Dot Arbitrage
One of the easiest ways to date yourself in the industry is to talk about the ClassesUSA MSN deal. To put it into context, this deal happened so long ago that Mark Zuckerberg had maybe left middle school and Google didn’t run ads on their search results. It was so long ago that you could name all of the lead generators on two hands. Oh, how things have changed. Today, there are 50 education lead generation companies alone grossing more than $5 million annually with the largest doing well north of $100 million per year. A good number of these companies do it the new fashioned way, they take financial risk. They buy media with no guarantee that they will make the money back.
That was certainly the case with ClassesUSA when they inked a deal with MSN. The media property didn’t care that ClassesUSA was just a startup. They had a rate, and they stuck to it. Similarly, ClassesUSA knew they had to guarantee as much revenue as possible in order to get the cost down. What most people didn’t know about this story is that when they first started working together, ClassesUSA didn’t really work with the lead buying institutions. They approached online learning in a more literal manner trying to provide classes to interested students. An almost accidental pivot led them to working with the schools we today think of when we say online education. The rest as they say is history – a successful exit and still one of the largest, most consistent suppliers of student inquiries.
The ClassesUSA story could have turned out quite differently had they not taken the media risk ,and especially had they not changed horses mid-stream. Their story is one of the more memorable, assuming you actually were there to remember it, because it didn’t take much time until companies much larger started to take note. With today’s fragmentation, it isn’t as easy to craft a similar coup, for it wasn’t just an issue of volume but figuring out inventory that seems unattainable to others. Another company that comes to mind is Education Connection. No one else came close to owning television like they did. Does a girl in her pajamas have anything to do with a degree? The connection, no pun intended, was definitely tenuous, but they managed to inspire threads about the commercial in forums and have auto-complete suggest “education connection girl” as the second most searched term.
Recently, we learned of another ambitious arbitrage, a less trackable but no less ambitious effort. ED Ideas, who operates CollegeComplete.com has done something that certainly no one in performance marketing has – sponsored a NASCAR car. As the company writes, “The traditional NASCAR audience has been, to a large extent, overlooked by higher education.” Well, no longer. And, how did they choose their driver? They chose to sponsor Nationwide Series driver Chase Mattioli “primarily because he is one of the only NASCAR drivers who is – simultaneously and in between races – an active college student.“ May they be so lucky that in short order their brand will be associated with the driver or with NASCAR.
Arbitrage seems to know no limit, online or offline. It’s less a matter of the what and more a question of the potential economics. So what might constitute one of the more extreme experiments? The answer might be at the root of all online, the domain name. With domain name registrations mirroring McDonald’s in quantity sold, obtaining a brandable one has become either impossible or extremely expensive. A good single word domain runs at a minimum in the low six figures and into the seven figures. What if instead of focusing on the .com you would own the .com? Those are the discussions taking place around most major brands. The ruling body for domain names has created a process by which just about anyone can apply for their dot something. For someone like att it would mean owning .att or .ibm.
Someone in Hollywood will certainly purchase .movie or .movies, hopefully ridding us of ridiculous movie domain names, like BlackSwanMovie2010. It also means no squatting, so if Apple had .apple, they could have ipad.apple and not worry about someone else beating them to a brand. The question is could it work for performance marketing? What if you had .college, .money, .wealth, .diet, .date etc. Would that make your ads more credible, increase clicks and conversions? As a network, it could mean countless white labels, each having their own domain. All interesting applications, but all a big gamble. It costs low six figures just to apply for the name, and then there comes with that a cost to operate the technology for registering names and making sure those you do register resolve. Companies like Neustar help make the process manageable, i.e., no additional tech resources needed, but the barrier to profitability is still going to be something like $200,000 per year if not more. We can’t pull it off, but we kind of hope that someone in the performance marketing space wants to give it a try.
