"..And theres winners, and theres losers
But they aint no big deal
cuz the simple man baby pays for the thrills,
The bills and the pills that kill.."
--John Cougar Mellencamp
Miami’s economy was not swinging like just twelve months ago.. Lots and lots of empty homes and condos.. Lots and lots of foreclosures. There was a foreclosure convention running in the same hotel facility as the TRAFFIC conference and those foreclosure specialists were making money.
This new foreclosure dynamic is partly responsible for the global credit market flux we saw in August.. Why? Lenders took debts they couldn’t sell as stand-alones and grouped them with other loans.. Those packages of loans were resold as securities effectively hiding 'the bad' in a forest of other loans. When times were good and interest rates were at 1%, the market bought those ‘securities’ and discounted risk. When rates rose, some loans stopped performing and the securities that constitute them didn’t look so hot. The debt markets started to question the soundness of all similar securities and liquidity got scarce.
On the last night of TRAFFIC (or the last ‘morning’ depending on your definition of night) we went to a private party in South-beach.. We rolled past lots of new, darkened condo towers, many of them unfinished. When we got to the club we walked past the line at the front door.. I thought about the other would-be patrons standing in line.
There are several types of club goers. Those who dutifully wait in line, chatting with other pals and strangers to pass the time... those who try to buy their way through the back-door of the club and those who cut through the line by signing-up for "bottle service".
I learned about bottle service several years ago.. and thrilled to learn you can whisk through the line at hot clubs and secure a great table by calling in advance for a $350 - $900 bottle of liquor. Pay up-front and get ushered in like a baller. Prepay two or three bottles and bring your entire crew of ballers. The good tables are always taken by those with bottle-service... and there is always somebody bigger. I once had a friend buy a $350 bottle of champagne only to be evicted by a celeb ordering 6 bottles of $750 champagne.
Well, selling Internet traffic comes with a similar set of secret handshakes. Traffic is Traffic... I own domains and you own domains. Some of us sell our traffic through the front door (Google Adsense, TrafficZ or Domainsponsor main-page signup).. Some negotiate specialty deals which run directly through Yahoo, Google or Ask. Behind those curtains are differing revenue share percentages.. Big, high-quality traffic publishers can negotiate a greater percentage of gross revenue than small publishers with bad traffic.. That’s the way it should be I suppose.
The problem with life (and traffic for that matter) is that it isn’t always fair. Sometimes the nicest, most fun people have to wait in line at the club and sometimes worse traffic can get handled much better than 'the cream' - and than it deserves to be.
Just as sub-prime loans can be repackaged and sold for more money, sub-prime Internet traffic can be sent to traffic aggregators and parking co's where it hides in the forest with other good traffic, making the parking co look like a better traffic source than it is..
Consider Ask.com .. which has a deal to send traffic to Google and provides redistribution services to third party middlemen and optimizers.. Ask may not offer a "fire and forget" feed that any domainer can use out of the box, but because Ask’s feed is not Smart-priced, there is a huge opportunity and inefficiency for those who know how to handle it. Traffic can be sent to a parking co with an Ask deal, (where it subsequently flows to Google) skirting the Google smart-price filter that this same traffic would be subject to at the front door Google "Adsense for domain" (AFD) feed.
And like our nightclub where serious drinkers with open expense accounts and a penchant for tipping have to wait in line at the bar with those nursing a VOS; the good Internet traffic going through Google's Smart-price filter pays the freight for a lot of VOS drinking, sub-prime, backdoor syndication fluff.
This is just one inefficiency of many on the Internet of course.. The loopholes seem to get created faster than previous ones are closed.
Whether it’s Google providing access to different types of feeds to different parking co's or whether it's a volume lead buyer purchasing sign-ups from one parking co and not another; there are always differences which act as a backdoor, providing enhanced monetization to some traffic for no other reason than the fact that the loophole exists.
In the final analysis it is higher converting, quality traffic which pays the thrills, the bills, the pills that kill by underwriting the paid-search advertising market and accompanying loopholes. If you own 'that' traffic in the form of quality domains or quality subsyndication partners, you will be in a much better position if credit market style 'contagion' shake-out ever finds it's way to this industry.