Do Not Follow the Herd – Part 2

Yesterday I wrote about how so many domains with ZERO keyword value have tons of bidders at NameJet when domains with LOTS of keyword value still remain on SnapNames with minimal or no bidders.

One comment was “You can be honest and tell people you are promoting your own domains or just keep doing what you are doing” – this comment struck me as it really gets to me when people who are INVESTORS would rather take time and complain about something that has no relevancy. For the record I disclosed we did own some (but not all) of the names but hey, if want to think we own all of them go for it – doesn’t matter at all to me. The purpose of the article was to simply provide examples of high quality keyword names for sale at Snap vs. so many we see at NameJet that have no keyword value, no Google results and absolutely no logic as to why people would bid on them.

For new domainers, its easy to get caught up in auction fever.  A name with 60 bidders – Yahoo!! – must be worth something.  Guess what – it’s not always the case.  There is no doubt NameJet has some great names but they also sell many names that would never be registered if they were available today and mark my words, will NEVER sell on the aftermarket should the buyer want to sell – That’s right, absolutely NO resale value!  In fact, I have seen several times a buyer winning a domain on NameJet, park the page a few days later, then post the name on the forums for sale wanting to sell the name and giving a good deal (lower than the auction price) – its called cutting your losses since they know the name was a bad buy.

Lets use facts (so the naysayers who focus solely on this article being self serving can be put aside).  Most, if not all, domainers agree:

1) Domain Appraisals mean nothing / there is no valid system that can truly and accurately represent the value of domain.  Too many intangible factors exist and the number of external factors (such as the increase in end user sales) will simply stop any such system from ever developing since end users do not value in multiple of PPC earnings.  In fact, – end users determine value on domains independently based on what the name means to them so very rarely will you ever have more than just a few companies feel the name is worth the same amount (except for the obvious ones like mortgage.com, sex.com and 2-3 letter names etc).  This makes any standard for valuation practically impossible.

2) Domains with NO keyword value but DO have PPC income are now being bought and offered by many domainers using smaller multiples then seen in the past few years.  PPC is becoming less relevant as companies try to attract the end users who don’t care about the parked revenue but want a brandable name.

3) DOUBT as in to the future of domain parking for low traffic names.  Sure, it will always exist but doubt creates lower values and until an alternative outside of just two (2) main providers (Yahoo and Google) is built than some domain owners are opting to sell good names at great prices meaning names with NO keyword value are even less valuable since other good deals are available.

4) Names with KEYWORD value are consistently some of the most sought after names at live auctions and reported at DNJournal every week. It’s very common to see a wealth of data each week from sales of domains that have keyword value sold from sources which provide NO traffic data.  Hence, buyers are buying the keywords to develop, resell, brand or hold.  Traffic has become less important because development or end user sales are the future.

5) MUST REALIZE that NO private seller and many registries in todays world are not going to auction or sell a domain that earns $500 a month in revenue at a $1, $59 or $99 reserve in an auction so the name must have value to an end user (keywords / action phrases), be very warm for development or engage a buyer’s interest as a worthy investment to part of thier bigger plan.  The newbies that still have faith in big business really need to use logic here.

6) Domains with keywords have DEVELOPMENT VALUE. Take Elliot’s article on what happened after developing TropicalFish.com.  From 1 to 100 visitors a day with a little work.  Develop a keyword heavy name right and search engines will reward you.

7) MUST UNDERSTAND or have an idea about how to use the domain for development (this is also part of selling a domain to an end user – regardless if you can develop it or not you must understand how it could be developed or you wouldn’t have bought it).  Only names with keywords, product names, people names and action phrases can make sense.  HotDogs1245.com does not work and will not hold any value down the road.  If a name like this has links and some existing traffic one day it will get scrubbed from the search engine and you have nothing.

8) END USERS ARE THE GOLDEN KEY – Domainers love to sell to end users because prices are not only larger but more relative to the value domainers can see in owning a good name – plus it’s almost easier to sell the larger investment.  A company who spends $10,000 a week on radio ads can surely drop 2, 5 or 10k for a one time investment in a solid domain name.  It’s just finding those end users and making them understand the asset you are selling.  BuyDomains is doing a great job at that – the company to take this kind of model to next level will win the game.

9) End Users DO NOT care about PPC Income – All end users have their own business model for earning income so the amount of income produced by PPC ads will mean nothing to them.  They may care about traffic but most companies who pay small amounts – like 5 or 10,000 – are buying a branding tool and traffic is not so relative at such small price points.  Trying to sell a domain for $100k – sure, they probably want some traffic but small money is not really concentrated on that.  And yes, small money is still a lot to domainers.

Obviously, the rare names – such as 2 and 3 letter domains are exceptions to all this.

So what if PPC stopped tomorrow….think about it?  It’s not going away but who knows – there may be a slower period ahead until somebody puts together a viable alternative ad provider outside of the goo-hoo system.  If that’s the case then all domainers who are betting the ranch and have no idea about development or understand the proper keyword elements behind domain names are gambling.  Keywords will sell themselves as the value is obvious to the right end user.

So, circling back to the initial paragraph about why we do not promote the names we sell.  No specific reason other than we just have no interest in blogging about our names – we would simply rather write about other things and try to help put some logic into a not so logical industry then turn this blog into one big sales pitch.

If we use some of our names for comparison so be it – sometimes we use yours.  Again, ownership of undeveloped domains is 100% not relative because at the end of the day we are simply comparing domain names.  It doesn’t take a rocket scientist to figure this stuff out.