Saturday, November 3, 2018

Reflections from my first domain auctions

It is natural for each of us to want to stay inside our comfort zones.  For domain investors, this could mean anything from which niches and extensions we invest in, to where we register our domains or the marketplace venues we prefer.  Obviously there are sound reasons to build expertise in certain areas and that supports a focus on sticking with what you know.

However, in many aspects of business and life, progress depends on going outside your comfort zone.  I did that this week, when,  for the first time ever, I am trying auctions for a few of my domain names. In this post I wanted to share that experience with you. Please keep in mind that domain auctions are new to me, so the following is very much from a newbie perspective on domain auctions!

Where To Auction?

The first decision I had to make was where to auction. There are a number of choices, with GoDaddy Auctions, Sedo, and Flippa being the most well known.  There is also the possibility of a site like eBay or even conducting a Twitter auction, which has been done several times for domains this year  by broker Darryl Lopes. One question to ask when considering these and other options is whether you see this probably selling wholesale to other domainers or retail to end users. Another important consideration is how much you are willing to pay in up-front costs, not knowing if the auction will be  successful or not.

I decided in the end to auction the domains on NamePros, a community of about a  million domain investors. This is definitely a market to domainers and not end users, so my price expectations are modest.  One big advantage is that it is free. To start an auction you simply (in the appropriate auction section) start a thread. They have some rules about what you need to include in the domain name auction description (see below).  You can include additional material, if desired, but certain things like expiry date and renewal costs must be included. Check out the useful  document at the top of the NamePros Auction thread to see all  the details.

Auction Parameters

  • Start Price   You need to decide the starting price.  Many auctions start at $1 to get the process going and I did that.  On many auction venues, like Sedo, you can set a reserve different from the starting price.  In a way this seems inconsistent, and some domains get bids but all below reserve and they never sell.
  • Increment   This is simply the difference between subsequent bids.   I set it at just $1 in my auctions. 
  • Ending Date/Time  Often this is set some number of hours after the last bid, but I wanted to keep things simple so set fixed ending times.
  • Registrar/Expiry Date  You need to include this information that will be important to the potential user.
  • Payment  What forms of payment do you accept?  I set mine to simply be PayPal but many include bank transfers, BitCoin or other forms of payment. You may also want to specify how quickly after the end  of auction you expect payment.  Between 12 and 24 hours is normal.
  • Transfer  There are two main options - you push the domain name to the new owner's account at the registrar, or you unlock it and send an authorization code so they can register it at their registrar of choice.  I offer both options, as either are easy for me to  do.

What Am I Auctioning?

I decided to try three different domain extensions - a .com, a .co and a .me.  While I have a number of ngTLDs that I personally like more, I do realize that the majority of NamePros members invest in .com, and .co and .me are also fairly popular.  So in a way I thought about my market when deciding which names to auction.  Also, most NamePros know me as an analyst, and sometimes advocate, for the new extensions.  I wanted my auction to stress that as a domain investor I do believe in a diversified domain name portfolio. Even if they don't  bid, they will see that I do handle other domain names.   Here are the specific names.

My first auction was for the 6 letter .com extension domain name  When I acquired the domain name my thoughts were to view it as nano from A to Z, so I write it indicate that. I had the idea that the domain name could be a brandable name in the nanotechnology space, or used as a reference site that answered various questions about nanoscience and  nanotechnology.  Although I did not realize it at the time, nano is also a cryptocurrency, so there are use options in that niche as well.  Of course nano as a prefix, meaning one-billionth, has even more general meaning.  The global nanotechnology industry is projected to grow to $75 billion dollars by 2020, so this is indeed an important area.  Only after the auction started did someone point out that AZ is the abbreviation for the state of Arizona, so it would be ideal for a nanotechnology company operating in Arizona.  I had also thought of the name as an abbreviation for nano azimuth, since azimuth is another word for bearing. Nanotechnology is one of the topics I highlighted in January as being big for domain name investors in 2018.  The GoValue estimate of worth for the domain name is about $1300. 

Not surprisingly nano has sold many times as part of a domain name. For example, it has sold  156 times (NameBio database) in .com with an average price of $1223.  Some recent sales include nanoview $7500 (2017), nanozen $3953 (2016), nanonest $2650 (2016), nanosys $2377 (2015), nano2 $1150 (2015), nanoco $875 (2014), nanoart $741 (2018), nanorx $404 (2018), nanopi $206 (2018). Based on these I feel confident that the domain name has value.

One difficulty in listings for domain name auctions is to compress a meaningful amount of relevant information into an effective but not too lengthy report.  Here is what I wrote for this particular domain name.

My second domain auction was also in the nanotechnology area, but this time with the .co domain extension. The .co extension is a  common 'second choice' for companies if the .com is either not available  or too expensive.

The name SmartNano integrates nanotechnology with smart in the sense of connected with intelligent response.  While the Internet of Nanoscale Things has been talked about for some time, it is now becoming a reality.  The idea, particularly important in medical applications, is that tiny nanodevices sense a parameter and then another nanoscale device will react to that information in an intelligent way.  It is like the Internet of Things, but on a nano  scale.

The combination of the word smart at the start and  the .co extension has sold multiple times with a range of prices. Some sales in the .co extension that starts with ‘smart’ include SmartSense $1999, SmartAudit $700, SmartPhoto $300, SmartDigital $250, SmartHomes $127.  I included that information in my auction listing.

The third name I currently have at auction uses the .me extension.  This extension is one of the more popular general use country code extensions.   It is ideally suited for personalized sites that benefit from the me connotation.  The .me extension has sold relatively well, especially with single words.

Domain names are more likely to sell if the domain name has multiple end use classes and that is definitely true here.  Catalina is a first  name, of course, but it is also the name of several different geographical regions, the best known  off which is Catalina Island off the coast of California.

The domain name Catalina has sold 10 times (i.e. a  domain name  that includes Catalina as part of it) with $903 average. The exact word Catalina has sold at least 3 times, in the .mobi extension for $1020, .tv for $900,  and the  popular .net extension for $1868. Multiple words have sold in the past such as VisitCatalina in .com for $2695 and CatalinaResorts for $1399.

The word Catalina is also a widely searched term.  There are over 2.7 million Google searches for month on the broad term (that means including searches for 'Catalina tours' , 'Catalina hotels' etc.) and  more than 40,000 monthly searches on the exact word simply Catalina.  The cost per click (CPC) are also significant,  for example about $0.75 in the broad context. The GoValue estimate of worth for is about $1300. I am confident that the domain name is valuable, but without any personal connections to Catalina, others can more successfully market it than  me.

Don't Forget Promotion!

At any time there are huge numbers of domain names for sale at auction, and it is challenging to get your domain name auctions noticed.  There are a few things you can do to help this process.

  • Think about when your auction will start and end.  There are many more NamePros members active at certain days and years.  I probably was not as smart as I could have been in this timing.
  • Your auction listings will quickly drop off the first page of auctions, and  as for Google searches, if you are not on the first page it is hard to get noticed.  NamePros allow you to "bump" your auction listings a set number of times per day that depends on your membership class (e.g. for my VIP status I am allowed to bump each three times per day). You do this by putting up a reply, like bump, that makes the thread active.
  • Don't forget social media.  If you are on Facebook, LinkedIn, Twitter or other platforms share with your followers that you have them on auction.  Don''t overdo this, and don't make it spammy, but do take advantage of the opportunity.  I am on Twitter, and  have promoted each auction there. 
  • Change your signature.  I just thought of this, and am about to try it.  But for both your domain related email and your NamePros profile.  Someone might see your domain name that way and enter the auction.
  • Use your web presence. If you have your own domain related website, don't forget to put a link (ideally with an attractive graphic) in a prominent place on your website.
  • Direct the domain name.  This is maybe  the most obvious, but most easily overlooked, way to promote the name.  If someone happens to enter the domain name in a browser you want them to find your domain name. Sign in to where  your domain name is registered, go to the section for managing the domain name, and then set it so that the name forwards to the URL of the auction. Then check that it is working. 

Can you think of other ways to promote an active domain auction?  If so, please share them in the comments section.

Concluding Thoughts

I still have a few days left in even the first auction.  So far I am still waiting for bids, but I know many have a strategy to only bid near the ending time for the auction (hoping to minimize competing bids).  So I am not worried. Yet!

So what if they sell for like just $2?  Then I guess someone gets a good deal on them! I mean when you auction domain names without reserve you should always be mentally prepared for this.  I  am! Auctions are unpredictable.

But is it worthwhile if you only make a  few  dollars?  Financially no, but I view this as a learning experience. The best way to become more familiar with a topic is to actually experience it, and  that is what I am doing.  If they sell, even at low prices, I will also build my reputation measure that will help me in future domain sales at NamePros.

I have already learned a few things from the experience.  One is the importance of the title.  To get positive attention that needs to interest potential customers enough to cause them to click on the link to learn more about the domain.  While the NamePros guide was helpful, it was also a good learning experience to put together the description of the domain name to start the auction.

There are a couple of other advantages beyond direct financial to try a domain auction. Even if people don't bid on these names, they may for the first time notice that I handle domain names in these niches.  For example two of my domain names are in nanotechnology, and I do have other names in that niche.

But there are also possible downsides of doing auctions.   If someone sees you sell a domain name cheaply at an auction, maybe they will delay purchasing a different domain from you because they think that if they wait maybe they can get it cheaper at auction.

Also, it does take some time to collect the information, post the auction, keep it active, promote it, etc.  For me this is mainly a learning experience, so I think it is worthwhile personally.  But I totally realize they are not good in all situations, and  definitely not for all domains in your portfolio.

No comments:

Post a Comment

Featured Posts

Why Would Anyone Want a New Extension Domain Name?

Background A NamePros user asked this question: "Why (would) an end-user would want to invest in a ngTLD versus a .com domain nam...