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March 25, 2014

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State of the Industry Too: Optimism Back in Style With Record Breaking Crowd at DOMAINfest Global  

By Ron Jackson 

Last month we published our annual State of the Industry Cover Story in which 19 well-known domain business experts identified 2010's most important trends and predicted what lies ahead for us here in 2011. I had intended to have Oversee.net President & CEO Jeff Kupietzky in that article as he was in 2010, however I missed getting him due to an email snafu of my own creation.

As it happens, Jeff also presents his own State of the Industry address at the annual DOMAINfest Global conference and I was sitting in the front row when he delivered the 2011 edition of his speech on the show's opening day Feb. 1. I also joined other reporters for a breakfast Q&A session with Jeff on  Feb. 2, then met with him one one on one on the closing day of the conference Feb. 3 to get his responses to a few final questions. 

Over those three days an unmistakable theme emerged in my talks with Kupietzky and dozens of others among the record breaking crowd of approximately 700 people who turned out for the show at the Pacific Ocean front Fairmont Miramar Hotel in Santa Monica, California. The big takeaway was that optimism is back in fashion in the domain industry - and for many good reasons. 

Oversee.net President & CEO Jeff Kupietzky
delivering his State of the Industry address at
the DOMAINfest Global conference - Feb. 1, 2011

That change in the industry's "weather" after two long years of recession, prompted me to forgo our usual blow-by-blow conference review article to focus on that bigger picture in this article, which will serve as a  companion piece to the dialog we opened on this topic in last month's Cover Story. Along the way I'll weave in some relevant DOMAINfest Global highlights that will supplement the daily show coverage we posted while the event was underway. If you missed those reports they are available here:

DOMAINfest Global Day 1 Photos and Highlights (Feb. 1, 2011)

DOMAINfest Global Day 2 Photos and Highlights (Feb. 2, 2011)

DOMAINfest Global Day 3 Photos and Highlights (Feb. 3, 2011)

Photos & Highlights from DOMAINfest Global's Grand Finale at the Playboy Mansion

On a related note - since it is still a major news story as I am writing this - let me address the widespread illnesses that befell dozens of conference attendees soon after the show attended. We wrote a detail series of daily articles about this starting February 8th (the follow-up stories are here: Feb. 9, Feb. 10, Feb. 11, Feb. 14 and Feb. 16). The Los Angeles County Public Health Department is still investigating the outbreak as I write this. 

Image: Sura Nualpradid / FreeDigitalPhotos.net

Our primary concern has been making sure that those who fell ill got the treatment they needed to return to full health, as well as to see the cause of the illnesses found so that future occurrences can be avoided. We were also very sorry to see what had been a triumphant week for DOMAINfest Global overshadowed by something they had no control over (as with all industry conferences, the facilities are rented and outside companies called upon to provide required services). Once government health officials got involved, Oversee.net worked closely with them to put them in touch with all attendees so that relevant details could be gathered and used to identify how and where this infection began, exactly what it is and now it should be treated.

Everyone is still waiting for answers at the time of this writing but we are relieved that it is now in the hands of medical professionals and that most who fell ill have reported getting better. We can  can at least start to re-focus on business again, though our thoughts are still very much with those who have not yet fully recovered and will continue to be until we hear that everyone is back at 100%. We will continue to follow this story in our daily Lowdown section and will likely update this passage for posterity's sake, once the final answers are in.

The good news is that as we return to the business trenches - those who were at DOMAINfest Global agree that the outlook is the sunniest it has been for a very long time. It became even more so when Jeff Kupietzly took the stage at 2pm February 1st to present his views on the State of the Industry 2011 and Beyond

Kupietzky's talk centered on 10 predictions he had for 2011 and each one carried an optimistic tone (by far the most optimistic being his final one - a prediction that the NFL would put a team back in his beloved home town - Los Angeles)! The other nine will be of more interest to those whose businesses hinge on domains and the continuing growth of the Internet.

Kupietzky started by noting the resurgence in the domain aftermarket and predicted a record year for high end sales - with several topping $5 million. He noted that forward thinking companies are coming to realize that it us possible to acquire a category defining generic domain for for less than the cost of a 30-second TV spot and own that name forever.

Kupietzky added that Oversee saw their own aftermarket business jump 50% in 2010 and the momentum is continuing to build (our January 2011 newsletter breaking down the 

Jeff Kupietzky details his views on the 
State of the Industry: 2011 and Beyond

most recent aftermarket sales data confirms this trend). Kupietzky also noted solid growth in domain registrations at the company's Moniker.com unit as well as a dramatic increase in discussions about domains names and their value in mainstream media.

Kupietzky's next prediction was vertical consolidation that will see registry operators starting to run  registrar services for their own extensions - a trend that is expected to accompany ICANN's planned launch of an unlimited number of new gTLDs. He also noted that the IPO window for domain/tech related businesses has finally opened again - as evidenced by Demand Media's very successful public offering - and Kupietzky predicted more to come, as well as a record year for mergers and acquisitions

Kupietzky said Google will be facing more real competition in 2011 and one positive from that will be the company becoming more partner friendly. That would be a welcome development from domain owners who believe they have been getting the short end of the PPC stick from their upstream providers. Customer relationships were also at the heart of Jeff's next prediction - that Customer Service would be the Killer App in Social Media as more companies realize that the most effective interaction with their customers may be accomplished through a presence on popular outlets like Facebook and Twitter.

Part of the wall-to-wall crowd on hand for opening day at DOMAINfest Global 2011

Looking outward at the broader tech industry, Kupietzky predicted that tablets will continue to rise as a preferred form factor in the mobile space - with Apple (and its ubiquitous iPad) winning the impending war among competing device makers. He also predicted that end users will see a much faster path to their favorite Apps as developers work on streamlining the number of clicks needed to access the full functionality of those programs. 

Kupietzky's final prediction (not counting his NFL returns to Los Angeles dream) was for a new metric for traffic valuation - that the value of traffic will be assessed for its data value along with its current category RPM. There is tremendous value in know what the people represented by any stream of traffic are searching for, allowing precision targeting of high yield direct navigation traffic. He noted that Oversee has developed a new precision targeting engine to power the company's popular DomainSponsor monetization service.

The sum total of Kupietzky predictions is that 2011 will be a banner year for value creation activities. Minutes after he wrapped up his talk and left the packed ballroom still absorbing his optimistic outlook, DOMAINfest Global keynote speaker Bob Parsons, the founder and CEO of GoDaddy.com, made his way to the stage. 

GoDaddy Founder & CEO Bob Parsons addressing DOMAINfest Global 2011 attendees.

Parsons' account of how he blossomed from a slow academic start and a stint in the Marine Corps (he is a decorated veteran) to become one of the America's most successful entrepreneurs gave the audience another healthy dose of inspiration. Parsons also gave a lot of practical advice based on his 16 Rules for Success in Business and Life in General

Bob's story is one those great entrepreneurial sagas that leave you feeling that anything is possible. For many of those whose enthusiasm for their business or for finally implementing new ideas might have been flagging - I'm sure Parsons' talk relit the fire and sent them home ready to conquer the world.

Before day 2 of DOMAINfest Global 2011 kicked off Wednesday, Feb. 2, Jeff Kupietzky hosted a group of bloggers and industry reporters at a breakfast where he talked about the direction he saw Oversee and the industry at large heading. One topic Kupietzky addressed were the occasional public conflicts that have emerged among competing parties within the industry as it has undergone change - change that has created a fair amount of tension. He said he did not feel any of that this year. "There is a lot more positive energy that comes from collaboration now," Kupietzky said. "I've been saying for three years now that we need to do that more and I think the fact that it is happening makes people more confident about investing in the space as they see that we all focusing on value creation rather than destruction."

Jeff Kupietzky

Kupietzky closed the breakfast gathering by fielding questions on a broad range of topics. I asked him about prospects for the PPC space, currently dominated by DomainSponsor's upstream provider Google. He said Google remains committed to the domain channel and that even though their focus is on user experience and advertiser conversions rather than on publishers, his company's relationship with them allows DomainSponsor to give Google input from a publisher's perspective, including how publishers can also help improve user experience and conversions. 

Kupietzky also expects that a new PPC network will eventually rise to compete with Google. Jeff said, "I don't know if Facebook is going to do it but they certainly have the capability to do it. It may not be their top priority right now though."

I also asked Kupietzky about the company's aftermarket strategy. He said the company's SnapNames and Moniker divisions give Oversee very strong positions in the low end wholesale category (SnapNames) and the high 

end brokerage/auction category (Monker) while partnerships with multiple listing services like NameMedia's AfternicDLS and Sedo give them access to big retail category in the middle. Kupietzky said Moniker's brokerage business tripled last year despite live auction results remaining flat. He said the auctions have become more important as marketing events rather that transactional events. Names exposed in their auctions often sell after the event in deals quietly handled by their brokers. 

Later on Day 2 one of the conference highlights - the annual DOMAINfest Global Pitchfest Contest - was staged in the main ballroom. This event underscores the innovation going on in the domain and internet space. Eight finalists were given a chance to pitch their new online business ideas to a distinguished panel of venture capital executives who served as judges (they were John MorrisScott Jarus, Andries de Villiers and Jeff Cohn). The audience also got to pick a winner of their own and, as was e case last year, the judges and the audience had different opinions.

The judges named local deal site Smartvark.com as their winner, allowing the company's presenter, Stefan Wrobel, to take home the coveted prize and gain some attention that could lead to a sizeable investment in his company. 

Smartvark.com's Stefan Wrobel making the pitch that led judge's to declare 
his business idea to be the best presented in DOMINfest Global's Pitchfest Contest.

In instant balloting conducted by cellphone text messaging, the audience came to another decision, naming ePayments.com their winner, earning presenter David Clements a return trip to the podium to pick up his crystal trophy from Peter Celeste.

  Pitchfest People's Choice Award Winner David Clements of ePayments.com (left)
receiving his award from Oversee.net Senior VP Peter Celeste

On day 3, the closing day of DOMAINfest Global (Thursday, Feb. 3), one of the most memorable events was an 11am fireside chat in which Jeff Kupietzky interviewed Ben Mezrich, the author or the book that the smash movie The Social Network was based on (the book's title is The Accidental Billionaires: The Founding of Facebook, A Tale of Sex, Money, Genius and Betrayal).

Mezrich has written 11 books including another (Bringing Down the House: The Inside Story of Six M.I.T. Students Who Took Vegas For Millions) that was also turned into a hit movie. That best seller (that spent 63 weeks on the New York Times Best Seller list) was the basis for the film 21 starring Kevin Spacey

Author Ben Mezrich enraptures the DOMAINfest Global audience with the detailed
back story
of how Facebook was founded by college kids at his alma mater, Harvard.

Mezrich's detailed account of how a Harvard kid, Facebook co-founder Mark Zuckerburg, turned a campus website into an earth shaking corporation with hundreds of millions of members again underscored, as Bob Parsons had before him, that there are no limits to what you can accomplish with the right idea, a domain name and an internet connection

After the lunch break that followed Mezrich's session, I got back together with Jeff Kupietzky one on one for a few final questions. One was a question that continues to linger - has domain parking already seen its best days? "Though revenues are down, the traffic from domains does not go away," Kupietzky said. "Even though one partner may value that traffic somewhat less this year than they did last year, that doesn't mean the traffic is worth less - it is just worth less to them. It put more of an onus on us to figure out how do we get that value from someone else." He said Oversee is doing the considerable spadework required to match specific domain traffic with the partner that will value it the most. 

With Oversee involved in all aspects of the domain business, from registration to monetization to aftermarket sales to full scale development, I asked Kupietzky, given his knowledge of the space, where he would put his time and money if he were an individual investor, rather than the CEO of a company like Oversee.

"My advice is always the same," Kupietzky said. "Pick an area you know something about and focus on that category. If you are the best at knitting, do  that. Home cooking, boogie boarding, whatever it is, take your hobby or your area and really understand it. Who do users want when they visit that kind of property? Who are the advertisers and suppliers of products in that area and what are their needs? The more you understand that, the better your chances of success."

"I don't think there is any longer a good business where you say I am just going to buy a domain, hold it and I am done," Kupietzky continued. "You've got to have a plan with that. It's just like real estate. Most people don't buy an empty lot and wait. There is a plan - I am going to build something on here, or I might partner with someone else to co-develop something. That think domains are the same way. Ultimately, I think you have to have a passion for what you want to build because that is going to get you through the hard work of actually investing the time and money needed to build something worthwhile."

Image: Ambro / FreeDigitalPhotos.net

On a final note, with Oversee's history of growing through acquisitions I asked Kupietzky if they now look for companies that strengthen their current lines of business - or are more interesting in broadening their reach into other areas. "We are already strong in travel, credit cards and retail and are interested in similar areas," Kupietzky said, adding that they look for companies that have a good model and a record of some success, but could be taken to the next level with some experienced business help. "We are always looking for new technology, new approaches and good people that can help us in any of our lines of business."

Kupietzky added, "Most people who want to do a deal want to do a big deal and at some point I think we will participate in a big deal." Could such a deal happen this year? Jeff just smiled and re-iterated that he thought 2011 was going to be a very good year

Another very positive sign for the industry is the growing group of women who have become active as investors, developers and corporate executives in the space. Dozens of them got together at the Fairmont for a special bash on the closing night before traveling together to the Playboy Mansion for the fund raising gala (for Jenny McCartney's Generation Rescue organization that funds autism research) that closed DOMAINfest Global 2011. 

Kamila Sekiewicz of NameDrive.com (at the far left in the photo above) posted this photo 
of the Women in Domaining party (Thursday evening, Feb. 3, 2011) on her Facebook page. 

The party at the mansion was another memorable event (and not just because of the post-show headlines about where people could have contracted the illnesses reported after the show). It is one of the most famous private residences in the world and one that millions have wanted to see for themselves. Guests are allowed to wander  the 5-acre plus estate, so, depending on your personal preferences,  you could find solitude on the grounds (which feature a private zoo among its attractions) or join the crowds gathered in the party tent or around the pool. The mansion visit (which has been a closing night staple for the past three shows) has been a big draw for DOMAINfest and a highlight of the week for many attendees. 

A scene from DOMAINfest Global's closing night party at the Playboy Mansion Feb. 3, 2011

Though the medical story that developed after the show stole a good bit of DOMAINfest Global 2011's short term thunder, the conference itself was an unquailifed success that, in the long run, will likely be viewed as a major catalyst in the next big upward move for the domain business.  


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