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Art of Selling a Domain Name

Ed from Michigan asked me to discuss how to sell a domain name, and I am happy to give some pointers. There are many factors to consider once the decision to sell has been made, and each factor can have many implications.

The first thing I do is evaluate the domain name based on its natural traffic, revenue, estimated number of searches (Overture or Wordtracker), number of Google listings for the “bracketed term,” number of advertisers for the term, and comparisons of recent sales of similar names from DNSalePrice.com and DNJournal.com. Using all of this information, I determine my ideal sales price.

With my price in mind, I decide whether I should target an “end user” or a domain investor. End user sales can be more lucrative, but they can also be very time consuming. Conversely, selling a domain name to a domain investor will almost certainly yield a lower sales price, but the sale may be completed more quickly because there are less hurdles to leap to close the sale.

In order to sell the name to an end user, it is important that the name be a one word .com or “category killer” name to avoid wasting anyone’s time. For example, I wouldn’t try an sell a name like AwesomeDevices.com to Advanced Micro Devices, however, I would consider selling Devices.com to them if I was interested in selling it (which I am not).

If I decide to sell the name to an end user, I first compile a list of potential buyers. The next step is to hone in the decision maker for each end user company. More often than not, an email to the Whois contact will not yield a response. Keep in mind that while I may think this particular domain name would suit them well, they may not feel the same, and they may not respond regardless of their thoughts. I would also target each company’s advertising agency in an attempt to close the sale. If all of this fails, I would try to contact a broker or possibly another domain investor.

It is very important that the domain name be generic when contacting end users. An attempt to sell a domain name can possibly be considered bad faith if it isn’t 100% generic. If you are unsure, consult an attorney.

In order to sell a domain name to another domain investor, the domain name must have a clear meaning, and it should have some inherent traffic. Unless the domain investor intends to develop the name, he will usually want to know the traffic and revenue generated by the name. Although I have never sold a domain name based on revenue, I believe it’s important to be honest about these figures. If you are dishonest once, it could cost your reputation, something that is most important in a small industry like this.

Naturally, the next question is about finding other domain investors who might be interested in buying your names. My best piece of advice is to use various outlets such as the domain forums or even Ebay to make contacts within the industry. You can list your names there, and when someone buys a name from you, there is always the opportunity to upsell other names of interest. Another option is to contact a domain broker who may have more connections within the industry. Typically, brokers charge anywhere from 5% – 15% of the total sale, and can be an invaluable resource. If you are looking for a broker, drop me a line and I will put you in touch with a couple people I know.

If you are honest with yourself and set a reasonable price, the sales process is much easier. You generally shouldn’t expect to sell a newly registered name for thousands of dollars, as it just isn’t likely to happen. People with thousands of dollars to spend on a domain name typically do enough due diligence to know you just paid $8. Selling domain names is much harder than buying domain names. I think people should do their due dilligence, research the market, and specialize in a niche before spending recklessly.

Searching the USPTO Database Using TESS

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I think it’s important for domain investors to search the United States Patent and Trademark Office’s (USPTO) database before buying a domain name – even if it’s a generic name.    The USPTO operates a system called the Trademark Electronic Search System (TESS), which allows you to search for trademarks using keywords and search terms.    If there is an application for a trademark, a live trademark, or a dead trademark, the search results will have that information.    

To perform a trademark search, you need to navigate to TESS and perform a “New User Form Search.”    The results will include when a trademark was filled (and by whom), the class of trademark, how the trademark is to be used, whether the trademark is live or dead and several other important notes.    If you have any questions about whether you can register a domain name for a particular usage, its always good to consult an attorney who may be able to advise you.    This is particularly important if you plan to develop a business on the domain name.

Trend Spotting & Domain Names

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One of the smartest things a domain investor can do is read the newspaper, watch the news, follow popular culture blogs (like TMZ.com), and even observe kids at the mall in order to spot trends and capitalize.

There was a television commercial for Ameritrade a few months ago showing a father responding to his daughter’s request for money to buy jeans, and his reaction was to buy stock in the company that produces the jeans. Domain investors should do the exact same thing, but instead of buying stock, we should buy relevant domain names. For the domain investor with a good amount of cash, he should have been looking to acquire a name like Jeans.com or Denim.com, and for people without that type of income, names like JeansShop.com or JeansOutlet.com could have been good buys.

One of the keys to buying valuable domain names is to acquire names that are meaningful and would be desired by others. Owning a name that is either the generic category killer for a popular trend or a name that represents part of that category is usually a good buy. Stick to generic names, and you should come out on top.

Buying stock in a growing company is fun, but you really have no control over the performance of the stock. Owning a domain name in a growing industry is much more fun, and you completely control how you develop, monetize, or sell the name.

“Brandable” vs. Generic Domain Names

I frequently see people trying to sell “brandable” domain names. To most experienced domain investors, brandable suggests that you need to explain what the name means and why you think it is valuable, which usually means a difficult time selling it. In most cases, brandable names aren’t good buys, especially as a short term investment.

By nature, copywriters, art directors and others involved in the creative process are very attached to their ideas. Deep down, almost every creative person wants to win a Cannes Lion, Clio or an Echo, and they want to win because of their idea. They want to be inspired from deep within themselves rather than developing someone else’s idea. I don’t think it makes sense that some domain investors think that a cool/hip sounding domain name will help inspire a marketing campaign or product name, which would seem to be the reason to register it.

On the other side, some people register these names hoping that a company will use that particular term or phrase in a new product and then seek them out to buy it. While I know of a couple people who did have success with this, there are many more brandable domain names registered than companies willing to buy them. It’s like buying a lottery ticket. Sure, once in a while it may be a good idea or even pay off, but more often than not, you will end up wasting your money.

In my opinion, if you can’t afford to buy a high value keyword name and choose to register new names instead, I recommend sticking with generic keyword phrases. Put two or three related keywords together to try and create strong sounding names. Use “quoted Google searches” to see how many references that term has in Google. Generally, the more references, the more interest in that particular topic. State specific keywords can be good, too.

Registering new names can be a thrill. Knowing what to register is what can save you hundreds of dollars.

‘Tis The Season – For Online Spending?

rick-schwartz.jpgEach year before the holidays, domain investors wonder whether the coming season will mark a breakthrough for interactive marketing campaigns. As online media continues to grow and thrive, we continue to wonder why companies still devote so much advertising spend on traditional media (print/tv) when statistics seem to indicate that people are spending more time online than reading the newspaper.

Will this be the year companies devote the appropriate advertising spend for online activities? Rick wonders aloud whether companies will finally “get it” and convert some of their traditional print and television advertising dollars into online spends. My gut says this won’t be the year, but I think things are beginning to change. Interactive marketing is fun, less inhibited, and better able to engage the viewer… I digress, but more on that in a future post!

From Rick’s Blog:

“So will THIS be the online Christmas many have always expected? Will the same sorry folks be marched out to tell you not to spend online? How dangerous it is? Marched out like a political attack machine because they know their days are numbered? These people who are funded by those with most to lose. Is this the year they get it? Can they figure out that Google is approaching $800/share for a reason? That they are the fastest growing, most valuable company in the world for a reason? Can they figure out that the newspapers are not only going down in circulation but in readerehip as well?? Same with other mediums. And talk about “Stickyness”…….Imagine how many MINUTES someone used to read a newspaper or magazine and how many minutes they read now?”

Read the rest of this post here.

Search Bar – “What Can I Serve You?”

There have been plenty of times where I walked into a bar and asked for a beer that the bar doesn’t stock.    Of course, I ordered a different beer, but for the sake of this post, let’s say that I really wanted a particular kind of beer, and when the bartender informed me that he doesn’t have it, I walked out and went to the bar down the street.

If this scenario happens just once or twice, the lost business probably won’t cost the bar much money.    However, if this is a recurring situation, it would be in the bar’s best interest to begin carrying the requested beers to satisfy the needs of its customers and not miss out on a revenue generating idea.

Likewise on a website, the owner should do his best to provide content that is of interest to his visitors.    Oftentimes if a visitor doesn’t find what he needs, he will use the search bar to locate it.    A savvy website/domain owner will use the search log information to see what his visitors are looking for but can’t seem to find.    He will then make adjustments to his product/content selection to ensure the needs of his visitors are met.    

The lost revenue from one or two visitors may be small, but if you can learn about what your customers want and offer it to them, you are sure to satiate your visitors’ thirst for information.

(Special thanks to Jonathan for reminding me about how important the search bar can be to a domain owner!)

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