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.