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Here's the scenario. You're a domainer that's been holding onto a great portfolio of domains since 1996 and you've sold a few along the way for modest sums of money but in reality there hasn't been the financial windfall that you've anticipated. Then you see that domains like seniors.com sell for $1.8m and you get green with jealousy. Isn't it your turn to make the big bucks? Why hasn't this happened to me you may ask? Why is it that Madison Avenue just doesn't get domains? Here's a few of my thoughts on the matter.
In my opinion, the problem with capital (brandable) value domains is they are just hard to sell. Purchasers of these domains typically will fund any acquisition from their advertising budgets and not from their technology budget. So let's take a look at the advertising budget.
Any company that is dealing with large advertising budgets will be using an advertising agency to assist them in wisely spending their money to get the biggest bang for buck. Right? Wrong! In my opinion, advertising agencies want one thing, repeatable business. So let's imagine that an enlightened advertising agency even knows about the power of domains are they going to make a recommendation to their client? Unlikely.
Think about it. An advertising exec says to their client, "I've just found a great brandable domain name with a source of highly targeted customers that will continue to grow into the future." The exec then abruptly reconsiders their position as suddenly they see that getting a commission on all of those traditional advertising placements has the potential to dry up. The conversation is abruptly shut down. The problem with domains is that they are are too good and they don't provide a continual consumption of advertising revenue that advertising agencies live off.
Here's to plan B. Plan B is when you hope that a marketing exec in a large company stumbles across your domain name, does a whois check, finds your email address, gives you call and negotiates the million dollar deal. Just think of the technological and business hurdles that this one sentence encompasses.
Most marketing execs are still working out that they are in charge of this "domain thingy" that they have and not the IT guys. Whois? What's that? If they get past those two stages the next one is even bigger. After doing a little bit of homework they send an email to purchase "xyz.com" for a large sum of money ($1000) and the response from the domain owner is normally, you left off three zeros from the offer. They're a bit confused as they thought that 120 times the registration price of a domain was more than fair.
So now the education begins. The domainer, if they are patient, then explains in detail why xyz.com is worth a lot of money. After a long while the marketing exec begins to start to get it, gets a little excited, goes to his board and says that they need to spend $1m on xyz.com. Around the board room their is stunned disbelief while the other directors wonder if the marketing guy should really keep their job after all.
This is a scenario but I believe that it's pretty accurate. It's the rare deal that makes it through this process. If you're waiting for that big deal then be prepared to wait a long time. Many of the future domain name advocates inside these companies are still going to university and it will be a number of years yet until we start to see consistent real volumes of domains being snapped up at huge prices by the corporate world.
Until this time the best thing that we can do is continue to raise the profile of domains and educate the press so that any information getting out will be positive in nature. If you haven't joined the ICA then I'd recommend that you do so now as the few bucks to join is like marketing and legal gold for the future.
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