For online domain auctions, less is more.
Two “extended” domain name auctions concluded this week. The results were underwhelming.
In the Rick Latona auction, only 9 of 600 domain names sold. The Moniker extended auction sold 79 of about 2,000 domains.
So what’s the problem? Too many domains, and especially too many poorly priced domain names.
I won’t profess to be an expert at picking which domain names will sell. But I assume auction houses apply some mathematics to it. You take the reserve price times the odds it will sell to come up with an expected value. Of course, you also consider that you want a high sell through rate, so you don’t just accept million dollar domains with a 1% chance of selling over $5,000 domains with a 90% chance of selling.
If auction houses are using a similar selection process, it just isn’t working. I think the problem is too many domains in the auctions.
Moniker set the high water mark a few auctions ago with 5,000 domains in the extended auction. It has since lowered the number, with about 2,000 in the latest auction. This is still too many, as shown by the less than 5% sell rate.
When there are too many domains in an auction, it turns off buyers. Some buyers like that, because they can run their analytics and find a few gems. But it’s bad for sellers if buyers don’t show up.
In addition to the number of domains, if a buyer sees any outrageously priced domain names, they’ll assume all of the domain names are overpriced. If I see a .ws domain name with a reserve over $5,000, I’m not going to waste my time looking at other domains in the auction. I’m going to assume everything is overpriced.
To be fair, part of the problem is too many submissions. If an auction company asks people to submit their ten best .com domains, they’ll end up with submissions of 50 .cc domains instead. That’s a mess to sort through.
We’re still at the early stages of domain auctions. But the results are becoming frustrating.
Jamie says
It will be interesting to see who has the balls to run a 50 domain auction and have the domains Low Reserve or No Reserve! That would be an auction I would be bidding in and watching.
Let the domains do the talking! Great domains at great prices will bring in bidders!
I hate digging through thousands of auctions. I do that daily already, so these “special” auctions become everyday moments with high priced domains.
Domain Investor says
I have sold a number of domains through Moniker’s auctions many times.
I found if the domain ends up in the extended auction category, I figured the chances of it selling is very low. Just not enough serious buyers.
One time I experimented with the no reserve pricing with Moniker and lost my shirt. The domain was EASILY worth low-mid $ x,xxx and it sold for low $ xxx. Moniker used my domain and other peoples domains as bait to get the bidding started.
I could have offered the same domain on any of the domain forums at that price and it would have sold within minutes. After that, I never used Moniker again.
Jon says
The business model of selling really good .com domains at domainer prices is dead. Auctions are left with domains that are junk and marginal stuff, and those should only be sold with no reserve. Someone needs to build a new platform to showcase and sell good domains at end user prices. Maybe sedo can do it.
Steve says
Domainers …buying from domainers …at domainer prices.
Maybe that’s the ultimate goal of domain auctions. I don’t know.
If a small business needs to buy a company car, they can probably find something used for around 5 grand. So, 5 grand for a fairly decent domain name should be something most small businesses would benefit from. Even a good two or three keyword domain that fits their niche could serve them well. That company car will wear out in a few years. The domain name won’t wear out. It is advertising and branding for the life of the company and even a salable asset after that.
There are some large corporations out there that already realize the value of keeping a portfolio of domains. They can probably afford to buy catagory killers, as well as some of those long tail domains. By now, you probably know what I’m leading up to. Yeah, I’m going to use that phrase that so many are sick of hearing. Wait for it. End Users. There, I said it.
Yes, there are “some” domainers that are end users. Yes, there are probably some “pure” end users buying at domain auctions. But this is a pond here in what really should be an ocean. Ahh, that elusive Holy Grail where domain auctions are loaded with end users buying where PPC and traffic stats do not apply.
So, how do you get to that point? How do you fix this? How do you get beyond domainer to domainer? I don’t know. I wish I knew, but I don’t.
“Damn it, Jim. I’m a Domainer not a Broker!”
DR.DOMAIN says
Auctions work better when the marketing highlights a certain “exclusivity”. Even a vintage Ferrari will take a price hit if it is auctioned next to an AMC Pacer.
monte says
I think a more important way of looking at this is that there has not been a million dollar auction since Moniker’s last one in May 2009 at TRAFFIC…showing full affects of the economy on our industry…..until now.
Here are the results of the most recent Moniker Auction at DFG:
Live Premium Auction
73 of 212 domains sold totaling $920,100.00
ASP: $12,604
Low and No Reserve
49 of 73 domains sold totaling $150,950.00
ASP: $3145.00
Extended Auction Results
79 domains sold totaling $247,987
ASP: $3,139
Combined Results
201 domains sold totaling $1,319,037.00
ASP: $6,562.00
Although there were less names sold in this extended auction than in previous ones, the overall ASP, Total, and results are positive and going in the right direction.
I think what you will also see is that there will be some very good Moniker/Snapnames Showcase Auctions with smaller and more specific themes that will start performing well as end users continue to come to the auctions to buy.
Tim Davids says
Monte…please tell the guys and gals at snap that “chickenfingers.com is not a “Geo” name. There were many non-geo names in the last geo auction. Showcases should be just that.
“if a buyer sees any outrageously priced domain names, they’ll assume all of the domain names are overpriced. If I see a .ws domain name with a reserve over $5,000, I’m not going to waste my time looking at other domains in the auction. I’m going to assume everything is overpriced.”
BIG AGREE
Tim Davids says
sorry to hit this again…”domain conference” auctions should be aimed at domainers and not end users actually…thats the audience that is in attendance. Good deals will sell…over priced, not so much.
monte says
accept domain conferences are not just for domainers any more. DFG had all kinds of people in attendance, from investors, end users, SEM and SEO, VC’s and other non domainer buyers. This is actually good for our industry and really starts to give us market trends and market values on domains since its not only domainers buying domains anymore. And yes there are some very good deals…and others over priced to the domainer…but not the end user. That is the point of offering a diversified on types of domains and prices.
Tim Davids says
less than 5% sold according to Andrew above…when it was mostly domainers it was prolly around 40-50% sold.
I agree end users attending is cool but at the end of the day these are domainer conventions.
EM @ KING.NET says
Maybe we need to go back to basic.
For starter, Domainer’s as end-user because we know the real value of a domain name better than the “end-user”. Now a days, you’re lucky to get one for your domain name.
Almost 70-80% who attended the previous conferences were domainer’s (family and friends who hang-out are excluded). Therefore, most of us are not interested to other extension e.g. .ws .cc .mx ,etc. We want the .com (optional .net or .org for premium names maybe). We have 6-8 (approx) conferences a year, check and re-check the “premium” domain names for auction between 100 to 200 domains will attract more buyers.
IMHO
Regards,
EM @ KING.NET
Landon says
Delusional prices/reserves is the biggest problem… These auctions have become like watching the fat kid in the fast-pitch batting cages.
He takes 97 strikes swinging with his eyes closed, accidentally bloops three out of the infield and calls it a ‘success’.
The vast, vast, VAST majority of people in this industry need to get their heads out of their a*s and start getting real with how they value these names. Everyone seems to be holding out for the endlessly-deep pocketed end-users that just aren’t coming. They’re all playing lotto, rather than exercising the opportunity to take profit.
Here’s a hint: If your name has value, you’ll be able to identify it instantly by the fact that you’ll get inquiries and offers for it on a regular basis. You’ll know because it will get a meaningful amount of type-in traffic and have a stiff conversion rate. I’d wager that the lions share of names listed at these auctions wouldn’t even beat their registry fee on parking, including names listed for exorbitant prices.
Patricia Kaehler says
It’s not rocket science…
Maybe one of these days these Auction Houses will get smart… and have the ONLINE Submit Form – limit the FIELDS… to ONLY be ABLE to accept ten… and only .COM… or whatever specific extension is on the block for that particular event…
Don’t have to weed through anything if you
start off right…
I lost interest in participating for the most part — some really CRAP names get accepted and MINE don’t… and we all know MINE are the BEST…
There I said it…
We all feel that way about our names…
and we all have seen the preferential treatment to “friends” with CRAP names making it in…
Snowed in here in Ohio…
I love snow though…
Have a great Sunday…
Off to update drop grabs…
~Patricia Kaehler
Stephen Douglas says
@ Domain Investor – Well said, brother.
For Monte, and the rest… I guess you’ve been reading my complaints everywhere from 2005 forward — we’re incestuous, and that will NEVER bring in the full value, or the full audience of buyers that is needed to make a domain auction successful.
As far as “baiting” domainers, especially noobies, to lower their reserves, I’ve seen this done at every live auction ever held. I’ve seen and heard, and shamefully participated (in one example) where this was done, to the detriment of the seller. Thankfully, although the seller was a client of mine, he was also a nice guy and didn’t take off my head after his domain was sold for $15,000 less at a Live auction I produced than what he was offered by a private party just weeks before. He was convinced by me and my associates to lower his reserve, and he got hammered. That guilt left a huge desire for me to try to change the system of domain auctions. (I looked at him from across the auction room and saw the blood drain from his face when the domain sold).
First of all, none of the auction systems prove they reach end users. There’s no proof at all. Monte can say there were buyers from all business roots (all due respect, Monte), but the facts are that the easier the auctions sell domains to “those who get it”, with the least amount of front money, the better the profits. However, THAT WAS YESTERDAY’S MODEL.
Tomorrow’s model for Live and Silent domain auctions, I am making the prediction now, will be themed auctions, with professional PR assistance. Like, you know, a professionally auction system, not based on “easy pickings” in a new industry called “domaining”, but based on the target market for the products being sold.
Thanks Dub-A.
Stephen Douglas says
Dang it, I forgot.
Why isn’t “Big Fishion” stating that all the domains that didn’t sell at these auctions were “worthless,” like he commented on my blog about my domains that didn’t sell? And even the negative comments from others who consider themselves expert domain appraisers and commented on my blog?
Getting a whupping publicly is hard, eh?
Jarred Cohen says
This is part of the reason why we crowdsource the selection process at Bido with our Vote For Profits program. It’s one of the ways we keep an attractive sales ratio (currently, approx 1 in 5 auctions sells at Bido).
Vote For Profits allows the community to vote in favor of what is likely to sell based on the domain itself in relation to it’s BidoPrice. And whoever voted is compensated if the domain sells.
We’ve heard that this filtering and selection process is one of the things that keeps our bidders coming back over and over, and attentively checking our list of what comes up for auction. More info at these links:
http://www.bido.com/VoteForProfits
http://www.bido.com/Info/BidoPrice
http://www.bido.com/SubmitDomains
I’m happy to answer any questions at jarred@bido.com
We also have an affiliate program, contact me for info.
Manusia says
The Vegas extended version accept too many .mx domains. What’s so special about .mx? Are them all their domains? Not sure. But I submitted several keyword rich domains (.co.uk), mostly rejected.
Whatever it is, good try !
r london says
There is nothing wrong with too many domains or the prices, if you do not want sales.
Most of the domains are junk and the few good ones have prices that are far too high.
The sellers and the auction are hoping for mircales that rarely happen. They want better domains at lower prices but there are no willing selling.
Romance for 1M what a joke, maybe 200K. Guns, a good domain that was priced ok since it is a 9 out of ten. The rest were basicaly slop.
Long Island sold because it is good and the price was ok. If auctions want to try and change things, CHRAGE a fee of maybe 200.00 to have a domain in an auction and see what happens. The fee for a top domain should be perhaps 500.00 This will stop sellers from fishing and wasting the auctions time.
The fees overall could be 200K. They all goe back to the sucessul buyers as a credit on domains sold. We can elaborate on this if interested. One idea is a 10K credit on the first purchase over 50K.
The auctions do earn 15% so even though there were poor results they show a profit.
The Domainiologist says
There’s a couple factors at play with all the domain auctions….
To me, and this is just my opinion, an auction house should just be a “vehicle” for selling domains…that’s it.
There’s way to many fingers in the pie when it comes to the way they handle submissions. Someone or a lot of someone’s at the auction house determine what’s a good name and what’s not a good name, by way of acceptance. I’m sure there’s a few out there that have submitted what they thought was a fairly good “niche” or “descriptive” business name, only to be told that it’s not acceptable.
The auction houses, as has been said by some, should allow the domain to speak for itself, with no reserve, if it’s a good deal, then it will sell, they’ll get their commission and everyone is happy.
They should focus their efforts more to the reserve of the domain than the domain itself, because after all, just because some of you seem to think that your domain is worth x,xxx.xx doesn’t mean it is. It may be to you but really..did you have it appraised? and valuate and estibot don’t count, as those are fairly generic, albeit the exact same engine, and a fair place to gauge a starting point.
The auction houses, seem to have whatever resources to be able to tell you that the domain isn’t worthy of being placed in their auction but should be telling you that yes we will accept your domain, but your reserve is over-valuated, and to lower it.
Domain auctions should be geared towards the end user more so than the domainer’s themselves, and another focus should be for auction salespeople, to tap that market that they’re selling the domains for which in turn would bring new blood and cash into the mix. It’s that old story, you tell 2 people who tell 2 people etc..
After all why would a domainer purchase a domain name from another domainer?…do they think that they can sell that same domain that’s shown up in several auctions to someone else for a higher price?….almost sounds like 12 year old school girl’s mentality to me.
Luke - DevRich says
Nothing confuses me more than the domainer auctions… We need to get some new money into the mix. I have never seen such cannibalism. It would be like going to the auto auction and only selling and buying at the auto auction…
As domainers we should work on a public platform for selling (that attracts new money, investors, businesses etc…) and keep the “Domainers” auctions a bit more private. Car dealers don’t publish for the public what they purchased their inventory for…
This is a real problem on many levels and we should address it with wisdom. Its like playing monopoly where all we do is pass properties/funds back and forth and seldom collect rent or spend money on houses let alone hotels…
Calvin says
I put some domains for auction at Bido.com and the wanted to give me $28/each for domains that appraised at over $50,000. That is highway robbery. Also, with other auction sites. It isnt like it used to be…..
Luke - DevRich says
@Calvin… Nothing is like it use to be… Heck a few months ago I bought 70k Shares of FNM for .37 cents a share! Change is the only thing that stays the same. We need new blood and money…
Open Domain Market says
Open Domain Market. It will be the generic domain market where an end user can meet the domain owner.
I agree, the success and failure of this project hangs on Domainers out there!
domaineer says
“(currently, approx 1 in 5 auctions sells at Bido).” yeah woopdeedoo. . what’s the ASP? You need both a sell through rate and good ASP then you can brag all day long. Bido is more full of crap domains and wastes of time then any live auction has ever been. Sorry dude.
I think all you guys who think you know how to run an auction should put one together. . . Snap actually lets you do it on their platform. Luxury domains and domaintips.com both did it.
Monte you should hold a contest and award a prize to the best auctioneers based on sell through and ASP… You want to build buzz and get domainers behind you, there ya have it ?
Mike says
DomainConsultant, along with Aftermarket, had the highest STR of any of the auction houses, roughly 70% overall. Conversely, we also had the lowest per sale price of the group. They are mutually exclusive in many ways.
But that was the stated objective we were given – they wanted more ‘action’ than ‘high sales’ figures. Tricky all around to achieve both simultaneously.
monte says
Typical Live Moniker auctions have STR of 40%+. The Low and No reserve auction at DFG had a 68% sell through with an ASP $3145 which I would say was impressive since not one name sold for over $12K at that auction.
Yes we will have some very focused themed showcase events with smaller inventories and many names priced at no reserve. This is coming soon. There are some premier domain owners that are going to use the Snapnames platform to do these just as LuxuryNames and Domainingtips just did. There are some exciting things and inventories coming.
We just released the preliminary list for Domainer Mardi Gras which is a larger list of domains (under 500) but many at no reserve that should get everyone’s attention.
The goal with these domain auctions is to attract a world wide market of domainers, investors, branding and naming companies, brokers, as well as end users. That is when we will see real market values and transactions. Remember how early we all are in our own industry. The corporate world is just starting to wake up on this alternative asset investment called domains.
It will continue to evolve and improve as more transactions and tests and trials are performed by companies like ours, however, I think you will see some great things in 2010 in this online auction segment.
Chris says
Stephen Douglas hit the nail on the head: “Tomorrow’s model for Live and Silent domain auctions…not based on “easy pickings” in a new industry called “domaining”, but based on the target market for the products being sold.
The argument that: “domain conferences are not just for domainers any more. DFG had all kinds of people in attendance, from investors, end users, SEM and SEO, VC’s and other non domainer buyers” is just not relevant statistically. Let’s face it, very very few people outside of the domain industry know anything about these conferences or auctions. To believe otherwise is almost embarrassing.
When Panasonic, Sony, P&G, Hitachi, JP Morgan, and Nestle start sending investment teams to these events to participate in capturing names in their vertical markets, then I’ll believe that “The Domain Industry” has finally moved out of its incestuous, self-servicing, and self-loving stage.
bernard says
So today, domainer don’t buy domain anymore, and as end users won’t buy more domain tomorrow, it means the bubble will burst severely.
I guess domainer with cash won’t exchange real dollars with banana dollars, and are eagerly waiting the market to go down.
At the end, a domainer with no ability to develop a domain (I don’t speak from Junk services like whypark) can’t held a domain portfolio, and it is very sane.
Stephen Douglas says
@Chris,
Thanks for the better follow-up to my comment – you said it nicely here:
“When Panasonic, Sony, P&G, Hitachi, JP Morgan and Nestle start sending investment teams to these events to participate in capturing names in their vertical markets, then I’ll believe that “The Domain Industry” has finally moved out of its incestuous, self-servicing, and self-loving stage.”
Chris was brutally honest – and his last paragraph should be wisely considered to be absolutely needed for this industry to explode with sales.
Robert Haastrup-Timmi says
I guess there is an uncanny Mayan principle behind domain auctions… Pole Shift!
There are some of us like Stephen Douglas who have been saying we need themed domain auctions targeted to the end user. It’s really unfortunate this has not yet happened in a robust way just yet. However, I should really pay credit to Moniker, because in all honesty, most of the domains I’ve sold have actually been at Moniker Silent Auctions. But here is the twist… I resisted lowering my reserve on restaurantlosangeles.com and kept it at $5,000 reserve. It sold in the last moniker silent auction at traffic. I have no one word premium domains, mostly 2 or 3 worded domains like SpaSwimmingPools.com for instance. Check the google type in on this sort of domain. So what is it worth? Nothing to a domainer, but perhaps everything to a spa dealer… and that imo is the authentic moral behind domain sales.