. Dude

    While I also agree quality domain type-in traffic is undervalued, Rick is incorrect that it is the most valuable. The most valuable is still the user who types in their product query in the Google search box. This is backed up by hard numbers such as conversion rate, revenue generated by advertisers, etc.
    Rick is also right that a problem was arbitrage garbage traffic being mixed in with quality which scared advertisers away from the domain channel.
    That is really the problem. Google itself is quite capable of knowing which domains have quality traffic and which ones don’t, they aren’t stupid. They just can’t control that advertisers saw bad results with thousands of clicks equaling zero sales. I’d turn that channel off as well.

  12. Iowa

    Everyone seems to be missing the most important part of what Rick said:”one sale has more value than 1 million visitors”. As newspapers and blog sites brag up their site traffic, the question then becomes”why are you failing as a business”? Traffic is not the key. The”right” traffic is the key. All over this country, companies are going broke, even though they have plenty of”visitors” to their website. The problem is, in the long run, the number of visitors to your website is just noise – it’s all about customers (buyers), not visitors. FB investors have found that out first hand.

  13. Jeph smythe

    Rick does this change your stance on who the real whores are? On you say its the bankers and Capitalists who poor money into things that are dumb, but I think its probably Google nad the other big companies who are the TRUE whores now. I think your right. Thank’s for this post and I hope you can do another 1 to clear up this issue of the whores.

  14. Donny

    Regardless of what Rick thinks at the end of the day he has 3 more million people visiting his sites that you do.
    But someone could make more money by only getting 1000 clicks per month as opposed to 3 million clicks. Get it.
    As far a politicians go, you sound just like them. Changing subjects all the time.
    And at the end of the day, I would rather look at Jill Jones than John Jones myself but that is just me.

  15. Old Timer

    Google’s search results are awful, and slowly people are starting to realize this. Google has also ruined the blogging market for bloggers trying to make money from Adsense through their panda, penguin, emd, updates etc… so it’s hardly surprising their ppc results are down 15% – and it lookslike they will be getting worse, who wil replace Google as the search engine ofchoice I wonder – some kid sitting in his garage no doubt.

  16. Show us the money...

    Google tries to present the image that its sh^t hot and they are the company to work for, yeah the online yellow pages selling space.
    Google has quite a number of useful IP products, but it lacks the basic skills to actually turn them into money.
    The new crome book is actually a F%&^king great idea that most of us have talked about for year, make it simple so you can access the less intellectual (or tech challenged) and bind them into your whole supply chain. F^&k they could if done right give the freaking things nearly away. Think and how and why and what be required.
    Google bought motorolla, and I hope to god they actually bought it to crapple apple with its patents or they really see free phone calls over its network the ultimate telecoms play.
    Google needs to ditch the basic colours, burn the bean bags and grow the hell up. It looks lame and dated.

  17. Show us the money...

    We need to have a thread on the dip^hits that call themselves adidas and their incompetent lying sob’s that call themselves UPS.
    Ok, and let’s relate this to the internet.
    Now, you would expect that a brand that associates itself with world class athletes would in itself be world class. Well, not so with ‘Adidas’ being an acronym in German obviously for seriously fucking useless. Now, on the internet you’d expect that if you were selling clothes you’d have appropriate sizing, well, no with adidas they have some random fucking European sizing convention that you don’t understand and when you click through to the sizing help there are another set of sizes that have no friggin connection to the sizing shown on the advert. An overly useless online help person responded to my request that they get their act together with more nonsense, they even said I should look up the German site for more information. Like WTF! So, Adidas, you might as well not be on the internet because you clearly don’t understand ecommerce. You do though seem to have a penchant for going after squatter domains via URDP.
    Anyway, this now brings me to the USELESS PARCEL SERVICE shortened to UPS. Finally after randomly buying a size and hoping for the best I had another surprise that instead of using a customer friendly postal service that would leave the item at my local post office they would in fact use UPS who would call at my house and not make a delivery because from 8am to 8pm I’m working my arse off in the financial district. I mean, FFS does Adidas think only the unemployed and retired can afford their overpriced tat? The only redeeming feature is that UPS are not lying about attempted deliveries like they did last time, liars.
    There is even more about substandard UAT making my IE not work with their JAVA, but the point is this: These so called world class entities are f&ing useless, it’s actually embarrassing.
    So, while Rick may say ‘they don’t get it’ these big companies can’t even work out efficient and effective ecommerce. SO INCREDIBLY USELESS.

  18. Joao

    I have seen Google datacenter on the net the other day, and its quite big isnt it?
    The only thing that surprises me is how such big memory locations tend to forget the people that helped them getting so big in the first place.
    I think that even their fanboys might start hating them when the new tlds arise. Its a wild guess, but adsense is dead for me for quite some time. I am not their dove.

  19. LD

    Google have recently increased their threats and abuse towards the group that actually spends money with them – Adsense advertisers.
    They make crazy decisions regarding unacceptable wordings (now you can’t say ‘click here’ etc.) and then threaten adsense clients with cancellation of accounts, loss of moneys in account etc.
    We’ve certainly stopped advertising with Google because of our confusion regarding their newly-created ‘out of the blue’ rules and threats.
    Their profit losses may have less to do with the domain channel and more to do with their monumental arrogance toward the demographic that actually creates much of their revenue – advertisers.

  20. John B

    I would love for some actual competition to google’s search. I don’t care what the cheerleaders say, Google is a monopoly and is a threat to the economy of the country. Google search is the railroad baron of the 1800s reborn and needs to be broken up and regulated.
    Are there any decent potential up-and-comers that may be competitors? Does anyone out there have anything in development?


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