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Predicting 2008 Trends

Elliot Silver
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3

When Sahar writes, I generally listen. This morning, Sahar made some predictions for 2008, and the following predictions worry me a bit:

“1. Top prices will drop: As the top of the domain market is driven by a handful of buyers (Frank Schilling, Kevin Ham and Co., Anything.com), I see those coming to the conclusion they either have enough to develop or have better returns elsewhere, therefore stop paying top dollars.”

“5. Top portfolio owners to diversify away from domains, investing in other technologies (Search technoligies, others), services ( arbitrage, others).”

Sahar has a great feel for the domain name market, better than most, so when he makes a prediction like this, I would take some time to evaluate your holdings.

I’ve noticed that many of the mid-level to highest-priced domain auction acquisitions end up in the portfolios of the big players. They control quite a bit of the money that is invested in domain names. If one or more of these companies drop out of the bidding at domain auctions, we could see what would appear to be a market correction. Of course, another company could come in and fill the void, but it would take a whole lot of financial power to do that.

Regarding the prediction below, I know that Owen Frager has also been saying something to this affect for a while:

“4. Top portfolio owners to collaborate more with marketers outside the domain space (such as Scott Day/Seth Godin The “ever” project), SEO folks.“

This is a smart approach to domain development. If you look at some of Scott Day’s domain names (like Chairs.com as an example), you wouldn’t know that each wasn’t a full business. Not only does Scott seem to have one of the nicest portfolios assembled, he also has one of the smartest development strategies.

At this time of year, it’s always good to evaluate your portfolio and make changes if necessary. It’s smart to have a diversified portfolio in case there is any type of domain market correction. When it comes to domain names, content is king (for monetization and protection), so now is the time to consider your development strategy.

Parallel Between Real Estate and Domain Names

Elliot Silver
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4

There are many parallels between real estate and domain names, but I was reading an article in the New York Times last night about home teardowns, and I thought about this in relation to domain names. A fairly recent trend in real estate investing is purchasing a home on a nice lot of land, tearing it down, and building a nicer, more modern, and usually larger home. The investor then sells this piece of real estate for much more than the price he paid and the cost of building the new home.

In terms of domain names, I can see this being a profitable opportunity for an investor who happens to have development skills or a staff of developers on hand. If he is able to purchase a domain name earning PPC for a decent multiple, he could quickly build a custom website, get it indexed by the search engines, and start building traffic and revenue. Assuming that this website generates greater income than the previous PPC page, he could resell it for a higher price. By using the Hybrid Development approach I outlined before, costs would be kept down and this could be done across many domain names.

There are many advantages of domain names over real estate in this instance:

    1) A person is not subject to weather that could impede a real estate rebuild.
    2) Other than the physical labor involved with developing a domain name, there are not many material costs, other than hosting, with a website.
    3) There are no added real estate taxes that will be incurred with a large property.
    4) The Internet is worldwide, and geography plays a small role.
    5) While searching for a buyer, the website is making money – the real estate property is costing money.

Whereas many domain investors buy and resell domain names based on the same PPC model (which I disagree with – but that’s another story), this could add tremendous value to the domain name. Many people believe they can increase the amount of money a domain name is earning by testing various parking companies and/or keywords, which may yield better results. By developing the name, you would almost certainly increase the value of the name much more than relying on PPC. Of course, development is difficult, so this isn’t for everyone. This is just another opportunity in the domain business.

The Problem With Domain Auctions

Elliot Silver
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12

Ask almost anyone what the biggest impact on the domain aftermarket in 2007 has been, and chances are they will tell you its the emergence of live domain auctions everywhere. Moniker, Snapnames, Godaddy, GreatDomains.com, DomainTools…etc all have announced or held live auctions recently. While this is good news for the most part, I’ve personally noticed it has caused some problems in the aftermarket.

The first problem is that many domain investors aren’t willing to sell their top quality generic domain names other than at auction. They know that top dollar is often found at auction, and they aren’t usually willing to compromise, unless an offer blows them out of the water. While this isn’t unreasonable, it has hampered buying opportunities outside of auctions.

Another problem with domain auctions is that many buyers aren’t buying domain names other than at auctions. Many buyers know that many great names will be up for auction, and they would prefer to make a big splash at auction rather than through a private sale, unless it is a great deal. Buyers may be reluctant to buy a name privately in the event that they need the cash for an auction.

The sheer amount of domain auctions that are going on within the industry is also causing an issue. It is difficult to get all buyers to focus on all auctions. As a result, there may be less competition among bidders, and names may sell for less than they would have if more buyers were present. The auction houses want the market to determine the prices, so they encourage sellers to set reserves as low as possible, but this becomes a difficult task, when the market for certain domain names may not be bidding at a particular auction.

Some owners are struggling to determine the best venue in which to sell their names, as the different auction companies hold auctions at various industry conferences and on their own. Also, listing domain names in an auction often requires exclusivity (before and after the auction), removing names from the market whether or not they sell at auction. Finally, if a name doesn’t sell at auction, an artificial price ceiling is created for that name, even though it might not have sold simply because the right bidders weren’t in attendance.

I know this may sound crazy, but while domain auctions are having a positive impact on the industry as a whole, they are also impacting the industry in other ways. I think the most important things auction houses need to do to grow the industry is to encourage end users to attend the auctions to acquire the best names for their business.

Are You Selling Your Names?

Elliot Silver
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6

From the Afternic DLS Blog, and brought to my attention by Dan:   If you are looking to sell your domain names, NameMedia might be interested in purchasing them.   I am frequently asked by my readers for advice on selling domain names or locating potential buyers.   I frequently suggest that they auction their names, as that tends to yield competitive bids. However, many people are interested in getting cash now rather than waiting for an auction, then waiting to see if their names sold in auction, and then waiting some more to be paid if the names sold.

If this is the case, and you are looking to close quickly, it may be better to deal with a company who is willing to pay for your names without any hassles. I don’t know what types of names they are looking to acquire, but my dealings with NameMedia properties have all been positive, so now might be a good time to connect with them. It is always easier to approach a buyer with his wallet opened!

PS: If you email Pete (per the blog’s request) tell him I send my best!

Jet Blue: Web Deal – Where?

Elliot Silver
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1

I am going to go on a bit of a late night rant – my apologies. When I see a good marketing campaign, I do my best to point it out, so others can emulate it. When I see a poor marketing effort, I try to point out the flaws, so improvements can be made.

Before I start my rant, I have to say that Jet Blue is my new favorite airline. For the past few months, I’ve tried my hardest to only fly Jet Blue, which is difficult since they don’t fly everywhere I fly (yet). I love the fact that they have televisions on their aircraft, and their employees are always super friendly. One thing that has always bothered me though is their online reservation drop down menus. They ask for departing and arriving cities, the date of travel, and the number of passengers, which is all pretty standard. My question is why does the # of passenger drop down menu default to zero passengers? Wouldn’t they assume that at least one passenger is flying? I’ve been booted back to the main page for forgetting to change this one too many times. While minor, this is a frustration that can easily be eliminated by thinking like a passenger rather than a marketer.

You are probably asking where is the flaw in their marketing effort rather than their reservation system. Today I received an email from Jet Blue, touting their new wireless access on one of their airplanes. I clicked through to their homepage and saw this: “Featured web fares: $69 each way New York, JFK to West Palm Beach.” Unfortunately, there wasn’t a clear mention of when this is applicable, and I just spent the last 10 minutes searching various travel dates with no luck. I am sure I could call, but I would probably get a “sorry, that’s a web deal only” answer. It’s just frustrating when a company presents an offer but makes it very difficult to find the offer. It’s one thing if they stated the travel dates and you can’t use the tickets on those dates, but it’s annoying to have to scour the website to find it (with no luck).

One company that actually makes it easy to find the special web deals is Greyhound Bus Lines. They offer a link to the special web deals page where you enter the date of travel, and you get the advertised fare. Print your tickets and get on the bus. Piece of cake.

When a company makes a great offer and makes it easy to redeem said offer, they’ve done a great job. The point of direct marketing is to generate a calculable ROI. Jet Blue was able to elicit a response from me, but they made it very difficult for me to book a reservation, so I went down as an unconverted lead instead of a sale. Marketers should think like consumers, and they should make it as easy for the consumer to respond as possible.

Hybrid Development: Increase the Value of Domains

Elliot Silver
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6

While some domain names have high paying keywords, frequently the traffic isn’t significant enough for this to make a major impact on the name’s value. When the name is parked, you may generate a decent amount of revenue from targeted type-in traffic. However, unless something out of your control happens, there really isn’t much of a way to increase traffic to the name with a parked page.

One way that may boost traffic, increase revenue, and consequently increase the value of your domain name is to build a stripped down website. This is a hybrid development project where you add limited (but relevant) content, which should help you with your search engine placement. As a result, more people will find your website, and they may be more likely to click on the Adsense links, generating additional revenue. The more you continue to update your site, the more likely it is that people will find you and return.

In my opinion, the key to this is developing these hybrid sites in areas that are of interest to you. This will encourage you to post more often than if it was a mundane topic or something you didn’t care about. The more passionate or knowledgeable you are about a topic, the more likely it is that people will find you. The job of Google, Yahoo and other search engines is to present their users with the most relevant website based on their search query. If you are able to provide this, you will be placed higher. Of course there are things that make this more complicated, but that is the general idea.

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