New tool is limited for now, but may become available to customers in the future.
GoDaddy rolled out a domain name valuation tool four years ago that offered free domain name appraisals. It was, to put it mildly, underwhelming.
In May of this year, GoDaddy got serious about domain name valuation. It’s about to slowly roll out the fruits of its labor.
Last week I spoke with Charles Beadnall, SVP of Domains Engineering and Jason Ansel, Director of Domain Engineer at GoDaddy about their new vluation technology. Beadnall explained that the company had reasons to take another crack at automated domain valuation.
One impetus was the company’s purchase of large domain name portfolios over the past year. GoDaddy needed a way to price these domains for resale.
It also realized that valuation is a key predictor of how likely a domain name is to be subject to attempted theft. Knowing domain values might help the company prevent domain theft.
Ultimately, GoDaddy believes that an improved automated valuation system will give better pricing signals to sellers and help everyone sell more domain names.
So the company went back to the drawing board in May, using neural networks to create a new system.
The company tested its new system against human experts, its previous internal valuation model and EstiBot for 1,000 domain names sold on Afternic in late 2015. Using root-mean-square error, the new system is 3.3x better than its previous internal model, 2.0x better than the average of four human experts, 1.8x better than EstiBot, and 1.1x better than the best human expert for these 1,000 domains, according to Ansel.
While creating the system, GoDaddy realized that the context of a sale is very important in domain valuation. Consider the actual sales of HatsForCats.com for $1,000 and HatsforDogs.com for $10. Why the big difference? The former was a retail sale on Afternic and the latter sold in a GoDaddy Auction.
GoDaddy’s new valuation system creates a wholesale value and a standard value. (EstiBot.com provides a similar wholesale value with its valuations.) Context was not given to either the model or humans for the test of 1,000 domain names. The model gets even better with the context.
Last week, GoDaddy ran 1,000 names that I have priced on Afternic through its tool. I don’t price my most expensive domains, and the list I provided to GoDaddy has a median list price of $1,500. The median GoDaddy valuation was $1,121, which seems about right. I also ranked my domains by list price and found that the valuations generally trended up along with my list price.
I also compared the prices of some domains I’ve sold privately to GoDaddy’s valuation. With the exception of the more expensive ones, they were very close in value. (The tool GoDaddy showed me only gives specific numbers for valuations below $10,000.)
Of course, automated valuation of domain names is very difficult since each domain is unique. You can’t compare specific examples to draw conclusions about the valuation tool overall. I’ve found automated valuations to best be used for finding outliers, getting a second opinion and portfolio valuations. I believe that GoDaddy has more actual sales data than any other company, so valuation tools from GoDaddy will be a welcome addition.
The domain registrar will slowly put the valuation tool to use, starting this week. Premier Services customers will receive an email from their account managers that highlights high-value domain auctions. The list will be generated with the help of the valuation tool.
GoDaddy will use feedback to validate and improve the system before rolling it out for wider use.