Latona explains what went wrong in live domain auction.
Rick Latona’s adult domain name auction at The Phoenix Forum didn’t go as well as expected. In an e-mail interview with Domain Name Wire, Latona says what went wrong and his take on live domain auctions at non-domainer events.
1. How do you think the results were? What were you shooting for?
Latona: We think the results were terrible and completely unacceptable. I take full responsibility and know that the buck stops with me. For everyone that had a name sell in the live auction for less than $500 I am going to give them $300 out of my own pocket to help ease the pain.
We had much higher hopes to say the least. We really had thought we had the right kind of inventory, the right software, the right audience and the right financing options but as you’ll read below, not all of that was true.
On the audience front, we’ve learned over the weekend that the adult business is in worse shape than we thought. We had already known that they were reeling in pain from so many free tube sights out there but apparently in the last couple of months (I’m told since October) revenue has fallen off a cliff for most of them. The reason, I’m told, is that the IPSPs or Internet Payment Service Providers, whom process credit cards for adult sites, have doubled the amount of credit card transactions they aren’t accepting. I suppose due to bank pressures and non-paying card holders suffering from the economy that charge back ratios are at an all time high.
2. There was an active bidder in the auction, Vertigogo, which is your handle at Afternic as well. Were you bidding in the auction?
Latona: Yes and no. They were house bids, not shill bids. I had just returned from the Bahamas and I was unable to catch my flight to Phoenix in time for the auction. I rushed to my office and got online just like any other surfer would and watched the event. I was hustling to get everyone I knew on instant messenger and over the phone to solicit bids since the names were going for so cheap. I also had multiple people who couldn’t get the system to work but were watching it on domaining.com and telling me what they wanted to bid so I was placing the bids for them.
Here’s the worst part. Proxibid sucks and I’ll never use them again. While I hate the way it turned out, I’m happy that I was able to experience first person the flaws in the system. It was very hard to follow the auction and I myself couldn’t even get it to work until the first 4 lots had already closed.
One of the biggest problems was that I couldn’t enter a bid. If I clicked on bid I couldn’t bid more unless I was outbid. If you were watching you may have noticed a $300,000 bid on CamGirls.com. I had actually been told a $450,000 bid by one of my buyers but I was unable to enter it! My own auctioneer was only asking for $300,000 so that was all that I could bid.
When webcam.com came up I had a buyer willing to pay $750,000 for it. I can’t remember what I bid for them but it was far less than that. I was screaming to myself in my office that I couldn’t enter a $750,000 bid because I knew David (my auction manager) had the seller on the phone and I was unable to make sure he knew there was a $750k bid on the table. I was furious to say the least. All I could do was watch my own auctioneer say 1, 2, 3 pass. What a miserable experience that was!
On at least two other occasions I had people willing to pay reserve price on one of the cheaper names but I was unable to buy it at that price because on proxibid’s system I could only bid what the auctioneer was asking for which was less than the reserve. This is a big lesson learned and the hole will be plugged in our next auction.
We will be going with new software and the next one and starting the bids at reserve.
To any haters out there, I use Kabonga or Vertigogo as my username at all registrars and auction companies. Most players know this. Clearly I would have chosen something else if it was for another reason. They were house bids for absentee bidders. That I know well. I was just frantically trying to solicit bids for my sellers however possible to get something going for my guys in Phoenix.
3. Do you plan to do more adult events in the future?
Latona: No, I do not. That isn’t to say we are going to ignore the market. I’ll elaborate more in the next question but we’ve already told the Phoenix Forum we won’t be there next year.
4. What do you think the key to success is for doing domain auctions at non-domainer events?
Latona: I think the key is to not do them. It is too risky for our valued sellers. No reserve names end up selling at fire-sale prices because the audience simply doesn’t recognize the value.
Here’s what we are going to be doing. We will be quadrupling our vertical brokering efforts. For the same amount of money that we lost in this auction I could of purchased a 2-page magazine spread in X-Biz, the industry’s largest trade publication and had it run for a full year! I’m going to do it. For everyone that has trusted me to market their names, I’m going to put the names in the ad and drum up sales at high-returns the old fashion way, with hard work and advertising.
For those of your readers that follow my newsletter they know I purchased a full page ad in Black Belt magazine recently just to promote our portfolio of martial arts related names. I have someone in my office full-time now assembling a database of top trade magazines in various markets and ad rates at each of them.
We will be doing much more of this. If the audience isn’t full of domainers, I believe in my heart – better late than never – that the best way to approach the sales is to put buy-it-now prices on the names and court the buyers. Between utilizing my call center in the Philippines and a strong trade magazine ad campaign, my current thought is that this new approach is the best approach. Wish me luck because I’m taking a big financial risk on this and if it works it’ll benefit us all.