Why Are Companies Reluctant to Spend Money on a Good Domain?

Why Are Companies Reluctant to Spend Money on a Good Domain?

The last article on “Underpinning Domain Sales” sparked an interesting discussion on the domain forum, NamePros. One of the respondents asked the question, “Why are companies reluctant to spend money on a good domain?” In this article, I hope to answer that question.

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In my opinion, the dominant reason businesses don’t spend money on domain names is because of ignorance. On the whole the domain industry has not been able to mobilise itself and communicate cooperatively to businesses about the importance of domain names. I’d like to unpack this a little further.

The biggest problem has always been the question of whom should put up the PR/Marketing money to generate interest and understanding in domains. Some people point to the registries, others the registrars while others say the current domain owners should all chip in. These discussiona often degenerate into name-calling and a lot of inaction.

What domain investors need to appreciate is that once they have purchased a domain name the registries and the registrars have effectively done their job. There is NO incentive for them to try and market on behalf of existing owners to increase the demand for already registered domains so the price goes up. That’s an almost impossible job.

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Do the Domain Sales Numbers Stack Up?

Do the Domain Sales Numbers Stack Up?

I thought that I’d take a break from the series on “Building a Business” and examine what underpins the domain sales market. There are a huge number of domain investors that have bought into the market purely to sell their assets onwards…..so is this a sensible thing to do?

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In my investigation into the domain sales space I thought I’d first of all outline the two fundamental domain sales business models.

Domains as Stock Items

Stock item domains are those that sell for sub $2,500 and represent around 87% of domain sales by volume. The goal here is to move greater numbers of domains and NOT necessarily increase the sales price. The business focus is therefore to increase the stock-turn from 0.3% to say 0.6% of your domains per year….it’s all about speed and automation of transactions.

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Using Analytics to Price Domains - Part 4

Using Analytics to Price Domains - Part 4

In the last article in this series I began to unpack the importance of the demand curve for accurately pricing domain names. My experience with domain sellers is that most of them price their domains more by gut then attempting to apply a process. In this article I want to move my line of thinking forward to help sellers more accurately price their domains and buyers know if their getting a fair deal.

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I should say out the outset that I’m going to keep everything as simple as possible by minimising the number of input data points and mathematics…..but hold onto your shirt as it can still get a little tricky! Remember the goal is to see if we can create a demand curve for a market vertical and then attribute pricing to this curve. So where to start?

We can use the google keyword tool (remember there are a LOT more other data points) to provide us with both quantity and price for an individual keyword. It just so happens that the price is more often than not a reflection of the demand for that keyword due to the Google auction system amongst advertisers. Google also provides a competitive index which is really interesting and bears a lot more thought…..I won’t be applying the index for this analysis.

So I entered a whole lot of “gaming” keywords into the keyword tool and out popped the data that I was after. After a bit of manipulation, I was able to produce the following chart (price is the vertical axis and quantity the horizontal). I really haven’t added a huge number of data points but it provides a reasonable picture of demand for the gaming market vertical.

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Stop Pricing Burger Domains at High End Prices

Stop Pricing Burger Domains at High End Prices

Many domainers need to appreciate that we live in a world where the is massive oversupply of domain names and a steady demand. Sadly, the domains in your portfolio are not immune to this state of affairs.

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While on my recent trip around the world I met a domain investor that has several thousand domains and hasn’t sold any in the last few years. It was clear that they were getting a little desperate as the renewal fees kept on coming in each year. My advice was to drop the majority of their domains and take a look at the price of the ones they just can’t part with.

Just think about it for a second. What business model was the domain investor I spoke with applying to his domains? Was it the stock-turn or high value model? He was actually unclear and the result was no sales.

Many domain owners should actually be in the stock turn game where they are trying to sell 1-2% of their portfolio each year at an average price per domain of around $1,000. The problem is they have big prices on their domains and no sales result. They aren’t actually realistic about the pricing of their domains as they fall in love with much of the hype promoted by the “big sales”.

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3 & 4 Character Domain Clean-Out!

3 & 4 Character Domain Clean-Out!

A ParkLogic client is cleaning out over 80 three and four character com/net/org domains! Some of the domains contain repeatable characters like pppp.net and there are a number of three-character dot net and org’s as well.

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The domains are priced to sell and we anticipate that they will be snapped up quickly by a buyer. The first buyer to reach out to Chris (see contact details below) and make an acceptable offer will secure the portfolio.

The domains will not be sold piece-meal but rather as a complete group. If you are interested in getting the full list of the domains then don’t hesitate to reach out to Chris Leggatt. He can be reached at “cleggatt at parklogic.com”.

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