Realistic Domain Prices Could Lead To More Sales

As someone who has always enjoyed reading the blog at Ebusinessdomains.com I was pleased to have Kevin Jackson accept when I reached out to see if you wanted to do a guest post here. Kevin is working hard to take his business to the next level and has said as of late his focus is on building awareness at the end user level rather than between domainers, that is the good fight and I am happy to have him say a few words here.

Good read below, and thanks Kevin!!!

For you to fully appreciate my viewpoints in this post, simply imagine that domain parking did not exist, and the only way to make money is to buy and sell domains (domain aftermarket) and develop domains into profitable ebusinesses (web and brand development).

All domain investors go through phases before they see the light of day. Quite a few will register or buy domains that have little to no resale value in their first few months of domain investment.

One thing I have noticed is that every domain investor, old and new, will think that their domain collection is priceless, or at least worth a fortune. You will most likely aggravate domainers if you try your best to honestly tell them that their domain names are not worth as much as they think.

Now, we really still do not have any foolproof method of valuing domain names. Over the years valuation techniques come and go. The reality is that when someone invests heavily in a particular niche, extension or type of domain name, they will form all sorts of theories as to why their domain niche is the best thing since slice bread.

One good example is the LLLL domain names. Some people invested heavily in these domains. They bombarded the forums and blogs with all sorts of reasons and theories as to why these domains were worth the big figures. Well, where are they now?

I am a domain investor, developer, and also a broker that operates a domain marketplace. People will naturally get suspicious when they hear me calling for domains to be more realistically priced. However, I am making this call for the overall goodwill of the domain aftermarket.

I invest in all sorts of businesses. The industry that mirrors the domain industry the most is the real estate sector. Even during the incredible credit crunch and economic downturn that we have been experiencing over the past 2 years, I still find it worthwhile to invest in real estate. Why? The rules of the game are clearly stated.

The domain aftermarket is very inefficient and illiquid. Domains are selling, but the volumes are extremely small when compared to other sectors such as the stock market and real estate. This makes it extremely difficult for one to carve any form of successful business in the domain industry.

The real estate sector is driven by supply and demand. There is no quick way of supplying new homes, and there will always be people seeking to buy a place to live in. Property investors will always have tenants waiting. Here in London, I literally have estate agents begging for my business (to supply tenants) long before I close the deal.

Now, if people are proclaiming that domain names are so valuable, why is it that there is no sort of conveyor belt system in the domain aftermarket? Where is the overwhelming demand from end-users?

This is the point I’m trying to make here. Unlike with real estate where it takes time to build new homes and introduce new inventory, domain end-users have loads of choices. They have an orgy of other domain extensions to choose from, and they also can come up with all sorts of concoction of a domain name.

Yes, we all know that the right domain name will help with branding. However, let’s not get ahead of ourselves. The most value that a domain name will add to any ebusiness will be the credibility that it brings. No matter how premium a domain name is, the business will still need to advertise. The domain name will only cut advertising dollars if it has some sort of traction (branding) with the customers. By this I mean repeat customers that will come again without having to see any fresh advertising. Anyway I will expand on that in another blog post, in the future.

Hope you are still with me.

Now, let’s look at domain registration. Companies do not argue about having to register a domain name and then pay subsequent annual renewals. They accept it. It is digestible.

What a lot of people will not get is how they could justify paying big dollars for a domain name when they can hand register an alternative, easily.

This is why we need to price domains realistically, and create a culture of a very active and liquid domain aftermarket. While some companies will need to justify the cost of a premium domain name, some small and medium size businesses just can’t afford to buy one.

We want to target the unemployed who are trying to start their own businesses, but yet we quote them $xx,xxx for an ordinary domain name. Why not make it easy for them to spend $1,500 for the domain name, another $1,500 on web design/development and then have another $2,000 to do press releases and advertisements. Yes, that’s $5,000 in total. I believe that should a good initial outlay for an entrepreneur.

Why demand $50,000 for a domain name when the buyer would need to spend as much if they want to make any sort of returns on investment within 5 years?

If we price domains more realistically so that entrepreneurs can easily utilise their scarce resources to develop brands and successful ebusiness, then we would have a lot more end-user activity in the domain aftermarket.

Now lets quickly look at the “old guard”  - the domainers with the huge domain portfolios that they monetize though domain parking. The “old guard” don’t sell, because they don’t have to, or simply “don’t have the time to deal with domain offer emails”.

Have you ever wondered why any domain-related article that appears on TechCrunch.com always get a swarm of comments calling ALL domainers squatters? A typical comment would read:

“Such a pain in the ass when someone already owns the name that would be perfect for the project you just thought up, and when you go to the site all that’s there is a bunch of Google ads.”

Domainers know that it is legal to buy and hold domains and to monetize them through domain parking. However, as we know it, most domainers will only park domains. They have no intention or desire to develop the domains into any sort of meaningful Internet destination.

Yet, when an end-user wishes to buy the domain name, they are either ignored, or asked to buy the domainer a mansion, a Ferrari and a yacht. In most cases, no matter how robust the business plan is the end user would not be able to develop the domain into any sort of web destination that generates that type of cash flow.

Hence, I believe that regardless of whatever their domain strategies are, it would benefit the entire domain industry if domainers make it much easier for end-users to acquire premium domain names.

Let us hear your viewpoints.

Buying Domains For Investment Vs Development

Something that has seemed to come up more than normal in conversations this week with various people is the difference in buying domain names for development versus buying domain names for investment. When I look at buying for development I have completely different metrics as well as intangibles that I think about as compared to when I buy a domain name for investment and gain.

I am sure many will say in either case you will always need the .COM, well as is obvious I do not necessarily agree with that. Although there will always be some level of direct type-ins for extremely high value two word or one word generic .COMs for anything below the absolute top in many cases the amount of type in traffic can easily be exceeded through proper SEO and marketing. I am sure people will disagree but I have enough evidence to the the contrary that makes it a simple fact for me. And enough people have talked about their keyword domains, even decent ones, not having traffic and that is why they develop.

The other argument heard frequently is that you will lose type in traffic to the .COM. Well, I have no doubt I lose some type in traffic from people typing in the .COM version of the domain I develop on a non .COM but it is a small amount, the amount of money spent on acquiring the .COM far exceeds the amount, in many cases, needed to brand and market the non .COM to a high enough traffic level to not worry about the traffic leakage. Once again, feel free to tell me I am crazy, does not bother me. When you are developing it is about the business not the name.

Now, all that said there is no way anyone can say that the best value for investing is not keyword generic .COMs and .NETs. But holding a name for something other than development changes the way you look at it. As an investment you look at the marketplace to either find opportunities (native cctlds) or names that inherently have value (.COMs and .NETs). I buy very few names outside of .COM and .NET for investment purposes.

I view buying a domain for development by looking at a business plan, now if I can fit in the acquisition of a high dollar .COM as part of the plan then well, that may be the best option. But if that acquisition would kill the business from the beginning so it can never make it off the ground then does it make sense to never start the business. No it does not, a good business plan is a good business plan, it is not about the name. As domainers sometimes we miss the point, I would venture to say that most who make comments like "I would never start without the .COM"  have never put together a full business plan (although there are people that have done very well, but they had the funds to start with the bigger names, they are the exception not the rule, do not ever forget that.).

I cringe everytime I hear people say that the .COM should of been bought, etc. Well if a company received 500K to start and the .COM would cost them 300K, does it really make sense to go after the .COM if you can show a successful path to growing a brand and traffic. No, once again buying for development is much different than buying a name for investment.

Long story short, if you can afford a large investment in your generic .COM without killing the business plan sure, go for the .COM but do not ever let the name keep you from starting your business.

Closing The Deal

One of the biggest hurdles people have when selling any product is the ability to actually ask for the close, or as I always say, ask for the check. Whether you are selling domain names or selling encyclopedias door to door it really does not matter you still have to close the deal.

The problem many people have is confusing the ability to get someone interested in your product with actually closing the deal. At one point in my career I was the same way, I could get them interested, just waiting for me to ask to close the deal, but I just could not get past the stigma of asking someone for money (and that is where alot of this comes from, it is ingrained in most people not to feel comfortable asking someone for money). But when you are selling a product (domain name) you have to close the deal, you have to take the money or it does not matter.

In many cases this is confidence as well, you have to believe in your product to get to the closing process, but you really have to have confidence to actually ask them to write you the check, wire you the money, or Paypal you.

Many people mistake having a great personality and being able to talk well in front of people with being a good salesperson. Unfortunately that is not the case, I know alot of really great people that are a blast to hang around, people love to listen to them, but they cannot actually close the deal. This is the biggest problem I have when people refer sales people to me. I can tell in 5 minutes if they are going to be comfortable with closing the deal.

When it comes to domain sales I think the real reason a lot of people try to do it through email is that there is no verbal communication or personal connection to overcome to ask for the close. If you are not from a sales background and have top domain real estate it is likely a good idea to use a domain brokerage service if you want to get the top value out of your top properties. They are not afraid to ask and they know how to stick to their guns to get the most value.

So, next time you are selling a domain name or website keep in mind you are selling a product, they are getting something in return, do not be afraid to ask for payment. It is the only way business gets done.

Optimizing Value Of An End User Domain Name Purchase

When selling a domain name to an end user you need to approach the valuation much differently than when selling at wholesale prices between domain investors. Our domain properties are key real estate properties and need to be treated as such when working with a possible end user.

As domain investors we tend to have domains that span many industries and as such do not necessarily think about the true value our names may have to the business acquiring our domain. When the real estate industry is in good shape commercial real estate agents can look at getting the top price for their property, we are no different with our "domain" property.

Earlier this week I had a contact from an end user looking to acquire one of my domains, it was a geo targeted .NET name in a hot tourist area in a very strong niche. So from the beginning I knew that there was solid value in the domain, but now it was time to evaluate what the true value was to the buyer.

First step was I noticed they indicated they wanted to buy my "website", this is something I have been noticing from buyers that have came from my minisites, they want to buy my website, not my domain name. This is key, they are viewing it as more than just a name, this adds value.

The other thing I noticed is that they person had their logo, title, etc in their email signature. This validated them as a company and what was really nice is I am familiar with their location and their business from visits to the area they are in. This also allows me to focus on speaking the value to their business since I know they are a real business and not just someone looking to buy a name on the cheap.

Before sending though I did some quick searches to determine if they were buying Google Adwords ads or if they were showing up in search results for the name they were looking to purchase. They were not...

After all of this I was able to set a price, although we all like to make the other side make the first move in many cases I find it more productive to set a price and negotiate from there. That is what I did in this case. The person is now taking the offer to the owners of the business (which is a nationwide firm).

Now, to make sure you get the most value it is time to start a bidding process, I went to Google once again to determine the Google Adwords customers targeting the related terms. I was able to determine the top companies that would be interested based on that. I was lucky enough to know the area and business they are in so that helped me focus on on several that I know are considered top players in their field. I then either sent emails or made phone calls to these businesses (asking for the Director of Marketing in most cases) to inform them that offers have been made for my "website" and I wanted to allow them the chance to bid on this property as well.

At this point negotiations are ongoing, but based on all of the above, and selling like a website instead of domain I have been able to increase the value and number of betters which increases the chance of success. Hope one of these tips helps you in some way.

UPDATE: Teendomainer also wrote a great post that you should read concerning selling to end users who have contacted you.

Domain Buy Offers From My Minisites

Although I do not speak about my AEIOU.com minisites as much here of late due to my focus on my full business development of Missouri.me and my other Geo domain names I do still keep tabs on them and do link building and other items related to the tender loving care of the sites. The majority of them are revenue generating and most lived up to the 10 month ROI that I was hoping for.

But, most importantly the thing that has been most surprising is the sales that have occurred from the For Sale link on the Minisite. I was always a bit skeptical about putting a For Sale link on a domain minisite since I was concerned about it pushing actual users away from the site even if the information on the site was useful. Luckily though that seems to not of been an issue since the CTR on most of the sites is quite solid (in some cases it exceeds 20 percent).

In the past 2 months I have had offers through the For Sale link on 3 different domains, 2 of them are closed deals and a 3rd we could not come to terms but if we had even at the offer that I received and turned down it would of been a profitable transaction. Also, before someone thinks that these are $500 deals after spending $200 on a minisite plus the domain cost that would not be the case. Both of the closed deals were mid $x,xxx, oh yeah and they were .NET domains.

The percentage of offers on these names compared to parked names or minisites without an obvious For Sale sign has been a bit surprising. I did not expect the largest profit to come from domain offers compared to Adsense revenue from these AEIOU.com sites.

This is one time I am very happy to of been proven wrong, I honestly expected the offers to dry up on these names after a site was developed on it. I like surprises:)

First Domain Name Ever Bought Acquired By XF.com – Symbolics.com Switches Hands

Congratulations to my good friend and domain investor Aron Meystedt on his acquisition of Symbolics.com. This is a piece of history changing hands after almost 25 years owned by the same company. The domain name was the FIRST name to actually be purchased by a private entity and is a prize that many have wanted but never been able to acquire. If you know Aron you will understand when I say this could not of happened to a better person, they really do not get any better as a person or businessman. I am still amazed though that he was able to pull this acquisition off.

I spoke to Aron 3 minutes after he acquired it since we had plans to get together to chat and do dinner that evening and he was busy working with his team putting the site together for Symbolics.com, once he told me what he bought I was floored. I have got to say it was a bit cool knowing I was the absolute first to know what he had pulled off. But I was sworn to secrecy, at dinner that night we talked about the fact that this one of the top pieces of history on the web, when it was announced it needed to be done in the right manner. If you wanted to own the domain name that started this world we live in everyday this would be it.

Congratulations Aron!

Here is the story as first broke on DNJournal: Symbolics.com DNJournal Story

And also Techcrunch.com : Techcrunch Story

Quit Paying High Prices for Domain Related Names

Why do domainers continue to overpay for domain related names or names that start with DN, or even the word domain when they have no plans to develop or brand them?  The reason why, emotion. People are basing their buying on an attachment to their hobby (if you are just collecting and hoping  someone buys its a hobby) rather than what they know to be right.  Now to be clear, we have all done it, I have bought domain names based on an attachment to something but I did it knowing that. But when you are within the industry that the attachment is too, well not sure that it is a great idea to continue to buy based on that.

I initially had written this post on the way back from the trip to West Palm with good ole Chef Patrick (He has a blog if you did not know, ChefPatrick.com). During the trip we had witnessed something that we immediately caught as something rather obvious and somewhat concerning. Solid product domain names with immediate end user value (not domainer) and development potential selling at prices below names that had no potential outside the domainer world.  As domainers we cannot keep being as incestuous as we are. The ability to continue to sell names inside the same group of people on Twitter, Facebook, Namepros, DNforum or other domain related sites at high prices is gone. We will not receive the value for our online real estate assets if we continue to do this.

Why do you keep doing it?  When I first wrote this post I had pointed out the specific domains but I would prefer not to call out specific purchases because I think the point can be made without pointing out an invidual persons purchase. This is something that our long time industry leaders have been pointing out yet people ignore the advice.

Rick Schwartz has been successful selling domains at high prices based on his willingness to look out side our industry, a good portion of the top domain sales go to end users not other DOMAINERS.  Continuing to put more value in slapping two words together and having the word domain, domaining, dn, or something to that effect and then paying more for that than solid keyword product names is not good. Yet it happens everyday. We all know that product related or service related names are the valuable ones, but we continue to overpay for domain related names.

Sometimes a little tough love is required to help people. For years while I followed the domain industry in the background I would read the forums, etc and see people giving advice but it was obvious they were diverting from the truth or simply were being taken as experts when in reality they had no more experience than the person they were trying to give advice too.

Well, I would prefer to help people rather than trying to hide info. I am sure people will disagree with this post, probably post a few comments that there is value in blah blah blah brandable 5 letter domain related made up word, thats crap. Unless you plan on actually developing it into something there is no value. IF you plan on branding it an developing it then you are no longer selling a domain but a business, there is a difference.

Morgan at Domainvestors.TV is a great example of branding, but guess what, he did not go buy your made up domain word, he was (and I am guessing here) able to hand register another made up word and has made it into something. That is why buying mixed up words with DN in them or others is not the most effective way to spend your money. Someone passed up the chance to own a product name with thousands of exact match searches a month to buy a name with exactly zero searches and no real end user potential so in otherwords, no true enduser value.

As I made clear on the bido video chat/interview on Friday I think it's a mistake to invest in made up words that sound cool, or just brandable word combinations in general. Now as I say that I am the first one to say you can build a brand on a name but this post is about domain reselling and potential fo resell or ease of resell to end users not other domainers.  If you are developing to build a brand and then sell a website that is selling a business and once again, NOT selling a domain.

At the end of the day the most valuable names are product, service or geo specific keyword domains. watch the domain sales lists. I am pretty sure, but from a resell and domain value perspective the product name should of went for more than the domaining branded name. Tell me I am wrong here, have you witnessed the same thing?

A Few Days Away, A Couple Domains For Sale and A Busy Week Ahead

I took an unplanned few days away from the laptop (well not 100 percent but close). After driving up to meet my business partner Friday the family and I decided to keep it going and spend sometime with some family in that part of the state and disconnect a bit. Good times, even if talk does turn to business more than planned. When you are excited and having fun it seems like somehow or another even when disconnecting you can get back to business.  Sorry to a few of you who I had planned on connecting with over the past couple days but had to put the calls off until tomorrow. Appreciate the understanding....

I have a couple names currently either headed to auction or in auction right now, here they are:

Smartphone.ME - With the current auctions for .ME continuing to do well you might want to grab this one while you can. Smartphones.com sold for $95,000 not to long ago to give you some idea of interest in this term. The auction ends in less than 12 hours at sedo. Smartphone.me Auction

StilettoSandals.com - This name will be on auction at Bido August 11th. A very solid product term to say the least. Heres a link to the auction: StilettoSandals.com auction.

Well, after getting a little breather its a long week ahead. I expect this week to have some interesting outcomes and to maybe have some announcements unrelated to Missouri.me coming out of the meetings to come that may interest many of you.

Back to my take a breather weekend. Hope yours was great!

It’s Better Than Real Estate Stupid

When explaining domain names and their value to people I usually start with a real estate reference, billboard location reference, etc and then go from there in how a domain name is even better for various reasons (probably should do a post on that....).  Well tomorrow it will be really interesting since I have to actually explain this to an end user buyer who has investors from the real estate community. Let me explain a bit.

Early last year I picked up an expired name that only someone local to St. Louis, MO would get the value of, but if you were from St. Louis you would get it in a second and if you happened to be in the entertainment or live music business you would get more attention from this name based on its history than almost any other. Plus the links to the name were from some of the top radio stations, etc in St. Louis and the region.

Well, in August I received an unsolicited email from someone interested in buying the name. The person was launching a business and was using the exact same name as the name I had based on the history that I mentioned earlier.  We negotiated a price, he budgeted for this in his plan and then he went to get financing. After initial approval the economy did what it did and the deal got put on hold. Thats fine the name pays for itself in ad revenue per month.

Fast forward 5 to 6 months and I get an email this morning saying that the project is back on and he now has external investors (from the real estate community) that are working with him to launch in July. He gets the value of the name but "the investors do not think the expense is necassary".  I almost laughed, people in real estate, specifically commercial real estate should get the value more than anyone outside our domainer community. Its all about location and thats what I have for them.

Now, let me say, I think domainers are naive many times when complaining about people just not getting the value of x name or y name. But in this case (and I wish I could release the name and it would make sense) there is no other name that works, period. It is the brand in this case. 

I sent back an email outlining that we could discuss this tomorrow and that the value of high end relavent domain names are still high even during this down turn (and referred to DNJournals YTD sales) and that every type in visitor or linked visitor they miss is a customer they missed out on. 

I am actually looking forward to the dicussion outlining why the category killer domain is valuable to their business, should be an interesting conversation if anything.

Sell Your Domain Name For Free

Ok, thought I would give people the chance to try something a little bit different.

There are many different avenues to sell your domains but I hear people complain all the time that their name is buried in the thousands of other names on the various auction sites or forums.

Also, many people want to be able to give a direct pitch to their prospective buyers, really give a sales pitch rather than just typing a few lines of stats but really not being able to verbalize in a forum post why they think their name is something someone should buy. Well now is your chance to change that.

For the first 5 people that are interested in trying this I will give you the chance to showcase your domain name here on BruceMarler.com for free. The video can be up to 2 minutes long, you can have anyone you want do the pitch, the 2 rules outside of that are no nudity (obviously) and no cussing.

There really is no downside. Many people are better in front of people than behind a screen typing, this is your chance to show that (or let someone else show that).

The video will be posted to youtube.com and have an embedded link here on the site. Each post will have its own contact form so all interested buyers will be able to contact the seller directly.

If you are interested in selling you domain here please contact me by selecting contact me in the menu bar above.

I do reserve the right to reject a name depending on content or extreme adult nature.

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