What’s in a Name?
“We’ve got less than half the world’s population online right now, so in a sense the party hasn’t even started yet,” said Angie Graves, consultant with WEB Group, Inc., in moderating the panel on getting into the domain aftermarket. “Some people do this just for fun, and some do it for money and have made quite a bit.”
What is a domainer, and what does a domainer do? Pertinent rhetorical questions, since more than half of the audience of this talk were attending NamesCon as new participants in the market. Amanda Waltz, VP of Sales and Acquisitions for Igloo.com, said that dominers fall into three main categories: Some who are just starting out, some who started as hobbysts and have turned it into a full-time profession, and some have one ultra-premium domain that they hand-registered: “some of them don’t even know what they’re sitting on” in terms of value. (The owner of “sex.com probably had a pretty good idea, though.)
“The fact that private equity companies are getting into the world of domaining is good news for all of us,” said Bob Mountain, Chief Revenue Officer of Afternic, part of the GoDaddy family. He said that newcomers are not frozen out, and that there’s “lots of room for creativity.” The arrival of such big fish, Mountain said, is a validation of the domain market as a fertile field.
Speaking to the after-market, Mountain said that identifying value is key. “How many .com’s are registered? North of a hundred million? Aren’t the good ones taken? Every time you think that, the number goes up.” Hand-registering new domains is one way in, but getting the timing right in aftermarket buys is another.
The Time is (Still) Now
Waltz said, “I certainly don’t think it’s a bad time [to get into the market]. There will be some obvious winners as all these new strings come into play,” but there’s opportunity for whoever is willing to keep her finger on the pulse. Her advice is to hack your knowledge base: “Find one of the long-time domainers here [at NamesCon] and strike up a conversation with them.” She encouraged anyone of any age and threshold to “make some key investments that, if you’re willing to hold them for a few years, could turn out to be quite valuable later on.”
During the dot-com boom, the market was white-hot, said Mountain. Then some opportunistic entrepreneurs jumped in once the bubble burst, taking advantage of that silver lining. Now, he said, we should look overseas: “The buying going on in China is unprecedented.” He hurried to add that this is a global phenomenon, and that this wave is not the last one. With this in mind, he said, it’s time to decide upon your profile and develop your strategy. “What’s your framework? What are you gonna go after? What’s your budget?” One way in is to grab expiring domain names at auction. (Speaking of auctions, don’t miss the Right of the Dot auction at NamesCon on January 11.)
Building a Portfolio
Mountain enthused about the information-sharing culture in the domaining world: advice is just a question away. Waltz said that planning your work is important in any business, and domaining is no exception. “I’d start to look at what’s selling,” said Waltz, mentioning services like NameBuyer. Some categories are hotter than others, she said, mentioning three-letter dot-coms as hugely profitable in recent years. In some cases, these can be better investments than stocks: “If it were me, I’d really start looking at those auction sites.”
Okay, so you’ve acquired some domain names. How, then, to monetize them? Mountain said that the traditional parking is still valid. The parking service plunks some ads onto your domain, and you make money from ads. It’s easy, but the market is not really expected to grow, he added. “It offsets the registration fees,” at least. Waltz noted that, when she started out, some domainers were unwilling to sell, since they were making more money on ads than they would have made on a straight sale. There are companies that will work with you to monetize your parked domain in different ways, she said: “There are some domains that lend themselves to lead generation,” particularly in the insurance and finance verticals. However, noted Mountain, make sure your lead generation isn’t missing opportunities for the sale of the domain itself. “On a parked page you have the advertisements, [but also] make sure you have a link that says, ‘This domain is for sale’.”
Graves remembered a law student who had registered bandwidth.com, and ended up partnering with Internet service providers in exchange for 15% of their profits from his leads. “He did quit law school. I think he’s got an island in the Pacific somewhere.”
Puling the Trigger
If you’re sitting on something that you feel like you’ve got the next diapers.com, don’t pour your blood, sweat, and tears into it, warned Waltz: the domain itself is the product, and the content you’ve built into it will dilute its perceived value to potential buyers.
How do your price your name, though? Mountain said you’ll choose between setting a price versus auctioning it off. You’ll sell way more domains at a fixed price, he noted, but the risk is that you’ll get the pricing wrong and sell too low. “Is that the worst thing in the world? No.” Leveraging the marketplaces, though, will help you reach a larger audience. If going with the buy-it-now pricing, Waltz implored the audience to set the same price across marketplaces or their own names can be at risk: one can end up developing a bad reputation.
Mountain said that lots of online sources exist for valuing a domain, algorithms aren’t perfect: “machines just aren’t gonna get it a lot of the time.” That, he says, is when your own gut comes in.