I wanted to let you know that Rob Grant will be offering guest posts on my blog from time to time. Rob is the man behind Adirondacks.com and is a pioneer in the geodomain business. I am looking forward to more guest posts!
Rob Grant Guest Post: The Domain 'Slingshot' Theory
Evaluating an Offer for a Domain Name
Sometimes deciding to sell a domain name isn’t as easy as receiving a fair market offer for the name. In addition to considering the value of the offer, market conditions, and the buyer’s circumstances, you really need to think about what the loss of the domain name will mean to your domain portfolio and business plan. While being in strong financial position is important, you need to evaluate how the sale of a domain name might be detrimental to your long-term business plan, even if an offer you receive is for the full market value of the domain name.
When I receive a strong offer on a domain name, I do my best to determine the actual value of the name. For instance, I try to figure out whether I could get a higher sales price if I approached certain buyers, end-users or if the name was auctioned and received bidding action. More often than not, I am able to easily determine that the offer is lower than market value, and I negotiate with the person who made an offer in an attempt to reconcile the difference between the offer and what I’ve determined to be the fair market value for the domain name.
On occasion, a legitimate offer that is received is either for fair market value or greater than fair market value. In these rare situations, since you are probably more inclined to sell after receiving the fair (or better than fair offer), it is imperative to think about what the loss of the domain name will mean to your business plan in the long term. I am very fortunate to have received a significant offer for a domain name I own. While most people would think the offer is probably very appropriate, I need to determine how it will impact me if I choose to sell it.
Sure, a domain name could have a fair market value of $200,000, but with my business plan, design template, and execution strategy, the developed website could make this domain name worth a large multiple of this, especially if the developed website is successful. If I sell this domain name, I would be inclined to go out and find a comparable one to fill the hole, and I might not be able to find a comparable domain name to develop in this price range. It might actually cost me more money to find something equally as compelling, which would make the sale very short-sighted.
While it’s usually a good idea to have a strong cash position, with the low interest rates and the weak dollar, holding cash in the bank is almost a losing proposition. Maintaining a cash position is important for the short term, but I don’t personally think it’s smart in the long term, although I did get a D+ in Financial Accounting when I was a sophomore in college (hey, I was pledging my fraternity).
Selling a domain name involves more than evaluating the face value of the name and the market conditions. It’s very important to evaluate how the loss/sale of the name will impact your business strategy and what else you can do with the revenue generated from the sale. It would be ashame to realize what you lost in 5 years by selling a particular domain name.
DNJournal on Kevin Ham
As he always does, Ron Jackson has posted a very nice article about Kevin Ham. While most people got to know about Ham and his entrepreneurial spirit through Paul Sloan’s somewhat controversial Business 2.0 article, Ron’s article gets much more personal. This is a good chance to get more background information about Ham, and it’s an opportunity to see what drives him today.
It’s a nice Sunday morning read.
Upcoming TRAFFIC Live Auction in Orlando
When looking through the just released Moniker live auction list, the most important thing I am looking to find are domain names that I can use commercially. When buying at auction, I assume the domain name’s sale price is far greater than any potential PPC revenue I could ever earn, and I also assume that since the sale price is public, it would be difficult to re-sell the name in the short term at a profit. As a result, the only time I personally would buy at an auction is if I plan to develop the domain name.
At this point in my career, I am now looking to buy domain names that I can develop and build into another website/business, so that’s what I am looking for on auction. I haven’t spent much time reviewing the list yet, so I don’t know if I will bid, but I am going to take some time this weekend to look. When you have a chance, check out the TRAFFIC Auction list (via TheDomains.com blog).
.Net Names are Hot… But Why?
Although .net names seem to be selling well these days, I don’t particularly like the .net extension. There are a few reasons for this, but what it boils down to is that I would never develop a .net domain name, and I don’t know why someone else would – unless there are extenuating circumstances (like it would be impossible to acquire the .com and nothing else will suffice). Ultimately, I believe the general public knows .com and they generally assume a website is found at the .com. Additionally, I don’t know why someone would park one for PPC revenue, as they may pay a premium for a top keyword, but type-in traffic to .net names is probably tiny.
Recently, I’ve noticed what seems to be an increase in sales and sales prices of domain names in the .net extension. Intuitively, I don’t believe there is going to be much (if any) direct navigation traffic to these names, so I am a bit perplexed as to why .net domain sales have been increasing. Could it be that the prices are such good bargains compared to the gold standard .com names that there is money on speculation? Sure, I can understand developing a huge category killer .net name like Baseball.net or Fishing.net, but I just don’t see buying a .net to park it, like many of the Year to Date sales leaders are.
I really don’t know why people are buying .net domain names. If the plan is to develop, wouldn’t it be smarter to spend money on the .com domain name? If a person is going to spend thousands of dollars and hundreds of hours of time developing a domain name with the intention of building a business, why would they start out almost handicapped by having the .net? The amount of money it will take to brand the .net over the course of a few years could be more than it would cost to buy the .com instead. If I am going “balls out” building a website, I would have the confidence in my ability to spend (or finance) the .com domain purchase. Maybe that’s just me, but if I am going to build a website or a business, I would be slightly embarrassed to tell my domain colleagues and non-domain friends, “no, not .com – .net.”
Another thing to keep in mind is that once a website is built on the .net, the owner of the .com just hit a jackpot, as the .net website just made his .com domain name all the more valuable, especially if it is without a doubt generic and doesn’t try to monetize it by taking advantage of the .net (Oversee.com would be stupid to have PPC links for domain-related things for example).
Additionally, for generic domain names, if the .com owner builds a similar website on the .com, I would assume he would be the beneficiary of better search engine optimization rankings, and people would just assume they are on the correct website when they navigate to the .com.
For illustrative purposes, I added a Compete.com traffic chart of Oversee.net vs. Oversee.com, with Fabulous.com used to show that an increase in traffic between the .net and .com weren’t simply related to an increase in Internet traffic. Based on the chart, it would appear that the few spikes in traffic seen by Oversee.net resulted in a lift in traffic for Oversee.com.
While .net domain names are certainly less expensive than .com names (and maybe even .org, too), I think there is a very good reason for it, and that’s why I don’t really buy .net domain names. I would be interested in hearing why others think the .net extension has been doing well recently, and I am interested in knowing what others thinking about building on .net. I am open-minded and interested in learning.
Want to go to TRAFFIC for Free?
If you want to get to the TRAFFIC conference in Orlando in a couple of weeks, head over to DNZoom and either login to your account or sign-up for their services. In honor of their one year anniversary, they are going to raffle off a ticket to TRAFFIC. From DNZoom today:
“As we mark our one year anniversary, we want to give a big “Thanks!” to everyone in the DNZoom community. We have more than 1000 beta users and have struck partnerships with the best companies in the domain industry.
Here is our birthday present to you — A chance to win a free ticket to T.R.A.F.F.I.C. Orlando.”
Check out DNZoom when you have a chance… and a Happy Birthday/Congratulations to Sean Stafford and the folks at DNZoom.