Supernatural Agency: Online business tales

How much would a domainer think a domain like eBuild.com is worth? $500,000? A million? As a parked domain it might be valued somewhere in those ranges. And if you owned it, as a domainer, you’d probably be pretty happy with that valuation. But what if I told you that its real value is more like $220 million?

Think I’m crazy? Well, what if I told you that, as a comprehensively developed site, it brings in $22 million in annual revenues off of 300,000 unique visitors monthly? Does 10x revenues sound unreasonable?

That revenue number and visitor count are real. The site is a comprehensive source for builders to learn about and source materials and fixtures. So, one more question: Let’s say you invest 2 million into building out a site like this. Say ten full time people working two years and a pretty good PR and PPC budget for promotion. Wouldn’t $22 million in revenues and a big valuation be worth that investment?

Or would you rather sell it for $500,000?

The future of domain valuation is not in type-in, parked, PPC sites, IMHO. It’s development because the stakes, long term, are much higher. This is where the big money is going to go.

There is a big shift in web design going on and it is changing the way I think about web architecture. I was in a client meeting last week discussing the messaging of a  site redesign that covers several product categories, a number of vertical markets and multiple languages. The challenge is that a searcher entering this site is likely to only be interested in one of the options. The client is a language services company. A searcher may be interested in technical document translation for biotech in Mandarin and French. If they come to the site’s Home page seeking this information they are going to have problems because you can’t offer all these options on one page without creating confusion and the resulting likelihood that you will lose them. Or can you?

What happened in the meeting was interesting. Rick, my client, is a good web designer who understands these issues. He put a graphic up on the screen that he had built to help him sort out the way to organize his Home page. It was a Site Map. No marketing message, just a treed outline of the site done in text. It was not his intent that this would be his Home page but as we discussed it, it made real sense to reconsider the whole concept of Home pages- why not use a Site Map as your Home page content?

For the visitor the benefit is obvious: A simple, easy to read guide to the entire site. Just skim and click to get your answer. For the company the benefits are huge: At one glance you see the range of services and experience and you capture the visitor’s attention by making it dead simple to navigate to the exact info they need. No confusion, super usable, great from a SEO point of view.

The next level is where it gets interesting. Each page linked to from this Site Map is now a Home page for that subject matter, the top level of a microsite devoted to Translation> Biotech> Technical Docs> Language Choices. This would be built on a database that pulled the information from each ‘bucket’ into a page customized for the visitor. If it wasn’t exactly what they want they can get back to the Site Map with a single click.

This model, if constructed properly, would be extremely search friendly both for organic and PPC. It changes the static corporate web site into a dynamic information source (with lots of call-to-action sales built in). But what about branding you say?

Who cares? The top level domain has the brand (if it doesn’t then that domain and the brand need to be resolved now). The visitor isn’t seeking a brand experience, they are seeking a specific solution as evidenced by their search terminology. I’d also argue that the breadth shown on the site map is a brand-reinforcing message in itself. As a user I like the direct approach that skips the marketing message on the Home page which is all too often a distraction rather than an enticement.

I’m going to be having a serious discussion with my designer this week about our impending redesign of our corporate site. I think killing the home page in favor of the user might be a very good idea.

Adobe is officially launching its Flash-based hybrid desktop and web development platform, known as Air, this week. The platform enables application developers to build programs that run in sync as web applications (accessible via any connected device) and as desktop applications (accessible on your machine when you don’t have Internet access). These programs can run as Internet-connected widgets, meaning they don’t require a traditional browser. Microsoft offers a competitive platform called Silverlight. Google also has something similar in the works called Gears. Together, these new models for interacting with the Internet have the potential to totally change the way we access and utilize the web. So how do they affect the domain world?

These platforms could eliminate the exclusivity of access to web information that unique domains offer. In fact domains could become a much smaller piece of the pie because we won’t travel to individual sites as frequently as we do now. Just as Google is the default starting point for most web activity, various application-driven sites will suck up huge amounts of traffic covering very large amounts of information categories, all on a single domain. For a simplistic (on the surface anyway) example, take a look at Amazon. The company took ten years to reach profitability but when it did last year the results were spectacular. The reason it took so long is that Amazon was building an enormous application around shopping, the default shopping application. They literally carry or offer everything. Think about it. If you want to buy a sophisticated piece of electronic test equipment, say a Fluke 700, you can get it via Amazon. While most of us think of Amazon as a glorified bookstore, it is, in reality, the largest consumables site on the web, a sort of AOL for shopping. As this site grows all those millions of consumable-focused domains will become marginalized; the mom and pop stores of the Internet. Amazon is a platform, an application for shopping and a search engine.

Now imagine the ability to easily build similar search-focused information delivery platforms. Any kid with programming skills can do so with these new tools like Air. If they build them and put them on a unique domain (like the hundreds of goofy Web 2.0 sites out there) they will sink into the gigantic maws of the web and disappear. If, instead, they choose to join an online ecosystem like those being offered by Google, Amazon and others, they will be integrated into those systems’ search, marketing, fulfillment, data and monetization tools, giving them a chance to survive and thrive. But not on a unique domain.

One of the outcomes we’re already seeing is the commoditization of brands on the web. If I want a Honda Accord I really don’t care where I get it. As long as it’s the color and model I want (there are only 4 or 5 choices) and the price is the lowest, I’ll buy it via an Amazon or eBay. It’s a known commodity. Once I’m past an initial brand decision and on the web my intent is a deal. I’m not being convinced anymore to change brands. I don’t need cars.com, coolrides.com, convertibles.com- all I need is a search and that search is going to point me to a shopping portal 90% of the time.

This POV isn’t doom for domainers; it’s a scenario, not a reality. But it is a scenario that is unfolding as web access becomes ubiquitous and platforms like Air and Silverlight keep us synced with the web all of the time. Food for thought.

This is all, of course, speculation. But think about this: what happens when you can store terabytes of information on your iPhone? Maybe you keep a copy of the million most popular web sites on there, a copy that automatically updates itself each time your device connects? You might not need any other sites…

The NYTimes today dissects Microsoft’s recent reorg of their executive team managing online operations and it is not pretty. The executives who would be managing a Yahoo integration are tasked with working both on online initiatives and Vista (!???) two completely unrelated businesses. The online businesses are completely distinct from the operating system/desktop business and there is not (or should not be) any crossover.

Here’s the Times take on what looks like the screwiest org chart imaginable:

“The online business will now be split between four executives, who all work for Kevin Johnson, a former I.B.M sales executive. Three of those four make up a group charged with the overall strategy and marketing for Microsoft’s Internet services.

Marketing and product management for Microsoft’s online operations will be handled by Bill Veghte, who also performs that role for Windows Vista and its successors. (His unit is called the online services & windows business group.)

Satya Nadella, a longtime engineer, now will run what is called the search, portals and advertising group. Mostly, this will look after the engineering for Microsoft’s Web search, advertising systems and related systems. Awkwardly, he will also have responsibility for the programming of the MSN portal, which is run by Joanne Bradford.

Mr. Nadella doesn’t even control all the technology related to the Internet operations. Steven Sinofsky, runs engineering for both user interface of Windows and the Windows Live services like e-mail and instant messaging. Mr. Sinofsky, however, is not part of the three-person group overseeing online strategy.

The third member of the Microsoft online triumvirate is Brian McAndrews, the former chief executive of aQuantive, the advertising company Microsoft bought last year. His area is dubbed the advertiser and publisher solutions group, includes both engineering and marketing for the company’s advertising systems.”

The only logic behind this mess is that Microsoft so desperately needs to fend off the emergence of online applications that is has to cripple its new management team by giving them an inherent, every day conflict of interest. The problem here is that Office, their biggest cash cow, may see its market disappear overnight. Only by tasking their team to maintain links between the desktop and browser-based applications can they hope to stave this off.

Google, by comparison, has no such strategic imperative. They only need relevant traffic so they can give away increasingly better online software and still support their advertising model.

If I worked for Yahoo, I’d be clearing out my cube.