Sendori, monetizing domain names

updated
sendori.jpgSendori, a Silicon Valley based company that lets you bid for traffic from other Web sites, has raised an undisclosed first round of venture capital.

The site operates in an industry that has so far been quite shady, and it’s an improvement over some past practices. The funding news was first reported by Venturewire and SiliconTap (subscriptions required).

Here’s how it works. I might own Gamespot.com, but I’d also like to draw traffic from other sites, such as VideoGames.com, or Reviewsgames.com, which are domains that aren’t being used, but which may draw traffic from users not knowing any better. (The users typically get to one of those sites by typing in “VideoGames” in their browser, for example, without knowing if there’s anything there.) I can go to Sendori, and bid to get traffic from those sites. I must bid higher than anyone else to get it. By drawing the users to my site, I get more business.

Sendori sets the bids on a cost-per-visitor basis. The company claims that domain owners can see a 25 percent boost in revenues compared to other approaches, such as Google’s AdSense.

As mentioned, the domain name business has had a dicey reputation. It’s not uncommon to be redirected to a mal-ware infected site if you type in the wrong domain name (something that a separate Silicon Valley company, OpenDNS is trying to prevent). However, by creating a marketplace of quality advertisers, this should help minimize the problems.

On its face, the Sendori system doesn’t seem to require much technological sophistication. Yet, the company is trying to secure a patent on its process. Some of the technology elements include geotargeted redirects and click-fraud blocking.

sendori2.jpgSendori is, however, targeting a crowded market segment. Take a look at public company Marchex, which is a leading domain name aggregator (with a portfolio of over 100,000 domains). In its latest quarterly report, the company posted revenues of $33.5 million.

Another major player is Demand Media, which recently raised $100 million from Goldman Sachs.

Sendori’s venture round included investors First Round Capital, Baseline Ventures, Maples Investments and Felicis Ventures.

Update from an interview with founder Ofer Ronen: Ronen got the idea for Sendori at the MBA program at Cornell . He teamed up with classmate Dave Weldon.

By December 2006, Ronen was able to raise some angel funding. It helped that he already had a start-up under his belt: Karanga (a B2B e-commerce site).

The old approach was to setup an intermediate landing page for when a user types in a domain name. Sendori’s approach is to send users directly to advertisers who want to get the traffic. This lowered costs and improved targeting, he said. To see an example of this, click the following: www.austrianstamp.com. As you can see, it takes you to a specific page on eBay.

Sendori’s platform aggregates about 33 million visitors per month, Ronen said, noting that national advertisers want “volume.”