At a time when many technology companies are on a hiring spree, Oversee.net has laid off 13 percent of its staff.

But the leaders of the downtown L.A. company say it’s part of a strategy to shift away from the slowing market for buying and selling Internet domain names and into the more lucrative business of performance marketing.

Oversee announced last month that it cut staff to make room for new positions that serve the company’s expansion into helping market and monetize websites.

Co-President Scott Morrow hopes the changes, which come just weeks after Chief Executive Jeff Kupietzky and several other top executives left the company, will broaden the customer base and open up new revenue streams.

“We are trying to articulate a broader corporate vision,” said Morrow, who was appointed co-president with Debra Domeyer in July. “We think that it’s a larger addressable market that will create more value for shareholders.”

Oversee’s primary business has been populating empty websites with advertising through DomainSponsor, buying and selling domain names through SnapNames, and registering domains through Moniker. The company also owns and operates several comparison-shopping sites in the travel, retail and credit markets.

Now, Oversee is expanding beyond the domain industry where people create parked websites, which have no content but make money through advertising to web surfers who accidentally land on the site.

The company is creating a suite of products that will help publishers grow traffic and monetize their sites. It’s also adding marketing services to increase the quality of the traffic driven to those sites. In addition, the company’s going to further develop its websites, which include ShopWiki.com and LowFares.com.

Oversee will continue to operate SnapNames and Moniker, but will place less of an emphasis on that part of the business, Morrow said.

Industry shifts

Andrew Allemann, editor of Austin, Texas, blog Domain Name Wire, said Oversee’s changes represent a shift in the industry, with companies that specialize in parking ads on inactive sites looking to do other things to make money.

“A lot of companies in the space have been saying we need to move away from domain parking,” Allemann said. “When you look at growth opportunities, I think that’s where it is.”

Two senior vice presidents and a vice president left the company in June as part of a realignment. Then, the company announced in July that Kupietzky would step down in August, and Domeyer and Morrow would fill his role as co-presidents. In addition to their new positions, Morrow is in charge of Oversee’s lead-generation websites and Domeyer is chief technology officer.

Kupietzky, who is still an investor in the company, said he left to move his family to Israel.

In order to execute its planned changes, Oversee cut staff positions that were no longer necessary. Morrow would not say how many people were laid off – other than that the reductions came from several divisions – or how many people the company currently employs. Oversee, which operates out of a high-rise on Flower Street, employed about 215 in 2009 before layoffs cut the staff to about 180. That means the 13 percent staff reduction could total about 23 jobs.

Morrow said the company is hiring in its engineering, sales and marketing divisions to build back up its staff.

“This was not just cost cutting to create lower expenses,” he said. “This was to reposition and realign the company toward a new vision.”

Domain decline

The domain monetization industry has struggled in recent years as owners of parked websites have seen a decline in ad revenue.

Rick Schwartz, chief executive of Fort Lauderdale, Fla., domain conference Traffic, blames some of the industry’s problems on Google Inc., which sells web ads through its AdSense business. The Mountain View-based search engine giant charges advertisers based on the value of traffic on a particular site and has marked down the value of traffic to parked websites over the years. That means the owners of those sites are making less money off the ads.

“The domain industry provides Google with a significant percentage of their traffic to begin with,” he said. “They’re having record earnings and we’re having record lows.”

When Oversee laid off 38 employees in 2009, it also slashed operating expenses by 30 percent.

Kupietzky explained the challenges during his two-year tenure as chief executive as the natural progression of a maturing company.

“There are ups and there are downs with any company,” he said. “The spaces that Oversee plays in represent some degree of maturation and some degree of competition.”

Despite Oversee’s budget cuts, he said the company was able to maintain profitability.

But Allemann said Oversee isn’t the only company to struggle. He estimated that the industry brought in about $1 billion in monetization revenue “a few years ago,” but that revenues have fallen significantly since then.

It’s a sign, he continued, that domain name companies will need to follow Oversee’s lead in diversification.

“The pie has gotten smaller,” he said. “I don’t necessarily see a rebound anytime soon.”