Results from DOMAINfest beg the question.
The advent of the live domain name auction has given the domain name industry a huge boost in both high dollar investor purchases and media attention. Two years ago in New York, Moniker’s live domain name auction topped $10 million in sales.
Last month in Los Angeles, the live domain auction brought in only $800,000 over two nights selling 110 domain names. It wasn’t a big surprise given the economy and what’s going on in the industry.
Live auctions cost a lot of money to organize. In fact, when Moniker sold $10 million in one day a couple years ago, I wrote that Moniker wasn’t in the game to earn $1.5M in commissions. It wasn’t worth the effort. Moniker was in the game for the day it brought in $50 million in sales.
Unfortunately we’ve gone in the opposite direction.
But the bright spot from the auction was the silent online auction. It sold close to $500,000 in domain names. And it didn’t require an expensive auctioneer, spotters, and full bar to make it happen.
Do live auction domain names sell for more than they would in a silent auction? I would have answered yes a couple years ago. They get more attention. The auction fever and egos in the room push prices up. But I question this premise in today’s environment.
I don’t think Moniker should exit the live domain auction business. It should keep in the game, if nothing else for when the market returns. But I question holding auctions at all but the biggest events. And perhaps even those should be scaled back in favor or regular online auctions, similar to Sedo’s Great Domains auctions.
M. Menius says
I have been a big fan of the auctions. They are (were) exciting for a time, no doubt. And huge credit to all the parties that have been involved in orchestrating them. Many domainers understand that discreet, under-the-radar deals/sales now have definite advantages over live public auctions.
My guess is that live public auctions need to occur less often, and as stated, selectively at the larger annual industry events. Name selection has always been controversial, and has caused some souring of the auctions within the relatively small domainer group that support them.
Silent “event” auctions are nothing more than a mini online Sedo auction. They don’t offer anything that isn’t already available at Namejet, SnapNames, Sedo, Afternic. Other than an “expert” preselecting the names based on “quality” (don’t get me started!).
I believe domain investing has matured and that buyers are much more strategic in their purchases. This will lead to many more private sales behind closed doors. So auctions may enjoy less status and success than in the past. Without the inclusion of the corporate end-user pool, the small domainer circle (ever more savvy) will opt out of public auctions to make their deals on the sly.
David J Castello says
Live domain name auctions should be held to the same standard of quality that you’d see at Christie’s instead of something that sounds like it’s lead by a carnival barker.
Typically, 75% of the names are worthless and there is nothing more irritating than listening to an auctioneer scream how great ThisCarHasWheels.com is worth 50K while everyone behinds him claps like a masturbating seal. It is not “entertaining” and it is an insult to every domainer in the room. After 20 minutes you want to get up and leave.
Could you imagine someone at an art auction holding up a child’s finger painting and screaming that it is the next Van Gogh? Well, that’s pretty much what these live auctions have become and until they start subscribing to the “Quality Over Quantity” philosophy they will continue to decline in popularity.
Kevin M. says
I don’t think that they need to be suspended per se, but with more and more domainer conferences popping up, there are more auctions each year. Not necessarily a bad thing, but when the same people, domainers, are the ‘only ones’ there at each one, and most of them for ‘deals’ to add to their now diminishing parking portfolio’s, do we really expect prices to go anywhere but down?? Bad economy or not? Let’s be honest here in recognizing that the ‘domainer auction buying crowd’, has pretty much run its’ course, and their financial wads. It’s time for these auction houses to start – 1) getting their lists finalized a lot earlier than the day before the show, to start generating buzz, and 2) start marketing these auctions to endusers!! That is where the next and real money is in domain auctions!! Domain Auctions need to reach out to ‘other trade conferences’, putting on a seminar there, discussing the value of domain names and their intricate web business benefits, and have more ‘targeted domain names’ that relate to that conference. Example – Travel industry conferences – travel related domains. Dating conferences – dating related domains. Etc, etc. And, there ‘needs to be’ more prior public awareness of these auctions to the related crowds, such as ads in travel publications, or dating publications, etc. If there were more people at auctions interested in the same names, the prices would increase! The model of sitting in front of a bunch of ‘auctioned out’ domainers, 5-6 or 7 times a year is just plain stale and, as we can see, becoming less profitable for both domainers who enter their domains, and the auction house that runs them.
And let’s be honest here too. Silent auctions are really just ‘bargain’ hunts for other domainers, not a place to sell a domain for a respectable profit!
Andrew Allemann says
@ Kevin – large end users will never participate in domain name auctions. It doesn’t fit their internal business processes. It’s hard enough to get them to buy a domain; it would be harder to get them to jump through the hoops of an auction.
Moniker has tried to take the show on the road to adult conferences, affiliate conferences, etc. with very limited results.
jp says
@Andrew – I think large end users may someday be at the auction if they hear the 1 domain they want is there, but this is many, many years off. The end user world has alot of evolving to do before this happens, and so do we.
Secondly, I wondering the exact same thing as I sat through that painful auction at DFG (should they stop doing this?).
I don’t think they should stop, but they should definitely review what they are doing. Who picked that list of domains? Maybe the problem is that nobody submitted any good domains to be sold (I know everyone thinks their domain is great, but not always). Perhaps less good domain holders are interested in selling right now because who wants to sell when the market is down? Regardless of whatever the reason is, the list needs to be smaller for 1, and 2 it needs to be a good list. If Moniker doesn’t get enough good submissions then they should just run a smaller auction. Putting in all those crap names either makes you look desperate or greedy. Lets keep these auctions “Premium”, without tarnishing the term.
Kevin M. says
@ Andrew – I’ve got to somewhat disagree here. I’m not talking about big endusers, like IBM, GE, Coca Cola etc. I mean more mainstream, in their particular areas. I totally believe common realtors would get the concepts of domains for advertising, more so than Century 21 top brass, and pay for them. Just look at any bus bench and the (stupid?) domains some use to advertise themselves. But at least they use them. And they’d pay more than domainers would. I went to bank auctions in the 90’s, and there were savy bankers that traveled from Montana etc. to California to buy at auctions (raising prices $&%#!). But they/nobody are going to go to what they don’t know about! They need awareness. And prices only go up, when there’s more that ‘want’ that item, there to bid on it.
And we can be assured that in those conferences with auctions that you note, that the lists of names to be auctioned, ‘were not’ available until, at the most!!, 4-5 days prior to! How many of us go – “Oh Boy!, there’s a domain name at an auction tomorrow, I can’t wait to make plans, go there, and bid, bid, bid for it!!’” There is no prior notice or education to ‘anyone’, let alone the trickle notice to – ‘in-the-know-because-I’m-in-the-industry’ domainers. It seems domain auctions only gear to domainers, yet everyone wants endusers to buy their names.
Granted domainer’s name price expectations at auctions need to be adjusted to today’s reality, but I think, that domain auctions need to adjust their focus and methods too, and not just add another domainer conference to their yearly schedules.
Andrew Allemann says
@ Kevin M – I agree that domains would need to be released well in advance for it to work. I was speaking mostly of Fortune 500 companies, as you point out.
End users like real estate agents are more likely to buy, but I still don’t see them getting involved in an auction. The bank auctions you talked about provided opportunities for one person to buy several items. I don’t see an agent traveling to have a one shot bid on [City]RealEstate.com.
I guess we both agree it would be hard, at least 🙂
Kevin M. says
–“I don’t see an agent traveling to have a one shot bid on [City]RealEstate.com.”–
That’s the thing, they wouldn’t, and don’t, for ‘one’ name at ‘some conference’. But at a Real Estate conference, with ‘many’ related industry names to chose from, then the odds, interest and dollars change!
Andrew Allemann says
Kevin – I sure hope so. The results at affiliate summit, internext, etc. don’t look so good though.
Johnny says
I don’t think live domain auctions will ever work with corporate end users. Online auctions – sure. You can start an auction for [City]RealEstate.com with reserve met, then contact a bunch of realtors and they may just bid online. But they are not going to show up in person.
In the future live auctions may work with really high-end vanity domains like common-first-name.com. But those may as well be included into Sotheby’s catalog, there is no point auctioning them off in front of a small group of domainers.
On the other hand, there are less and less really premium domains that can be acquired. At some point they may start being really bid up again. But probably not through live auctions.
wannadevelop.com says
They were mostly for pure entertainment… All for show.
Mike
Jamie says
The MARKETING sucks!
Example: Domainer Mardi Gras auction coming up.
“The catalog and silent bidding starts February 13. The auction is scheduled for February 21.”
8 Days and that’s IF the auction list comes out on the 13th. Nobody can market a domain list to the mass in 8 days.
Secondly: What #2 @David said. Domain Quality. The live auction companies are thinking “the more the better”, because they are thinking of the commissions!
monte says
Look folks, we have up markets and down markets. The key is to keep your nose down and stay focused. We do believe in doing less auctions this year and we will do less live and more online live auctions. But doing auctions is important for all of you and important for making a market…and we do believe that we are as close to a domain christies or Sotheby’s as we can be given not selling a tangible product or service.
I would also remind folks that a decent domain name can sell for great ROI in both up and down markets. Although Domainfest will end up with about $1.6M in total sales, I consider it pretty good given the market and even better that we made that money with all names in the $5K – $20K range where we would have at least one or two large transactions.
also, we have had successful auction at the affiliate summit, InterNext, not SES but there were many reasons why that event did not work…mostly due to logistics and marketing, etc.
We believe in the market and will continue to invest and create new platforms in the live and online auction areas that will meet more needs to the buyer and sellers that want to participate.
jp says
Good to hear you join in on this one Monte. I completely agree with alot of what you said. I would even say from a long term business perspective, its probably better to sell alot of domains for 5-20k then each then 2 for $500k – $1M.
I definitely think you do a great job, and more importantly your intentions are definitely in the right place, for your company and for the industry as a whole.
I suppose the challenge this is picking the names for the auction list. It’s easy to pick a list of $1M names, but probably much harder to pick a list of $5-$20k names. Being that everyone has different opinions, odds are that everyone that looks at the $5-20k list is going to think that half the names are crappy. The interesting thing is that out of all those people that think half the names are crappy, they probably all have a completely different set of 50% labeled as crappy. So the trick is how do you pick a list where everyone thinks all the names are great?
I just think the industry is going through a change and not everyone’s expectations are at the same level of reality.
I also wonder, how many of the people complaining that there were no real big sales at the auction could have even bougt a name for 6 figures anyway?
Steve M says
I’ve said it before, and I’ll say it again:
We’re all NEVER going to all agree what any particular domain is worth.
EVER.
Rick did a great test that confirmed this awhile back where he took a nice .com (don’t recall what it was) … asked 8 or 10 or so knowledgeable, experienced domainers what they thought it was worth (with no one knowing anyone else’s figure was) … and guess what?
The range of “value” was something like a 400-500%+ difference from the high to the low … with “values” all over the map …
… meaning that all this talk about how Monte or anyone else is including “overpriced” domains in their auctions is silly and misplaced.
No one knows what any domain is truly worth.
Not you.
Not me.
Not anyone.
Ms Domainer says
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Kevin (#8) has nailed it.
Stop holding auctions at domainer conferences and go where the end users are. The domainers will find you no matter what, either showing up (if they want a domain bad enough) or bidding online.
Gem domains: Go to the Tuscon Gem Show.
Real estate domains: Go to the major realtor’s conference.
Book domains: Publishers’ conferences, The ALA, The MLA, NCTE conferences.
Business domains: Business expos in various niche markets (accounting, marketing, etc.)
If you want to take the show on the road, why not target the people who might actually have the big bucks to pay for their niche generic domains?
Also, in the submission process, wading through niche domains will be easier than wading through a mass of whatever. Pick well from the submissions to create buzz for your final premium selections. Use that old marketing trick of creating rarity–(you have six paperweights to sell, but you display only one at a time). In this case, offer only a few blockbuster domains, maybe 25 max. The auction should be an event with a lot of sizzle and anticipation, not something that people wander in and out because they’re bored.
For those whose domains are accepted, ask the owners to write up a blurb, less than 100 words, to reveal to end users why they would want and need the domain. Hire a writer and marketer to polish the blurbs and get an advance brochure/catalogue out to particpants. Of course, this means a lot of advance planning and selection of domains long before the event.
Niche auctions directed to end user events may be the way to go.
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David J Castello says
LOL As a matter of fact Ms Domainer I was at the Tucson Gem Show last week. I like your idea about seeking out the endusers, but the Tucson show would have been a tough sell unless you can speak Brazilian or Thai!
I agree with Monte that $1.6 million in sales at DomainFest in this economy is nothing to sneeze at. The challenge for Monte and others is that the audience has shifted from mostly speculators and flippers to developer wannabes in a very short period of time. The most common criticism I hear at auctions is, “Cool name, but what would I do with it?” Only developers speak like that.
Therefore, I suggest it would be best to focus on selling names that have genuine development potential. If someone has ever truly monetized a name (and I don’t mean Adsense) you know that the parameters tighten considerably on what names really qualify as having development potential.
Ms Domainer says
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David,
I’m jealous. Someday I WILL get to go to the gem show to end all gem shows.
By end user, I mean someone who is more interested in developing a domain for his/her already-established business, not someone who wants to put up a mini-site. Nothing wrong with that, of course, but I wonder if domains (after this recession is over) might go for more with motivated end users bidding.
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Andrew Allemann says
@ David – good point. I chatted with an Oversee.net employee as we watched about 20 of the names go through the auction. For each one he asked me what I was thinking. For about half of them I said “it’s a good keyword, but how would I make money from it?”
monte says
We continue to market to the end user, corporate buyer….and they are buying and even selling more and more. This is not an easy job. This industry is in its infancy. we are only 12 years old and it takes time to transform the buying audience. Trust me, we have sold more names to corporate buyers than probably all the other companies combined….and I am talking about big names. 70 percent of our domain sales are not reported publicly.
We do target end users all the time, that is why we go to SES, Adtech, Webmaster World, SMX, Web2.0, and other conferences. I speak at all of them to educate the corporate and infrastructure buyers and they are coming….slowly but coming to buy. We will continue to market to them no matter what conference the auction is taking place. That is the great thing about our online auction system…so that anyone can bid online at any time the event is taking place.
thank you for all of your support.