Brandpa went to NamesCon this year. Here’s some highlights from what we learned.
1. For investors, .com is the only game in town
We heard from investors, registrars and even the largest domain portfolio in the world. And we’re convinced that 95% of the value in domains is in .coms for the foreseeable future.
There are more alternatives than ever – .club, .global, .asia, .cat, .coop, .mobi – and 1,200 more on the way. But ironically, the more alternatives there are, the more valuable .com becomes.
“The extension it’s .com or .net, that’s it. People in the US can’t type anything in except .com or .net” – Drew Rosener, MediaOptions
Everyone likes to say all the good .coms are taken. But in comparison, there are still plenty of dictionary word nTLDs available – .global even announced a handy list that aren’t registered yet. The problem is, this wide availability of names severely limits their value.
This pattern came up everywhere. Verisign and GoDaddy have huge databases of sales to learn from, and both learned to focus heavily on .com and .net. The NameJet live auction featured some incredible domains, but look at their top 10 sales:
- great.com – $900,000
- payperclick.com– $100,000
- runner.com – $69,000
- fakenews.com – $65,000
- tees.com $50,000
- boj.com $35,000
- bjn.com $29,000
- r5.net $7,500
- tax.help $6,000
- porn.club $5,000
The highest .net was $7.5k, or 8% of the highest .com; the highest nTLD was tax.help for $6k. For comparison, porn.com sold for $9.5m in 2007, porn.club sold for just $5k.
“Buy the best .com you can afford, you’ll make it up in advertising later”
This is not to say nTLDs don’t have value – but most of that value is in specific combinations the left and right side of the dot (e.g. “2.cool”, “home.loans”, “go.global”) and is consistently priced at a steep discount from .com. Things may improve, but for now we’ll be sticking with dot coms.
2. How to run the most valuable domain portfolio in the world
GoDaddy gave a fascinating talk on how they manage their colossal domain portfolio, containing over 734k domains valued at over $2.5 billion.
They dived into how they price their domains:
- Roughly 85% of their names are priced between $500 – $5k, the “sweet spot” for sales. Majority of names are designed to be affordable by new/small businesses.
- 99% of their names have a BIN (Buy It Now) price, the rest are “make offer”. Their research has shown BIN domains are 5x more likely to sell.
- To price domains, they combine three different automated algorithms with manual assessment by at least four people (2 pricing analysers and 2 approvers).
- Their algorithms look at the keywords in a domain, Google traffic and past sales volume. Their latest (and best) algorithm uses machine learning to get a deeper understanding of the name’s semantics, sounds etc.
They also had some good lessons from their experience selling domains:
- A sale is 46% more likely via phone than via email.
- A sale is 20% more likely if engaged in the first 24 hours than in the next 24 hours.
- As a result, after an enquiry, they make up to 4 phone calls and 4 emails within 48 hours in an attempt to get the customer on the phone.
Finally, this is how they broke down their sales approach:
- Empathise. Understand what the customer is aiming to achieve. There’s a good chance this is the first step towards starting their dream business, you want to be a partner and not an adversary on that journey.
- Set expectations. Most customers are not familiar with domains as an industry, they are often surprised to learn domains typically sell for $1-5k. Educate them as needed.
- Give comparable ranges. One of the most effective tools for selling is to showcase similar domain names that have already sold (“comparables”), and for how much.
- Diffuse emotional responses. Here you need to combine what you’ve learned with your own expertise. Some examples: “In my years of selling domains I’ve seen how the right domain can establish a brand”. “How much do you have to pay for leads, versus the organic leads you’ll get from this domain?”
GoDaddy also made their new machine-learning domain pricing technology available to members of the conference. We had a play and it’s promising. Hopefully this will become generally available in future.
3. How the heavy hitters value the best domains
We heard from an impressive panel of domain name experts, focussing mostly on premium domain valuation ($100k+).
We’ve paraphrased some of what they said:
Drew Rosener, MediaOptions: “The most important factor is search volume”. Search is correlated with interest, and the semantic value of the domain name. One approach is to look at the Google Keyword Planner tool, and consider the cost per click for any keywords. Drew also considers age, length, and something that is often overlooked: how easy is it to replace. How many alternatives are there to this domain? More close equivalents means more handicaps.
Brian Kleiner, Afternic: “Depends on how you’re running your business”. There are essentially two prices – the price if you’re willing to wait for the best possible owner of a domain, even if that takes 10 years, or the price if you’re buying domains at the drop and looking for a quick sale. He looks for potential uses for a domain – e.g. law is more valuable than supplements. “Comparables are probably the best way to put a price on domain”.
Brian also notes that automated tools may undervalue or overvalue domains, as they’re based on past trends. For example, they are probably under-pricing crypto now (Jan 2018) and may be overpricing in 6 months.
David Clements, Brannan’s: “Brandables are the most fun”. He searches on USPTO, Crunchbase, Baidu for potential users of a domain. As an example “Sterling” is a word used by many sizeable companies, and so he knew that Sterling.com would sell. For the highest valuations you want to start a bidding war.
The panel was then asked to price a bunch of domains shouted out by the crowd:
- nasty.vegas – “zero value” or “$500 – $1k if someone wanted it”
- bitcointaxation.com – “has value, not a tonne”, “maybe $2.5k to some schmuck”
- quiver.com – “pretty killer, dictionary term, memorable, actual product”, “needs a 2nd buyer to get to $100k” but “wouldn’t sell it for less for a decade”. $50 – $250k.
- thewinestore.com – “domains starting with ‘the’ have done really well”. Plenty of companies called ‘wine store’ or similar, “if a large chain is called ‘wine store’ then that changes everything”. Estimating $10-15k.
- financebrokers.com – “an almost name … I would guess it has 0-1 enquiries”. Around $500.
- tiq.com – “like that it has IQ in there”. $15 – $100k.
- wineville.com – “not much value”, $5 – 15k.
- where.com – “doesn’t pass the radio test” (“wear / where / ware”), which really harms the brand value. Estimates from “low six figures” to $1m.
We had a great time at NamesCon, and learned a tonne. We’ve already written down a new-feature list for Brandpa that could fill a small library :-). Hope to see you next year!