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Finding End User Prospects

Elliot Silver
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8

Subscribe to Elliot's BlogFinding end-user prospects for your category defining domain names is just as easy as searching Google for that term. Chances are fairly good that if the category is at least somewhat competitive, there will be several advertisers on the top and side who are paying tens, hundreds, or thousands of dollars a day in pay per click advertising.   If someone is paying this much money to ensure their top position in Google, they may understand the argument to spend money on their category defining domain name.
I personally prefer to reach out to the SMBs (small to medium sized businesses) who advertise on Google.   Compared to large companies, there is much less red tape involved in decision making with SMBs, and you can have an answer in less time than you would if you went to a large company. Many times, the decision maker is also the person who signs off on the monthly Google ad spend, so this is a good opportunity to speak with the right person.
My note to the Whois contact will explain how I found the company, and how I believe the domain name can help them. Not only can a category defining domain name help save money because of the type-in traffic (if that is true), but the category defining domain name will give them even more credibility.   This is much more pertinant to the SMBs who are probably competing with the large brands for positioning in Google.
For some companies, it makes sense to buy a domain name for $25,000 when they are spending $5,000 a month in Google Adwords spends. For others, they prefer to market their brand rather than use a generic domain name.   If a company has an issue with branding, I like to recommend they look at Vodka.com, Baby.com, and Loans.com to show brands that have successfully used generic domain names in advertising without watering down their brand.
Companies that spend money on PPC advertising buys are generally more aware of the power of a good domain name. Educating others is important, but I will let Google and Yahoo spend their time and money educating. I’ve found it to be very tough to sell an expensive domain name to someone who doesn’t really get it.   There are enough companies out there that do get it.
If you want an example of a company that gets it, have a look at this week’s domain sales report on DNJournal.   Rick Schwartz just sold RoomDividers.com to the operators of OrientalFurniture.com, who currently hold the #1 side banner ad spot for the term on Google.   This is clearly a company that gets it, and in time, they will probably be able to rely less on PPC and more on organic search traffic.   Smart move.

Sales Updates

Elliot Silver
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3

A couple of quick updates.   WeddingEntertainment.com has been sold, and the transaction should be completed by early next week.   LastWillAndTestament.com also sold, and the deal is to be completed today.
Back to work for now.

Printer.com Sold for $800,000

Elliot Silver
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3

According to an article in the Dutch online publication WebWereld.nl (reported on DNForum), a company based in the Netherlands recently paid $800,000 to acquire Printer.com. The notice currently showing on Printer.com says company plans to launch their new website on September 2, although they did not reveal their plans for the new website.
Personally, I think this is a fantastic deal. In Euros, the company spent just €546,220, which is a great price for this industry defining domain name. Although I don’t have any public sales to share, I know there have been a number of sales to Europeans over the past several months, taking advantage of the weaker US dollar. Similarly, in the 1980’s when the US was going through tough economic times, many huge real estate deals were consummated in New York City by Japanese companies, which used the strong Yen to their advantage.

Domain Sale to an End User

Elliot Silver
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11

End user sales, that is sales to people or companies who plan to use the domain name to enhance their businesses, can be the most profitable (and satisfying) domain sales.   Since most domain owners monetize their domain names using methods that are financed by advertisers, these advertisers may prefer to outlay a lump sum to acquire the referring domain name rather than paying per click daily. I recently sold a domain name to a company that intends to use it for their corporate website, and I wanted to share how I went about selling it and provide other tips to people who might wish to sell a domain name to an end user.
The first thing I did was a Google search for the term that made up the domain name.   While most of the paying advertisers were large companies, I opted to contact several companies who had organic positions in the results page, but were fairly low.   In my experience, most companies who have decent rankings (but still lower than top 10) would like to do what they can to improve their rankings, and they have the knowledge to do this.   Having a top 5 ranking can boost traffic tremendously, as I have seen with my own websites, and many of these companies need just a bit of an edge to get there.
I figured that most of the small companies I contacted had some good inbound links to achieve the decent ranking, but many of their current domain names were poor. With some redirecting of the old domain to the new one I wanted to sell them, rankings could be lifted due to a more relevant domain name.   I didn’t mention this in my pitch, as it isn’t a guarantee that this would happen, but at the very least, customer awareness of the new domain name would be impacted.
The reason I reached out to the SMB audience (small to medium sized businesses) is that there is less hierarchy involved in decision making.   Previously, I contacted a fairly large company for the domain name, and the mid-level manager told me the name was fantastic and the price was good, but he would still have to get authorization of the CEO for the expenditure.   Well, it’s been over a month and I still haven’t heard back.   SMBs tend to make decisions quickly, which is something I like, and there isn’t a whole lot of red tape to cut a check or send a wire.
In my email to the businesses, I told them that I own the domain name for their field, and I wanted to sell it since I don’t have plans to develop the name. I mentioned that I thought the domain name would be perfect for their company, and I listed the sales price. My pitch was quick, as I have found that if you need to extensively explain why a domain name has value, it is very difficult to convince someone to spend the money on it.   The company either gets it or doesn’t, and if they don’t get it, their competitor will.   Companies that do get it, will end up getting it – if you know what I mean.
I quickly received a response from one SMB and after a short conversation it was a done deal.   There was a bit of negotiating on the price, but we worked out a fair deal. I’ve found that it’s easier to negotiate a better price than have to spend more time pitching the name to other people.   The fact that my opening price was reasonable was also something of note, as a SMB isn’t usually going to blow through their marketing budget (if they even have one) on a domain name that was pitched to them out of the blue.
There are a few things to keep in mind when contacting end users.   Sometimes they don’t like that a person outside of their industry owns a domain name from their industry. Some don’t understand that it is a free market and that you have just as much right to the domain name as anyone else.   There really isn’t much of a reason to engage in a pissing contest over this issue.   I have never dealt with this although I know of people who have, but if the potential buyer isn’t receptive, there is no reason to continue the conversation.
Also, don’t ever pitch a potential trademark infringing domain name to a company. I’ve seen many UDRP decisions which cite the owner’s contacting the business as a sign of bad faith.   Unless you plan to give the domain name to the company for free, do not do this.   Do not contact a company’s competitor either. Even acronyms (3 & 4 letter .com names) aren’t immune to UDRP or other legal troubles.
After writing this in my head at the gym this morning, I saw that Rob Sequin also posted a guide to end user sales.   I think there are some very good suggestions there, and I urge you to check his site out when you get a chance.
Incidentally, pitching a domain name to an end user is far different than negotiating with an end user who has approached you. When someone approaches you to buy a domain name you may or may not want to sell, you are in the driver’s seat.   IMO, someone with experience negotiating end user sales should build a business around their skill.   If you receive an inquiry from a potential buyer, the negotiation company would take over for you and would close the deal.

LastWillAndTestament.com

Elliot Silver
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2

I decided to sell my two legal domain names so I don’t lose focus on my main projects. I blogged about them to get opinions about which to develop, although I am going to sell rather than spend the time/resources developing.
LastWillAndTestament.com
1,120,000 Google results for “last will and testament”
Many top and side advertisers several pages deep
Aaron Wall’s Keyword Tool – 340 daily count
LegalZoom has a great affiliate program for these legal agreements
BIN price is $20,000.
UPDATE:
PrenuptialAgreement.com has been sold.

Things to Consider When Selling a Domain Name

Elliot Silver
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0

Some of the largest domain portfolio owners rarely if ever sell a domain name. They’ve built strong (and profitable) business plans that are effective by not selling a domain name, or only selling for a very, very compelling offer. While I would like to be able to keep every domain name I acquire, it isn’t feasible for me and my company. When I do decide to sell a domain name because of an unsolicited offer or if I put the domain name up for sale, there are several things I consider prior to the sale, and I thought I would share these things.
Is the domain name generating revenue as is?
Before selling a name (or before pricing a name), it’s important to calculate how much revenue is being generated and at what cost. If the domain name is generic and it’s parked, the name can typically be priced anywhere from 8 – 20 times its annual revenue, all depending on the name. For many category defining or product (non-TM) domain names, people have sold them for hundreds of years multiples. Most people with category defining domain names won’t sell simply based on a revenue multiple so this is a guideline.
If the domain name has a website, the owner should take the monthly hosting costs into account as well as other costs that are incurred, such as commission for advertising sales. Additionally, advertising agreements that are in place should be considered, since the new owner may not wish to keep the site as is, so contracts may have to be broken with advertisers once a domain name is sold. All costs and revenues should be considered when a domain sale is contemplated.
Are there plans to develop the domain name?
If the owner is planning to develop this domain name because of a particular interest in that industry/field, or development would be made easier because the owner has content or access to content, the price to sell the domain name could be higher. Sometimes a particular domain name fits well within the portfolio of a domain owner, so selling might not be in the best interest of the owner. A domain owner should think about what opportunity costs will be faced if this particular domain name is sold.
Can the domain name be easily replaced?
One reason why domain names are so valuable is because they are virtually irreplaceable. There can only be one ElliotsBlog.com, and likewise there can only be one of every domain name. If a domain name is sold, it might be impossible to find a similar domain name at the same price level. If you think you will regret selling a particular domain name down the road, you should probably hang on to it. In my opinion, domain names are going to continue to increase in value in the years to come, so don’t make a sale you will regret. However, don’t miss out on other opportunities because you became too attached to a domain name that you value more than the market – unless you have plans for the name.
Can the sale proceeds be used to reinvest in a better domain name?
On occasion, a person will want or need a domain name owned by someone else, and they will offer significantly more than the market value to acquire the domain name. While this might seem like a great deal if it happens, the domain owner needs to weigh whether he will be able to reinvest the money in a similar/better domain name. If the seller can upgrade, it might be worth selling the domain name. If the name isn’t easily replaceable and the owner has plans for it, selling might not be the best bet.
I’ve heard people praise others for passing on a $200,000 offer and selling a name for $300,000 4 months later. This is great only if the person couldn’t do something else with that money during the same period. If the domain owner could reinvest that money in other domain names and sell them for more in a short period of time, it might have been a better deal to sell for $200k, buy other names and sell those for more.
The one caveat is that the seller must be conscious of the tax implications of a sale/purchase. If the seller makes $100k profit on the $200k sale, he needs to be cautious when reinvesting that $200k because he is in the hook for around $35k of the $100k profit. If he buys a $200k domain name, he will still need to pay taxes on the profit.
Can the domain name be sold to someone else for more money?
The seller should analyze the market to see if he could get more money elsewhere. As any real estate broker will tell you, a home owner usually values his home more than the market would actually value it. Likewise, many domain owners believe their domain names are worth more than the market will yield. The domain owner needs to determine whether someone else would pay more than a current offer, and if so, what the effort to make that sale would be. Time is money in this industry.
Like with any negotiations, the dynamic of the negotiation really depends on whether the domain owner is actively selling a domain name or a potential buyer inquired to buy a domain name. In the first case, the seller may be the motivated party in making a deal, and this may somewhat dampen his prospects unless there is more than one interested party. When a domain owner receives an inquiry, the sales price really depends on the owner’s motivation for selling. If he has plans for the domain name or if he doesn’t need the proceeds from a sale but the buyer needs the domain name, the sky could be the limit for the price (just ask Rick Schwartz).
If the domain owner is actively marketing his domain name, he should strongly consider any offers before rejecting or counter offering on one. I’ve experience domain sales where I asked $25k for a domain name, and upon receiving a $20k offer, I’ve tried to counter at $22.5k. Sometimes during this period of negotiations, the potential buyer purchases another domain name, so his offer became voided.
From my experience, if you are the seller and you are the person seeking offers, if you receive a counter offer that is acceptable, you should consider accepting it rather than trying to make a small % more. Even major companies like Yahoo have overestimated the value of their assets, and they lost a sale they would be happy to have now.
As any domain investor knows, there are many other facets to valuing a domain name and negotiating a domain sale. These are just a few things I consider when selling, and I wanted to share them. As always, if you have questions or need help, drop me a line and I will do my best to respond shortly.

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