AIG Parallels to Biggest Domain Investors

Elliot Silver
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Subscribe to Elliot's BlogAIG survived a close call when the federal government agreed to give them an $85 billion loan in exchange for equity. As I understand it, this will allow AIG the opportunity to find buyers for some of its assets rather than force them to sell for rock bottom prices in a fire sale.   Because of AIG’s global reach, a fire sale would have impacted worldwide markets in a huge way. From my experience working with AIG, I know AIG has relationships with many of the biggest financial institutions and companies throughout the world.   Without the US government’s intervention, there would have been a huge impact never seen or felt before on a variety of industries.
Let’s look at it from a domain perspective. There are several major holders of premium domain names. While domain names can be highly valuable assets, most don’t generate a ton of incremental revenue compared to their actual value.   If a major domain company made bad hedges (maybe TM investments resulting in lawsuits or some other debt problems) and they needed instant capital to pay this down, they would be forced to sell their valuable assets.   If they needed cash immediately, it wouldn’t be easy to get hundreds of millions of dollars in a short time frame from other domain investors.
That said, if they needed to liquidate their domain names immediately, domain values would plunge as not all domain investors would be able to eat the hundreds of millions of dollars in domain names that were poured onto the market.   Good luck trying to convince a bank or lender to give you $5 million or $25 million to buy domain names.   The best performing names would probably be bought, but the mid-level names and lesser names would flood the marketplace.   Those in a strong cash position would buy a small percentage of the best names, but the others would be available, causing everyone elses values to decline.
There wouldn’t be a ton of money to go around in the aftermarket, so domain sales would be difficult.   Since we live and thrive in an industry where the most avid buyers are those who own the largest portfolios rather than outside investments, if the money well went dry, it would be hugely impactful on us all.
The next several months are going to be difficult for many. The best advice I can give is to be prepared. Keep enough cash on hand to survive for a bit of time just in case.   Irrational thinking and anxiety can cause periods of massive uncertainty and chaos, and we all need to be prepared.   Unfortunately, we are all in uncharted territory now and there is no telling what tomorrow will bring to the financial markets.

Social Networking to Sell Domain Names

Elliot Silver
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Subscribe to Elliot's BlogOn the treadmill last night, I was thinking about how to get around administrative assistants and other obstacles in the way of directly communicating with a decision maker. Most of the time at mid to large companies, the decision maker has an admin who reviews all emails and phone calls before passing them through. If something appears to be spammy, there’s a good chance the message will be deleted before the decision maker sees it.
In the day of Linkedin and Facebook, more and more people (including decision makers) are signing up for accounts on these networks. Since it isn’t always business that is discussed on these networks, I would assume that many connect their personal email addresses to the account. With the help of a mutual friend – or maybe even a cold call, you can get in touch directly with the decision maker. Although it will still be difficult to get in touch with a decision maker at a large company, it’s possible to do this to those at small to medium size companies.
The difficult thing is determining who the decision maker is. Social networking sites actually play a role in determining who to contact, as most allow the decision maker to list his credentials right on the site. If you get in touch with the wrong person, there’s also a good chance that this person will tell you who the right person is.
Instead of sending a blind email, social networking communications could help you get in touch with the decision makers you need to reach. The caveat is that I just thought of this and haven’t tried it yet.

Finding End User Prospects

Elliot Silver
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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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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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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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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.

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