Many domain portfolio owners get so focused on their parking statistics that they forget about other factors that impact the overall performance of their portfolio. In this article I would like to unpack the effect the Euro/US exchange rate has had on a portfolio and to illustrate that all is not as it seems.
I was recently looking into the performance of a particular portfolio that does a little over $20,000 per month in revenue. Given the size, I was confident that it was statistically significant for my analysis.
What I was investigating was the RPM (Revenue Per Thousand Visitors) trend so that I could try and understand what is going on with the overall performance. The reason why I was interested in the RPM is because the measurement effectively removes the impact of any fluctuations in traffic.
Since Sept 2014 the RPM for the account had dropped 6.5% from 13.85 to 13.00. Many portfolio owners have experienced some downturn across this period of time but I thought that further investigation was warranted. It just so happened that the portfolio had a large amount of European traffic and this got me thinking.
It wasn’t long before I had the below graph of the Euro/US exchange rate for the same period of time. The Euro had effectively depreciated by around 20% and this is what had contributed to the adverse results.
There was some good news in the all of this analysis. Even though the Euro/US exchange rate had dropped by 20% the overall impact on the client’s portfolio was only 6.5%. The reason for this is that as the Euro dropped versus the $US the ParkLogic systems automatically migrated the traffic to higher paying European monetisation providers. As the client was being paid in Euros this effectively meant they were being paid more.
Any traffic that was being highly paid by US companies remained with them as long as they were paying more than the impact of the exchange devaluation.
I know that this all sounds a little complicated but it clearly illustrates why systems like the one developed by ParkLogic are so effective in reducing external factors that impact the revenue line. We've found that if you leave all of your traffic with a single provider for longer than about a week, then you will be affected by things such as the exchange rate.
If you leave all of your traffic with one monetisation company and there is a crash in the exchange rate, then you will be in for a rough ride. On the other hand, think of a service like ParkLogic’s as being like a “stop loss”. If things go bad, then the traffic is automatically moved for your benefit.
Full disclosure dictates that I declare that I’m one of the founders of ParkLogic. It’s not often that I openly discuss some of the hidden benefits like the one above we provide our clients. It just so happens that the exchange example is a clear case of why traffic optimisation really does work.