I took my son down to get his hand X-rayed today. You may ask whether he has a broken bone or there is some other problem with his fingers but you'd be completely wrong. The problem that he is having has to do with braces and teeth.....so what does the doctor ask for? An X-ray of his hand. Go figure?

This reminds me of the way domains traffic is handled and why domain owners get paid what they get paid. For some reason we all believe that a user clicks on a link on a parked page that generates a certain amount of advertising revenue....but is this actually the case?

Could it be that what's really happening is something completely different? For example, the reason why my son's hand was being X-rayed was because it has a growth plate in it that is easily viewable which helps the orthodontist determine whether his jaw has stopped growing.

In all my years of domaining no one has been able to clearly articulate why we get paid how much we get paid. I do believe that like my sons hand and teeth there is a tenuous relationship between clicks, earnings per click and my bank balance but I'm ultimately convinced that it's only tenuous.

Just ask yourself these questions:
1.    Why is it that despite the global world meltdown the amount of online advertising dollars spent continued to increase and yet a domainers income has been slashed?

2.    Why is it that there is a direct relationship been EPC rates and the Google/Yahoo share price?

3.    Why are CTR different depending upon how the traffic is routed through to a parking company?

After a bit of a break I've decided that it's about time that I did another data dive and try to get answers to the unanswerable. There is one thing that I'm becoming more and more convinced about....domain owners should do whatever they can to avoid the major advertising aggregators and if possible develop direct relationships.

In the meantime I'd better head off to the dentist with a few snapshots of my sons hand so that they can work out what to do with his teeth!

I've just returned home from a game of Netball that my two daughters play each week....it's sort of like basketball without bouncing the ball. I'm sitting at my desk, staring outside and as normal my mind begins to drift to the topic of domains.

I've noticed that there have been a number of auctions recently that have suggested that domain sales are back and thriving once again. High value sales such as dating.com at $1.7m are all really exciting (especially if you were the seller) but the reality is for the great majority of domain owners then encourage the "wait for the pot of gold" mentality.

What do I mean by this? The average domain sale is more in the vicinity of $750 rather than millions so when you look at your portfolio of domains then think more in these terms. In addition, if you have 1,000 quality domains (who really knows what quality actually means?) then you are doing really well with a stock turn in the range of around 2% per year.

So let's do the maths. 2% x 1,000 equates to 20 domain sales per year or about 1 every two weeks. If the average domain sale is $750 then that means you are selling about $15,000 per year. If all of the domains are dotcoms and the registration cost is $8 per domain then you have about $8,000 in direct costs. Ignoring your time and every other cost then your profit is $7K. In Australia, the government says give me 30% which leaves around $4.9K in profits.

This means that if you are doing exceptionally well that for every  1,000 domains you own you can earn a profit of $4.9K per year. If you want to earn a living like this then my guess is that you'll need around 25,000 domains to have a reasonable chance. I know that my maths is a little out of whack but it will be reasonably close.

Everything really depends upon "quality". Here's a definition for you......if you got into domaining in the last 5 years you probably don't have it. I know you love the domains and you think that there really good but for some reason buyers aren't agreeing with you. I also know that it can be immensely frustrating as you see the big numbers for some domains that you think aren't really that good.....but let's face it beauty is in the eye of the beholder.

The only people that purchase domains for hugely inflated prices are those people that have a business model behind them and have put together a business plan to justify the expenditure. They need to get a return for the whole business plan that makes sense of the high price.

The next time you think that you're going to make a killing on a amazingly brilliant domain think again and reappraise your selling price. My advice is if it's over $750 then you're unlikely to sell the domain.....but then again there are always exceptions....after all beauty IS in the eye of the beholder.....