Domain Market Resting
DomainFest, TRAFFIC, Domain Auctions February 21st, 2008
With the most recent TRAFFIC auction not performing up to my expectations considering the quality of the domain names at auction, I think the premium domain sales market is taking a temporary breather. Sellers still have high expectations for their domain names and buyers are reluctant to pay those prices, causing a stalemate. While there are still areas of growth persevering in niche markets, the overall market is resting.
Previously, domain owners could expect their premium domain names would sell for anywhere from wholesale to end-user prices at an industry conference live auction, but that hasn’t been the case for the past two main industry events. In many cases, buyers aren’t willing to pay the premium asking prices right now, and the sellers are reluctant to lower their reserve prices, causing a stalemate in the market. While this might be a cause for concern for those who are heavily invested in domain names, it could develop into a good buying opportunity, so liquidity is important.
While $10 million in domain sales in less than 30 days at the recent DomainFest and TRAFFIC auctions would seem indicative of a strong market, the names that were offered should have sold for much more (at least in my opinion). Whether domain buyers are worried about the looming/current US recession, credit fears, domain litigation/regulation, or something else, the market doesn’t appear as strong as it was before. Don’t get me wrong, the market is still relatively strong compared to many other types of investment vehicles, but I think we are in a slow down.
At the moment, the market reminds me of the New York City real estate market. I am not an expert in real estate, but from what I’ve seen and heard, sellers are reluctant to lower their prices and buyers aren’t actively buying new apartments. This is causing a slow down in real estate sales. While the market still appears to be headed higher due to record sales at the very high end of the apartment spectrum, there isn’t as much action in the middle-valued properties. People are still buying the smaller one bedrooms since those are the most economical, but the middle-priced apartments aren’t moving as well. Two years ago, if you saw an apartment you liked, you needed to make an offer ASAP at either the asking price or higher in some cases. Today, you have more time to contemplate a purchase.
Nobody would call the New York real estate market weak, but it is simply not as strong as it was. This is how I would describe the domain market at this moment, and with a swath of upcoming domain auctions, this will probably become even more evident. At the moment, I am still buying names for development, which is why I think liquidity is key.
February 21st, 2008 at 12:16 pm
Without arbitrage, typos and tms the big boys would be left with no skills and you’d find them valet parking the fancy cars they now drive as a result of this false and trumped up domain economy. Game over.
February 21st, 2008 at 12:49 pm
They missed all he European investors with this stupid auction time. In Europe at 2h00 of the night investors are sleeping!!!
They did the same mistake with DomainFest.
They don’t learn.
They should consider run auctions during the morning pacific time to have most of the world wake up!
February 21st, 2008 at 12:59 pm
Yep, staying liquid is way to go. I am developing few sites right now and my suggestion would be to stick with one niche, like cities in your case. I found too much headech to develop site in other nitches and split my attention, unless it can be totally automated. I did find that brand extension or nitche extension in this case, doesn’t split my attention as much.
Here is my thoughts on development. As more people develop generic names sites, more people will do direct type in search to save time shuffling trough the search engines. So the more people develop, the more people will be directly typing in. So i am very glad that this is what going on.
February 21st, 2008 at 1:08 pm
Domainers cannot afford to pay retail, we can speculate on domains as well. Kevin Ham paid (i think) 200k for ET.com, because of the traffic AND speculating that he will get 2x-3x return on a GREAT DOMAIN. Now look at the LL.com’s for 120k each. The chance of selling those for 2x-3x are small the traffic is 1/3 of ET.com so, unless you are a end user and traffic and domainfest are not end users. These prices will NOT be met. Once again, I didn’t purchase ANYTHING.
February 21st, 2008 at 1:09 pm
One of the problems with the Traffic auction is that you need to pay $499 just to get a ticket to bid. In my oppinion it will only be the bigger players who will attend, anybody else will go for other names where they know they wount waste $499 without any result. Personaly I had my eye on 3 names, and they sold within the limit I was prepared to pay, however I chose not to particupate as I didnt want to waste $499, and I think Im not the only one.
February 21st, 2008 at 1:14 pm
There’s not much point in putting a domain up for auction unless you have at least one buyer, preferably two, willing to pay the reserve price. Perhaps these sellers already know their high reserve domains won’t sell but still gain the benefits of the exposure the auction creates.
I would think it’s possible for Moniker to use their Marketplace platform to pre-stage these domains to see which ones are generating interest at the seller’s reserve price. By allowing the buyers to actually determine which domains go to auction you’ll end up with a much higher sales percentage at the actual event. That’s my suggestion.
February 21st, 2008 at 2:12 pm
Since we are talking realestate I wanted to point out one name that sold.
One geo-specfic state name that sold was OklahomaRealestate.com
This went for only 25k. The only other better name to own is Oklahomahomes.com An agent could probably put up an average website and still sell 4 or 5 homes a year based upon natural traffic alone, once the site is optimized they could probably get at least a dozen homes sold in a year. In my opinion this name is worth at the least 75k on a horrible day, and could be built into a million dollar business in 3-5 years. Your average commission on a sale is probably around 6-8k
February 21st, 2008 at 4:24 pm
Bad example Don.
Or, instead of spending $25k to buy the domain, Mr. Real Tor sets up MyRealEstateInOK.com. He then proceeds to buy $25k worth of advertising over the year. Instead of selling 4-5 homes via the ‘brand’ he ends up selling 20-30.
He then easily re-invests 50k the next year, and the cycle is a beautiful and glorious victory.
Domains aren’t some be-all end-all godsend.
***UPDATED BY ELLIOT***
Ultimately, I think it would be more effective for him to advertise OklahomaRealEstate.com though. The name is easier to remember, and there is a trust factor with owning that name. I think his CPL would be lower with the better name, so instead of 20-30 leads he could get with the longer more complicated name, he could get 25-35 instead, which over time, would make it a much better investment.
February 21st, 2008 at 5:54 pm
In my opinion, the results of the auction hint to a great buying opportunity around the corner. You do not get rich buying at peaks but rather at lows. The economy is tightening and will force many to become liquid to some extent which means those who have the means have an opportunity that only comes so so often.
February 21st, 2008 at 6:22 pm
I think you hit it on the head Sanchay ! This was a BIG hint.
February 21st, 2008 at 7:13 pm
Those were actually overpriced ‘junk’ domains. Outside of generic term .com’s, the only valuable ones are large city nonvariable names. Im sure the few geo names they had did fine.
February 22nd, 2008 at 1:53 am
75K for Cotton.com and 25K for OklahomaRealEstate.com were fantastic bargains.
February 22nd, 2008 at 1:58 am
AhmedF: Ever hear of Nashville.com
February 22nd, 2008 at 2:59 am
Lets forget type in for a second in that OklahomaRealestate.com
and see the value of the name. Home buyers might feel much safer and better buying from someone who own OklahomaRealestate then myrealestateOK. Lets stop looking at type in traffic, and look at value of how trustworthy name sounds. This is intangible yet its worth much more then few type ins the real estate broker might get. So, on top of of 5-6 houses he sells extra, he can increase conversion from his normal generation of leads. So 5-6, might really mean 10-15.
So i certainly think it would be worth while investment to buy that name for the trust worthy branding alone.
February 22nd, 2008 at 7:13 am
I believe the 2008 year-end sales totals will be up from 2007. I think the “slowdown” perception comes from a couple factors. First, there are a lot more auctions popping up. All these auctions are saturating the marketplace. Secondly, there are a lot of deals being made outside of these auctions in private that many of us will not know about. Domainers are getting savvy in making the “one on one” deals. The perception of a slowing domain market is making for some great opportunities and it’s a good time to take advantage of it. I am also seeing more people starting to develop their names and this in the long run will be good for both the domain owner and those that are looking to sell in the future.
***UPDATED BY ELLIOT***
I agree with the auction market saturation, but I think there have always been many deals that have been completed in private.
February 22nd, 2008 at 9:01 am
It did not help that moniker released the list of available names less that one week before the event. They could have benefitted by having the list published 30 days prior and then doing some targeted pr releases such as oklahomarealestate/lowratemortgage to the real estate and financial industries…cotton to the apparel, etc..
By targeting a few select names within a targeted pr release you might draw more interest from an outside entity…that may have helped to bring in some more monies
One confusing item for those not in attendance was that it seemed many names receieved bids within 5-10% of their expected reserves..so it was hard to tell if their really was a demand for the names but the reserves were to high or if the auctioneer was trying to fish out any real bids…
I will give moniker credit for the snapnames/live feed, this was exciting to watch and will only gather more momentum in the future…
Lastly, I dont think you can really sumarize the event until the silent auction results are out..some of these names could resurface
February 22nd, 2008 at 12:37 pm
Michael - I’ll give exception to geodomains for a city. They are a unique brand that cannot be copied nor ‘re-distributed’.
But when it comes to domains, the PPC and multiplicative factor becomes prohibitive. As domainers have become developers, many have come to realize this (just ask Sal).
Was $25,000 better spent on the domain or on advertising? I have to lean towards advertising myself.
February 22nd, 2008 at 12:39 pm
“Home buyers might feel much safer and better buying from someone who own OklahomaRealestate then myrealestateOK. “
Would love to see some actual proof of this commonly talked idea that has never been backed by actual statistics.
***UPDATED BY ELLIOT***
I think it would be difficult to quantify. I also think it really depends on the quality of the website. If the better domain name has a poor quality website, the visitors will probably equate the business with it.
February 22nd, 2008 at 1:23 pm
But it’s actually even much better than that for OklahomaRealEstate.com.
When a realtor goes in for a listing appointment (often competing against others), on which website do you suppose the sellers are going to prefer to have their home posted on…the realty company/agent utilizing OklahomaRealEstate.com…or the ones using sites like MyRealEstateinOK.com?
Fact is, depending on the size/number of agents of the company that correctly uses such a generic geo dotcom, such a web address could be worth 5, 10, 50, even 100 or more listing/year…
…to say nothing about how much owning it would mean to the eventual sale’s price of the company itself, if and when the company/agent sells their business someday.
25k for such a powerful industry tool?
While at that price it might be just a good value to a domainer/investor buyer…to an end user, it’d be a real steal…and likely the best and most valuable investment the company/agent ever made in their business.
February 22nd, 2008 at 1:35 pm
AhemedF: We used to own SouthCarolinaRealEstate.com and leased (then later sold after a year) to a real estate company in SC.
I can tell you firsthand that SouthCarolinaRealEstate.com received many direct navigation leads (the real estate company couldn’t make us an offer fast enough). The real estate company later compounded those results with Internet advertising. In addition, the branding advantage of a name like SouthCarolinaRealEstate.com is obvious.
Real Estate Geodomains like this always do well and are a great investment. We’ve also seen the same results with our Golf Geodomains.
February 22nd, 2008 at 1:40 pm
“Home buyers might feel much safer and better buying from someone who own OklahomaRealestate then myrealestateOK. “
Would love to see some actual proof of this commonly talked idea that has never been backed by actual statistics.
——————-
I have seen it in my offline business. I get now sales from other states, just because of the better domain name. So while there is no statistics since this is very new industry to begin with, i can assure you that in my personal experience it has made a difference. I get appointments with people and call backs from people, whom i would have much harder time reaching before. As eliot said, if website and beyond that, office or whole image of company is crappy, then domain name doesn’t matter, but if company has it right then domain name will give it more credibility and authority in the market.
Just use your common sense, think who would you rather go to if you saw advertising: my real estate OK or OklahomaRealestate . Or you can wait for statistics another 5 years to prove the obvious.
February 22nd, 2008 at 2:14 pm
If I used this brand of ‘common sense’, we would all be using Search.com, News.com, Local.com, Auction.com, and so forth
But we aren’t.
Just like the argument that type in traffic is so much better than PPC - the only person I have ever seen publish actual #s was Brian Benko. I believe his conclusion was Google PPC > domain traffic > Yahoo PPC (this was from like TRAFFIC 3 years ago or something).
Again, this isn’t to displace the value of domains and its traffic. This isn’t to displace whether that domain was worth $25,000.
I truly believe geodomains/local are the exception, but almost every domainer who has gone into development has found this - buying traffic is more potent than buying domains and waiting for their traffic.
February 22nd, 2008 at 5:23 pm
AhmedF: You mean like Hotels.com, Cars.com, etc?
You said that “…buying traffic is more potent than buying domains and waiting for their traffic.”
In that case, I agree 100%. If you spend a lot of money on a name and it doesn’t receive great direct navigation traffic you just made a classic mistake.
On the other hand, in addition to our Geodomains we own Whisky.com, Banana.com, Daycare.com, Rate.com, Sample.com, etc and they ALL get great direct navigation traffic.
February 22nd, 2008 at 6:08 pm
Ahmed,
“I truly believe geodomains/local are the exception”
Why are geodomains the exception? Ask every Convention & Visitors Bureau (CVB) which name they would rather have, Lowell or VisitLowell or Nashville or VisitNashville?
Nashville.com and Lowell.com are the direct navigation and do not need advertising.
Same with OaklahomaRealEstate.com. It is a sense of trust for the consumer when the name is so focused.
Now take domains in general. When people are looking for something online they usually type what they are looking for. Direct navigation is the domain name. Direct navigation / Domain Names are the best advertising you can buy.
When you own the “right” domain name you also own the number one advertising outlet for that particular brand/industry online.
Cheers
February 22nd, 2008 at 6:43 pm
I’m not arguing that domains are great for traffic.
I’m arguing:
They spent $25k to buy the domain. How much business will it give them? We don’t really know. Would it be wiser to spend that $25k on PPC? I fully believe so.
February 22nd, 2008 at 6:43 pm
i believe what ahmed is saying is: pure city dot coms are the exception when you’re talking geo. you don’t need to advertise them.
other geo domains — city + something dot com, including real estate and golf names, usually have to be well developed to attain or retain traffic, credibility, customers, income.
the majority of $$$ on less-than pure city dot coms is better spent not on the purchase, rather on the development and/or advertising.
re: just ask Sal –> he learned those lessons from me
February 22nd, 2008 at 7:13 pm
Whether it’s Nashvile.com or OklahomaRealEstate.com (even 50K for OklahomaRealEstate.com is a bargain for the right company), no name should be bought to just sit on its intuitive or branding advantages. However, a name with direct navigation traffic that is developed - even minimally developed - has a synergy that is nothing short of magical.
We’ve seen it with PalmSprings.com, Daycare.com, Nashville.com, Whisky.com, etc, etc.
In fact, we’re still waiting for it not to happen.
February 22nd, 2008 at 8:01 pm
david — we’re all agreeing here.
what we’re saying is — drill down farther, to
palmspringshouses.com, seattledaycare.com, discountwhiskey.com and the $$ at an auction
WITHIN OUR INDUSTRY seems high.
sure, to the right buyer who IS in OK real estate
it’s worth much more. perhaps the buyer is a
successful flipper.
February 22nd, 2008 at 8:27 pm
Yes, I agree. If they’re buying this just to flip it right back into the pool they’re taking a gamble.
February 22nd, 2008 at 8:29 pm
PS: It’s a little hard for me to relate to those who flip names because my brother and I have never bought a name (large or small) that we didn’t intend to develop.
February 22nd, 2008 at 8:43 pm
flipping: neither have i. i’ve developed from day 1 as well,
in the 90s, when “development” wasn’t considered useful or
necessary within our industry.
flipping was just my best guess why one *in our industry*
paid that amount.
February 22nd, 2008 at 9:11 pm
Does anyone know who bought OklahomaRealEstate.com (or Cotton.com)?
February 22nd, 2008 at 11:42 pm
Ahmed,
I used to agree with your thinking 100%. (I owned an agency;) Put your money into ads, build your brand, generate qualified traffic, and so on.
But you have to remember that after you spend the $25K for the domain, you then permanently own the direct navigational traffic for that term for LIFE. And since you aren’t monetizing this on a “per click” basis at some parking company, the traffic will easily pay for itself year in and year out, and your brand becomes your primary keyword. (That’s very cool.)
So yes, buy ads, track them to see which work, test different variations, and definitely promote your site any way you can. But by picking up the domain, you create a never ending stream of clicks that you have one of the best, highest uses for.
Finally, I’m sure there are many people in Oklahoma who sell real estate, but there can only be one OklahomaRealEstate.com;)
Jonathan
February 23rd, 2008 at 12:15 am
once again i would like point out that credibility owning a domain give a business, is amazing. I dont care much for direct navigation, i am willing to PCP just to drive traffic to my site, for one simple reason. Good Domain name has credibility built in, in fact it gives business more credibility. I am still shocked at how much it’s true, SHOCKED. Lets put it this way, if you have off line business, with good domain name you will make a lot more sales. MArcia, you absolutely right, without development my name would be very poor on direct navigation, but i dont care about that (much) i care about what message it send to buyers. I own city+profession extension, by switching to that from my crappy old name, have not only increased my sales but it increased people going, i want to learn from you since you are the man of cityname+profession. Has changing domain name helped my business ” OH YEH” would be an answer. CREDIBILITY is the name of the game. I dont care about direct navigation, i will say it over and over, since my name wont have much of it, what it will have is a lot of credibility when client does find me.
Lets take Daves www.daycare.com , this is credibility. You or I would trust it much more, then daycare.net or cooldaycare.com . We assume status, this is psychology, i am in psychology field, and i dont care about direct traffic (i think this is 6th time i am mentioning it).
February 23rd, 2008 at 1:41 am
no one questions that someone in a certain profession
who buys the placewheretheylive+profession dot com
isn’t getting a great deal, no matter what the cost (almost).
that’s a true end buyer. did that happen at traffic?
i’m assuming the buyer has a portfolio, and doesn’t
go to a real estate office in oklahoma every morning.
whoever bought it, would be great if he’d jump in here.
would enjoy knowing if he’s in the RE profession in oklahoma
or an investor with a portfolio with plans to develop /
flip / park that domain.
dane (a non-oklahoma-real-estate-professional
portfolio owner) owned it.
prior to the sale, wonder how he did with it.
February 23rd, 2008 at 2:23 am
btw, that name is just an example, as i felt there were
several at the auction that were also high, yet there
were a couple tremendous deals, one being cotton.com.
February 23rd, 2008 at 2:27 am
Jonathan Mizel:
You raise an excellent point. We’ve operated PalmSprings.com since 1995, but never full appreciated its direct navigation traffic until we launched GolfClub.com. For two years, we directed PalmSprings.com’s golf section’s traffic directly to our GolfClub.com Reservation Center. In addition, we paid top dollar to Google and Yahoo for top rankings for the phrases Palm Springs Golf, Palm Springs Tee Times and Palm Springs Golf Packages.
How did PalmSprings.com compare to Google and Yahoo? There was no comparison. The (free) direct navigation traffic we received from PalmSprings.com blew Google and Yahoo out of the water. In fact, if we’d had to pay for PalmSprings.com’s traffic at the same rates we were paying Google and Yahoo it would have bankrupted GolfClub.com within 90 days.
February 23rd, 2008 at 7:45 am
Ahmed,
You are nothing short of brilliant with ibegin.
You have what every geodomain owner needs, which is a back end. I will say that now because I got in at 6am. When I wake up at 1pm i might believe the same thing. You have something that creates a conundrum in regards to what we are speaking about here IMO.
Good night all
j
February 23rd, 2008 at 11:40 am
I have to say this: but potential is ‘nothing’. its the same some crappy country code domain that was pumped as something its not. If I spent major dollars for a web domain, it damn well better produce, NOW. Remember .ws? “get your dot website today!” well .ws is nothing today; but it had plenty of potential. .mobi is a boiler romm: its a stock ‘pump and dump’ reliant of the ‘bigger fool theory. Caveat Emptor, my friend, Caveat Emptor…