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August 27, 2012

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Has Sendori Discovered a Cure for the PPC Blues? New Monetization Model Gives Domain Owners a Direct Connection to Top Advertisers
By Ron Jackson 

It's no secret that domain owners have been watching their pay per click (PPC) revenue sink for more than a year now. Many are reporting drops that range from 30%-50%. That is a bitter pill to swallow, especially at a time when overall online ad revenues have been rising at a 30% annual clip. 

The companies at the top of the PPC pyramid, Google and Yahoo, are seeing a lot more ad money roll in, but for some reason the domain owner's share keeps getting cut, even though they are the ones providing the product that is being sold - traffic. The frustration of domain owners has been compounded by a lack of transparency in the PPC system. The end result is that many domain owners have started looking for new monetization opportunities. 

This trend is playing right into the hands of Sunnyvale, California based Sendori.com. Sendori has come up with an innovative monetization system that bypasses Google and Yahoo by allowing advertisers to bid directly on traffic from high quality domain names. Since the traffic is sent straight to the advertiser's site, they pay for every visitor, not just the ones that click through.

For those with high quality domains and traffic (the system is not meant for mediocre domains), Sendori officials say their system can produce considerably more revenue 
than parking, especially since Google or Yahoo and a parking company both take big chunks out of each ad dollar spent before the remainder trickles down to the domain owner. 

If at any time the amount advertisers bid for a specific domain's traffic falls to a level that would be lower than what parking can earn (or if there are no bids), Sendori automatically switches the domain over to a parking feed. They say that ensures that domain owners can take advantage of the upside of selling direct to advertisers without having to worry about their revenue stream underperforming the PPC system.

The idea for Sendori was hatched by its two co-founders, CEO Ofer Ronen and CTO Dave Weldon who met and conceived the idea while both were going through the MBA program at Cornell University. Weldon, who spent five years with Intel, handles the technical side of the business while Ronen, a magna cum laude graduate of the University of Michigan (where he earned both bachelors and masters degrees in computer engineering), handles strategy and runs day to day operations. The team got another valuable new member recently when Director of Business Development Michael Feeley came over from Dotzup.com where he had become well known within the domain community. 

With the high level of interest we are now seeing in monetization alternatives I decided to call on Ronen and Feeley to get some more insight into Sendori's system. Ronen told me he had always wanted to be an entrepreneur so he jumped at the chance to start the new venture with Weldon when they 

Sendori.com CEO Ofer Ronen

completed their MBA programs at Cornell. Ronen said family members helped provide the seed money he needed and once Sendori got up an running they quickly attracted venture capital investors as well.

"When we looked at the domain parking business we realized that visitors to domains would have a much better user experience if they were directed to the best websites in the world, instead of landing on a parking page," Ronen said. He used Travelocity as an example of a site that someone searching for travel information could automatically be sent to when they type in a travel related domain name. "Domain owners, no matter how much they try, can never build up the kind of brand recognition that a Travelocity has," Ronen said.

"So we thought the traffic would do better if it flowed to them and that a market-based approach, where there was competitive bidding, would also help domain owners earn the most possible money. The advertisers that can benefit the most from the traffic would be the ones who would bid the most," Ronen said.  The marketplace he envisioned went live on August 1, 2006 when Sendori began operations.

Having just celebrated the company's second anniversary Ronen said he has been very happy with the way things have gone. "We've been seeing really great results. We learned that the model of advertisers paying for every visitor, not just the ones that click, has worked very well. We created a lot of technology to optimize the matching of domains with the right kinds of advertisers. We also uitilize a system that advertisers are familiar with by letting them bid on keywords. That made it easier to get advertisers onboard and bidding on our traffic."

Domain owners aren't the only ones that can take advantage of the Sendori system. They offer an API that lets parking companies integrate it as well, so that they can essentially "turn the channel" to the Sendori system whenever it is outperforming their parking revenue from Google or Yahoo. 

For domain owners, Sendori just recently introduced a DNS solution that allows you, once your domains have been approved, to simply point your nameservers to Sendori to go live on their system. Feeley has been in charge of bringing in domain portfolios for that program and he said a lot of key players are taking advantage of it. "Over the last few weeks we have brought in some of the premier generic domain names. We are extremely selective about the domains that we work with and we go after very specific domains in relation to who we have signed up on the advertising side," Feeley said.

"We can approach a portfolio holder and say you have five really great domains that would work well with advertiser A, B and C and sort of grow the relationship from there. They see

Michael Feeley
Sendori Director of Business Development

that we outperform parking by a pretty large  margin and they end up wanting to bring over the rest of their portfolio," Feeley added. 

Feeley said many holders of top domains are anxiously waiting for Sendori to sign on advertisers whose needs match the product or service represented by their domains, so the company expects to continue growing at a rapid clip.

Of course the company's timing couldn't be much better, given the disenchantment among so many domain owners with the deterioration of the PPC business. "People are really eager for a new model," Feeley said. "There have been some big changes and it looks like even bigger changes are coming down the pipeline that will put a hurting on a lot of these guys so they are looking for a new home"

"What I like about our model is that it has total transparency," Feeley noted. "You know exactly who is advertising on your domain. You know who is paying your bills and that is something that has been missing. It's true that we are still somewhat of a middleman but the domain owner's revenue share is still a lot less diluted than it is with parking." Feeley also said that because of Sendori's direct connection with their advertisers there is a strong possibility they could facilitate an outright sale of domains to advertisers for those owners interested in selling. "We  think you are going to see some strong end user sales transactions down the line through Sendori" he said.

Feeley added that if domain owners are willing to share their statistical information with the company they can use that data to sell the right advertiser on using that domain in their ad campaigns (or consider it for purchase). "With the stats we also know how much to sell the traffic for as we are obviously not going to sell it for less than what you are already making. Some of the bigger domain owners are hesitant to share their stats with anyone but if they will take that step we can make more money for them."

With their emphasis on quality, the Sendori system is obviously not designed for everyone. "It is not a walk in system," Feeley said, "we have to look at the owner's names and see what

might sync up with our advertisers to determine what we would be interested in. Where we are going to shine is where we have an advertiser match so that is where we concentrate our efforts."

Sendori's roster of clients is impressive as it includes some of the biggest spenders online including Netflix, GEICO, Hewlett Packard and other well known brands. Ronen said, "Companies like that can offer more for domains than other buyers because they have the most to gain from owning them or advertising through them."

There has been some debate about how well the domain channel converts traffic into sales. Some say it is far more effective than search engine traffic and others claim it is less so because of click fraud and other issues. I asked Ronen if he had seen any reluctance among the major advertisers Sendori deals with to use the domain channel. 

"Not at all," Ronen said, "because we offer complete transparency. They can see exactly where conversions are coming from and they can weed out anything that is under performing. Our reports update hourly so they can see exactly what is going on. The transparency we have is not something they get with Google and Yahoo. We've also found that advertisers are always willing to try something new if they can measure it, so we made sure we built something that they can measure."

"It has been very exciting to see what happens when you match a great domain with a great advertiser - the value that is created," Ronen said. "We are seeing very high conversion rates, in come cases 30% or more, and it is fun to watch that happen."

Changes are always afoot in this business and great fortunes have been made by those who have been able to catch the right wave of change. A lot of people think Sendori is in a perfect position to catch the next big one and Ronen said they have already received buyout offers. Those were rebuffed because his team thinks there is too much upside in their model to sell so soon. 

Only time will tell how their fortunes will play out, but for those holding premier domain names the Sendori proposition looks like one that is worth looking into.


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