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Advice

Suggestions for a Successful Domain Auction

1

The success of domain auctions has spawned the introduction of new domain auctions across the industry, causing some confusion. These new auctions leave me with a bunch of questions:

– Who is having an auction?
– When is the auction?
– Is the auction live or silent?
– How do  I sign up to bid?
– How do  I submit names?
– How do  I bid?
– ….etc

I am downright confused! Clearly domain auctions are an exciting way to sell domain names. Since I am not in a position to build, operate and execute a successful domain auction, I would like to share a few suggestions for the companies who are running these domain auctions:

– Live, real-time auctions are better than “silent” daily/weekly auctions. They are more exciting, and people know what they win instantly so they can budget accordingly.
– An easy to understand and operate online interface is essential to give bidders at home an opportunity to bid.
– Provide as much infomation as possible about each name. Traffic stats, revenue stats, rankings…etc all help in a domain evaluation.
– Create niche auctions in certain industries. Publicize the auction to domain investors, people in that industry, AND also to the advertising agencies that represent some of these companies.
– Million dollar names aren’t essential for a domain auction, although they will bring publicity. Remember that most people are looking to buy .com names.
– Keep the auction short and sweet. Anything over 50 domain names can cause fatigue for bidders. A company wouldn’t have to auction 300+ names if they hold a monthly auction.
– Make it easy for people to sign up and bid – similar to Ebay’s system.
– Make the submission process quick and simple. Cap each person’s submissions to 10 names. If a domain investor can’t pick the 10 best names they want auctioned, you shouldn’t have to dedicate the man hours to do it for them.
– Transparency is essential. People need to know they are bidding against a “real person.”
– Phone bidding availability is important for people who don’t have access to the Internet at the time.
– Don’t try to lock domain owners into long exclusive agreements. I think 30 days is more than enough time for everything.
– Don’t pressure people to lower their reserve price. If the price isn’t low enough, don’t put it in your auction as it will irritate the owner should it sell for the reserve.

Saga of Nissan.com

2

The saga of the domain name Nissan.com is fascinating. For years, Uzi Nissan and the automaker Nissan have fought several court battles for Nissan.com. In December of 2002, a court ruled that Uzi keeps the name but he cannot use the domain name for the following purposes:

“1. Posting Commercial content at nissan.com and nissan.net;
2. Posting advertising or permitting advertising to be posted by third parties at
nissan.com and nissan.net;
3. Posting disparaging remarks or negative commentary regarding Nissan Motor
Co., Ltd. or Nissan North America, Inc. at nissan.com and nissan.net;
4. Placing, on nissan.com or nissan.net, links to other websites containing
commercial content, including advertising; and
5. Placing, on nissan.com or nissan.net, links to other websites containing
disparaging remarks or negative commentary regarding Nissan Motor Co., Ltd.
or Nissan North America.”
Source: Nissan.com website

These restrictions essentially prevent Uzi from generating revenue from Nissan.com, causing him to solicit financial support to fend of Nissan in future legal battles. Basically for Uzi, owning Nissan.com is like owning a giant piece of land right next to an active diamond mine, but not being permitted to mine for diamonds. If he would want to sell this piece of real estate, he could potentially open himself up to a UDRP case.

The end goal of most domain investors is to sell their domain names to end users. I can’t think of a better end user for Nissan.com than the automaker. In my opinion, instead of Uzi’s public fight where he is forced to ask for donations to continue to stave off the far wealthier automaker, Uzi should have someone reach out to Nissan on his behalf and sell the name for a hefty sum. He might give up the rights to his domain name, but at this point, the name is worth FAR more to the automaker. This has become a battle of principles, and I believe Uzi might be smart to sell the domain name.

Instead of having to ask for donations, he will be able to give tzedekah and represent his family name and heritage in other ways.

Missed Opportunity: Subdirectory Direct Navigation

1


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Owners of generic domain names know the value of direct navigation traffic, but a quick review of some popular websites leads me to believe they aren’t considering subdirectory direct navigation on their websites. Briefly, a subdirectory is the word or phrase that follows a backslash after the extension on a domain name. In the following example, Boston.com/RedSox, “RedSox” would be the subdirectory.

I frequently navigate to a subdirectory hoping to avoid the front page. In my Red Sox example, I often directly navigate to the Boston Globe’s Red Sox page to save time. If I do this on the Globe’s website, I am sure there are other people who do the same thing on other websites. Oftentimes, a 404 Error page is displayed when directly navigating to subdirectories, proving that many website owners aren’t considering this type-in traffic. Below are a few examples of websites that take subdirectory traffic into consideration:

CNN.com/Sports (forwards to Sports Illustrated)
ESPN.com/Soccer (forwards to ESPNsoccernet.com)
Google.com/Mail (forwards to Gmail)
Yahoo.com/Finance (forwards to Yahoo Finance)

However, there are plenty of ecommerce websites that don’t take this into consideration, possibly to their detriment.
BestBuy.com/Speakers (404 Error)
CircuitCity.com/Speakers (The page requested was not found)
Ebay.com/Speakers (Page Not Found)

Just as some people directly navigate to specific domain names, I believe there are some people who directly navigate to the subdirectories. Although these browsers may not leave the website if they encounter a 404 error page, I think it would be an easy fix to give browsers what they are looking for if they do directly navigate to a subdirectory. It seems that many news websites anticipate this direct navigation, so I think ecommerce websites should consider this traffic as well.

5 With… Elliot Silver

4

For the inaugural edition of “5 With…” I thought it would be appropriate to conduct an interview with myself.    Look for new interviews in the “5 With…” category, as I already received commitments from some of the best-known people in the business.    Here goes…

1.) EJS: How did you get started in the domain investment business?

EJS: When I was in graduate school, I saw people buying and selling domain names on Ebay.    I thought that if people could do this, I could do it, too.    I focused on buying domain names I thought could be developed into businesses, forums, or other profitable ventures.    I stuck with generic domain names that had obvious meanings.    At the time, I didn’t realize that there were online communities dedicated to the domain investment business.    Once I joined a couple of the forums, I was able to learn alot from others, and I made contacts with other people active in the business.    I owe alot to the people I met on Ebay as well as some of the active members in the various forums.    

2.) EJS: When did domain investing become more than simply a way to earn some extra cash in graduate school?

EJS: After I joined DNForum in early 2006, I saw a listing for the .net, .org, .info and .biz of a one word domain name for sale for a few hundred dollars.    I bought those and contacted the owner of the .com.    To my surprise, the owner sold the .com for only a few hundred dollars.    I was able to resell the entire set for low $xx,xxx.    Several months later, I bought a well-priced name, and I sold it at a TRAFFIC auction for $xx,xxx.    I’ve been fortunate enough to be able to reinvest the profits into better domain names, helping me build a stronger portfolio.

3.) EJS: What was more exciting for you: Red Sox winning 2004 World Series or buying Customs.com?

That’s a tough call.    I think buying Customs.com was more exciting because it was a personal achievement.    The Red Sox winning the World Series was a great feeling – especially since I was in New York City when they won.    Hopefully 2007 will be a repeat!

4.) EJS: What’s the best piece of advice you would give people just starting out in the business?

EJS: Study the market as much as you can before you dive in and buy a bunch of names that are best left unregistered.    Since there are many different areas of domain investment, focus on one aspect – maybe a particular extension or genre of domain name and learn as much as you can.    Just as you would want to buy low and sell high with stocks, the idea is the same in the domain investment business.     Do your research and continue to buy better names each time you buy.    

Also, may I give a second piece of advice?

EJS: Sure, it’s your show, go ahead.

Thanks!    I would also recommend that people read my blog post here which gives 10 Domain Investment Tips.

5.) EJS: Do you regret ever selling a domain name?

EJS: The only domain name I really regret selling was Arrangements.com.    I still think that name is perfect for a florist.    I think I sold it for a great price, but I was able to reinvest and buyer more great names.    Maybe some day I will try to buy it back and develop it!

Bank Launches .mobi Website

2

In one of the first examples of a large company utilizing (and actually marketing) the .mobi extension, Bank of America launched bofa.mobi. The Bank is heavily promoting this with a retail merchandising campaign, including bofa.mobi window decals in their large branches in Manhattan.

I think this is a positive development for the .mobi extension, as the Bank could have simply used their standard domain name and detected the type of browser the visitor was using. They could have also gone to market with the domain name and only used it for protective purposes, so consumers or other companies couldn’t use the name. A heavy endorsement of this website is a positive sign for the staying power of .mobi.

I have one security concern with this, and I hope the Bank is mindful of it. What if someone set up a malicious website on a similar domain name that only had two lines asking for an account number and password? Since we are talking about mobile devices with small screens, unknowing consumers could accidentally submit their banking information, unaware that this wasn’t the Bank’s website. It’s one thing if someone did this with typos of the full Bank of America name and/or used the Bank’s logos, as that would be a federal offense. My concern is if they weren’t this sophisticated.

Bank of America needs to do a very good job of training their customers about what to look for on the bofa.mobi site so they know if they accidentally navigate to another website in error. They should also buy as many .mobi typos similar to their bofa.mobi domain name, so nobody has the opportunity to set up a malicious website.

I don’t have much of a stake in the .mobi extension with only two .mobi names in my portfolio, but I believe this is a good endorsement from a major corporation.

Valuing a Domain Name

2

There is much more that goes into determining the value of a domain name than a simple revenue multiple or traffic report. The value of a domain name lies in the name itself. The reason we have domain names is because the IP address system would be too complicated for consumers to remember. It’s much easier to remember ElliotsBlog.com than a string of ten random numbers. Because we use domain names as memory recall devices, the most descriptive, and easiest to remember domain names are best.

When I look to buy a domain name, the most important thing I evaluate is whether I believe a business can be built on that particular name. It doesn;t matter if it is a service or product based company, when a person hears a domain name, they should know what they will find when they navigate there. Nearly all of the domain names I purchase have this attribute, and I think it is important for domain investors to consider this when they are buying their next domain name.

Traffic and currrent/expected revenue are important, but the actual name is the most important valuation factor for me.

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