A domain parking update from ParkQuick’s Leonard Holmes.
by Leonard Holmes, ParkQuick
There has been some debate on how the current banking and financial crisis is affecting the domain industry.  Whether or not this specific crisis affects domains, the general economic slow-down is definitely having an effect. While $2,000,000 $3,000,000 did change hands in Moniker’s T.R.A.F.F.I.C. New York live domain auctions, this is down from $10,000,000 in 2007 (according to an email from Rick Schwartz).   Last month’s Name Monetizer newsletter provided information on similar decreases in parking income; and on Oversee.net’s staff cuts.
Perhaps most telling is the fact that there will be only two T.R.A.F.F.I.C. shows in 2009.  T.R.A.F.F.I.C. had three shows in 2006 and in 2007. There were either three or four in 2008 (depending on whether you count T.R.A.F.F.I.C. Down Under). If Rick Schwartz and Howard Neu are slowing down, then you can bet that the domain industry is slowing down.
How does this affect your domain strategy? Undoubtedly some of us will let some domains expire because they are a bit harder to monetize. This creates buying opportunities for others. The burst of the dotcom bubble in 2000 created a similar buying opportunity for astute domain owners. Keep your eyes open in the next few months, and you may find some real domain bargains.
Leonard Holmes
“If Rick Schwartz and Howard Neu are slowing down, then you can bet that the domain industry is slowing down.”
I would disagree. I would say it is changing.
What were the total domain auctions this year (Latona, Moniker, Sedo, Traffic, etc) compared to all last year?
I dont think it is as comparable to 2000 bust, since a lot more domainers are out there, and they know that domains will remain a praised assets. The difference between domains and stocks, that as long as you can afford register fee and buying fee, you can hold as long as you want. I also think there is a lot more domainers who make their live hood on domains, unlike 2000s when it was still a new thing. So i while i do think we will see a lot more domains for sale, i dont think we will see much larger price decrease, unlike stocks.
Undoubtedly, many people are apprehensive about the current economic situation, domainers and domain end-users alike. It has the year 2000-2002 written all over it. Many names are not getting bids and some of the ones that do, are getting far less than 2006-2007 comparables.
GovernmentBusinessLoan.com on auction at the T.R.A.F.F.I.C. New York Extended Online Auction has only 1 bid, GovernmentForeclosureHelp.com has none, as well as BusinessBroadbandServices.com and others.
These may be so called long-tail names but they are real product or service search terms that actually make money. In any event, time will tell. Patience, just as in 2000-2002, is greatly needed.
Henry.
$3.1M of domains sold at our two auctions at TRAFFIC NY with more to come in the extended auction going on through Thursday, not $2M and that is about $1M more than sold in May at TRAFFIC Orlando. That is the way I would look at it.
Our next BIG auction will be at DOMAINfest Global in LA at the end of January – http://domainfest.com/ and I predict consistent performance and market stabilization by that time.
While it is true that we only have two T.R.A.F.F.I.C. conferences set for 2009, it is not a reflection on the domain market. Everybody and his uncle are now getting into the domain conference business. However, T.R.A.F.F.I.C is still the “gold Standard” when it comes to learning, networking and partying. this is because T.R.A.F.F.I.C. is the only industry-wide conference and expo with nothing to sell to customers, but to further the industry in continuing new directions.
By the way, the MONIKER/T.R.A.F.F.I.C. live auction netted $3,000,000 while the LATONA and AFTERMARKET auctions netted an additional $1,000,000 with the extended on-line auctions not yet completed.
The genie is out of the bottle, and many more players are realizing the undervalued state of the quality .com name sector.
We need to attract the Madison avenue Advertising agencies into our club. Sadly this cannot be done by telling them how foolish they are for not seeing value.
We all need to tone down this attitude and actively pursue their participation at our auctions.
I certainly trust Howard and Monte on the numbers. I was basing my numbers on emails from Rick Schwartz (and from other c/o Rick) summarizing the live auction results – and it does look like I should have put $3 million rather than $2 million. I will correct.
I agree that the inclusion of other auction partners diluted Moniker’s results a bit.
.net to be in high demand ? enter caryards in the browser bar hit shift and enter on your key board at the same time, and it will go to caryards.net – I must point out that I have it as a pointer at this stage, .net works on the key board like a .com – e.g. caryards hit control and enter at the same time and it will only go to caryards.com
When you take into consideration the current value or buying power for the American dollar, whose value has dropped in excess of 40% since 2002. The latest auction name FinancialAid.com would have gone for well in excess of $ 1,120,000, instead of the bargain basement final sales price of $800,000.
Anyone who thinks there is not a lot of bang for a buyers buck in this marketplace, needs to move to the back of the class. People will look back at this photo frame of the domain name market, as possibly the greatest asset opportunity, of a lifetime. But incredibly some people, right now, can not see this. This is what makes markets folks.
Jeff – that assumes that the buyer doesn’t have all of his assets in U.S. dollars.
Jeff Schneider observed, “We need to attract the Madison avenue Advertising agencies into our club. Sadly this cannot be done by telling them how foolish they are for not seeing value.”
Trust me, Jeff, Madison Avenue fully understands the power and value of premium domain names. And that is EXACTLY why ad agency execs routinely DISCOURAGE clients from investing in high-end names. Of course, at face value, this statement rings of lunacy. So, allow me to explain.
We’ve been pitching ultra-premium client domain names to grizzled Madison Avenue execs for five years, Jeff, as a necessary and treacherous peril of the high-corporate domain selling process. With rare exception, when senior corporate decision-makers turn to their agencies for related counsel (and executive CYA), agency execs do their utmost to obstruct domain acquisitions.
It’s not that they don’t get it. They do. The cold, harsh reality is that high-end client domain name acquisitions are natural predators of the agencies’ own best interests. Why? Because agencies know that corporate clients won’t line-item the domain investment from assets or general operations. In most instances, they’ll tag it as a marketing expenditure and yank the equivalent cost of acquisition from the agencies’ ad budgets, thereby depleting the agencies’ commissionable war chest. On paper, a million-dollar domain name will effectively cost the agency $176,500 in lost commissions. And if the domain turns eventually drives a more cost-effective ROI/ROA than commissionable media placements, corporate budget planners may further trim the agency’s annual meal ticket. So, with callous disregard for the best interests of the client, Madison Avenue straps on its armor, unsheathes its sword and beheads the threat to its bottom-line.
Along the way, we’ve been beheaded a few times when corporate sales seemed otherwise imminent. In more than one instance, we’ve seen respected global ad agencies feed contrived data to their clients, in an effort to short-circuit high-end domain acquisitions. It used to piss us off. Now, when necessary, we know how to play Madison Avenue hardball too, in order to preempt interference or overcome agency greed and antagonism. In fact, I’m semi-pleased to admit, I’ve tallied a few trophy heads on my own mantle. 🙂
Madison Avenue too often remains inherently conflicted and fiercely protective of its own interests, rather than true to their obligation to provide reliable, unbiased counsel to clients. Until such time as agency’s begin to bow to the 21st century marketplace, rather than obstruct it, “our club” and the selfish best interests of Madison Avenue will continue to collide.
For those of you who don’t know Scott, he knows this business in and out, so you can trust his analysis.
These are interesting times – its all generic now, the only way anyone can stop it is change the language we speak –
That’s an eye-opener, Scott. It has never really occured the general domain owner, that Madison Avenue really DOES get it but it is against their best interest. It makes sense and we appreciate the insight.