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Domain Speculation Pointers

Throughout the past several months, I’ve had many conversations with a fellow domain investor about different speculation strategies focusing on newly registered domain names. He and I frequently share stories of new registrations along with the motivation behind speculating on certain new names.  I want to share a few brief pointers for registering relevant domain names on a speculative basis.  

Travel and geographic-related domain names may be worth speculating on, as their value has climbed and always seem to be in high demand.  Sometimes you can create a relevant domain name by combining a travel destination with a travel-related keyword to form a new name with some value. The key is that the new domain name must make sense, and the keyword should have some click value (be it a large ticket item or an expensive service).

Example:

When I am planning a vacation, there are several things I search for prior to departure:

  1. Hotel
  2. Transportation
  3. Sites
  4. Restaurants
  5. Etc…

To make the most of #3, I frequently search for a tour guide online, in order to visit attractions that will be most interesting to me and my fiance. With that in mind, I believe the terms “tour guide” and/or “tour guides” could add value to a travel destination.  Turns out, CroatiaTourguides.com is available to register.  Whether it has much value, I don’t know, but I like the name for under $10 because there are plenty of  tour guides in Croatia,  and there are many people looking to find them online.

Other types of speculative domain registrations I  occasionally  take a chance on are  relevant health related domain names.  With most health or wellness related issues, there are cures or forms of proactive products.  Oftentimes this is in the form of creams, pills, shots, patches….etc.  Sometimes newly discovered and/or trendy plants and herbs are publicized, causing great demand for their related products.  

Example:  

One way to speculate on this type of domain name is to stay on top of these marketplace trends and buy relevant domain names.  Using the herbs or the health issue, you could add keywords to the end of the domain for potential products that may be developed and marketed.  Recently, I’ve heard quite a bit about fish oil.  I know the pills have become popular, but maybe there will be another application.  Perhaps a cream could be in the works? As of today, FishOilCream.com is available to register.  Maybe this name (and product) stinks, but if it does become popular, it will cost under $10 to secure this name.

The final type of name I would like to discuss are state/local professions and activities. These are my favorite types of speculative purchases because they are less about speculation and more about hunting for unregistered gems.  You can search through the yellow pages or various online directories to see if a particular profession exists in a specific area, and if it does, there is probably at least a small amount of demand, and certainly the ability to add content.  This topic is something that  Frank Schilling  discussed a while ago, and it’s something I like.  Personally, I own WashingtonDoctors.com, NewJerseyDoctor.com, and VirginiaMortgages.com among others I bought in the aftermarket, and I am a big fan of this type of name.

Example:

One way to become inspired is to search through your local phone directory to see what professions exist where domain names don’t.  Let’s say you live down in Palm Beach, Florida.  When I was down there last, I noticed nearly every home had a swimming pool.  These seem to be high value commodities, so presumably there are people who would pay quite a bit for a lead.  PalmBeachSwimmingPools.com is available to register.”Relevant” is the most frequently used descriptive term in this post.  In order to make a wise speculative purchase, the domain name must be relevant.  You probably wouldn’t find much value in registering FloridaMountainClimbing.com for example.  If you stick with relevant domain names, you may come across something of value.  

You should stay away from registering names that contain the trademark of another company. I would advise that you do a search of the  USPTO database  before registering a potential trademark infringing domain name.  

Again, please keep in mind this is purely SPECULATION!  Just like investing in the stock market, I would only advise a small amount of domain names in your portfolio be of the speculative nature – although some might argue that most domain names are speculative if they aren’t developed.  Owning too many speculative names may be cost prohibitive and wouldn’t be something I would advocate.  

Making Purchases Online

Beat the mobs on ‘Cyber Monday’

According to the article and a study from the National Retail Federation, nearly 75% of online retailers will offer special promotions on “Cyber Monday,” which falls on the Monday after Thanksgiving (tomorrow). Up until last year, I had never heard about Cyber Monday, but apparently this is one of the biggest online shopping days of the year.

CyberMonday.com, a website powered by Shop.org and owned by the National Retail Federation, offers links to many retailers who have “Cyber Monday” deals.  

CNN.com  offers some good online shopping tips to help save money and ensure a safe shopping experience.  As with all shopping, people should use their best discretion, and they should use common sense when making purchases online.  

Art of Pricing a Domain Name

Yesterday, I blogged about the “Art of Selling a Domain Name,” and I want to take a step back a bit and discuss an important step in the process: Pricing. If you price your name too high, it won’t sell, and it will set a price ceiling for the name. If you price it too generously, you won’t achieve as high of a return as possible. There is an art to pricing a domain name, and I would like to share my own personal process for pricing my domain names when I sell.

For the sake of this blog post, I will use my domain name AlcoholCounseling.com as an example, and I will set a sales price for the name at the conclusion of this.

When I decide to sell a domain name from my portfolio, I look at a variety of factors in order to determine the price, including:

1) Traffic the name receives
2) Revenue the name receives
3) Google listings for the “bracketed term”
4) Advertisers on Google
5) Comps of recent sales
6) Gut feel
   

Although I don’t buy my names based on traffic or revenue, I know that many of my clients pay close attention to these figures. The amount of natural traffic a domain name receives is important because it shows how many people are looking for something on that domain name without having to incur advertise costs. I also use the Overture search tool to get an idea of how many people are searching for the phrase or keyword of the domain name I am selling. For AlcoholCounseling.com, the traffic is light, only receiving about 1/2 a unique per day.

The revenue is important because a name might receive very little traffic, but the revenue per click may be very strong. Conversely, a domain name might receive a ton of traffic, but the click through rate might be low and the revenue per click might be low as well. This is important because if a name has strong revenue, a developer can build compelling content, increasing search engine traffic, and dramatically the revenue produced by the name. For AlcoholCounseling.com, the CTR is about 25% and the revenue per click is around $1.50. It is important to keep in mind that revenue share and CTR will differ for each parking provider and can be very different. This is one reason I only use this as a guideline.

I use the number of Google listings for the word or term in my domain name as an indicator of how much information is being published about the topic. It is likely that there is a parallel between the amount of information available and the number of people looking to find information. In the case of “alcohol counseling,” there are 154,000 Google searches for the topic. It is important to put the term in brackets, otherwise the results will include all pages that use alcohol or counseling, which is deceptive.

The number of advertisers who are paying per click is also a good indicator of the importance of a keyword or phrase, and thus the value of it. The more advertisers, the more competitive the bidding is, and that may mean a higher revenue per click figure. In the case of “alcohol counseling,” there are 8 sidebar advertisers, and there are 2 top advertisers, which is very strong in my opinion.

In order to get comparisons of other sales (both recent and historical), I like to use DNJournal’s Domain Sales chart or DNSalePrice.com. I also reference personal sales and other sales that might not have been published. For AlcoholCounseling.com, I would compare it to other psychology, rehabilitation and counseling domain sales. I have been fortunate enough to have sold a few similar names, so I have a good internal base. There have also been several public sales ranging from $3,500 – $10,000, which is in line with names I’ve sold.

Just like a real estate broker, I spend countless hours analyzing the domain market. This has given me a good “gut feel” for certain domain names. I also take my clients’ needs into account. I think about their verticals, their needs, and the types of names they buy as well as the price they would consider for this name.

In the case of AlcoholCounseling.com, I will set a price of $5,800 for the domain name with the hopes of a quick sale. Of course, if you are interested in acquiring the name, drop me a note or post a comment.

***Updated***

I just want to add that these are the most important factors I consider when setting my prices. There are plenty of other considerations, including: whether the other extensions are owned and used, registration date of the name, prior sale price/listing of the name, amount of inquiries the name has received in the past….etc.

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

3

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

2

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.

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