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Current State of the Market: Domain Broker Point of View

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For those of us who frequently sell domain names, we know it can be challenging to do so in the current economic conditions. I reached out to several domain brokers to ask what they are currently experiencing in the domain aftermarket, and their insight is below.

Mike Fiol of Boxcar and DomainConsultant.com

“For years I’ve been criticizing our industry’s penchant for generalization. What is the state of the industry? Well, that depends on which segment you are referring to: ccTLDs, keyword rich, GEO, brandable, single word, etc. So let’s look at the good areas.

Brandable generic .coms have risen, as we predicted publicly in 2008, replacing the keyword rich variety as the sales staple. Got generic one-word domains? Hold. Other promising areas include ccTLDs, Spanish and GEO domains, the fastest growing traffic/end user segments.

But the truth is the domain industry is in flux, tossed into cautious turmoil by ICANN, leaving us at a transcendental crossroad. For there are two possible outcomes: the new gTLDs will devalue existing extensions or they will increase and perhaps, finally fortify value.

Domainers need to decide which road to take and by doing so, may help define the state of the industry…for at the moment, it is largely unpredictable, unidentifiable.”

Rob Sequin

“First, I’ll say that speculation is out of the market. So, the “good old days” of a quick flip on the forums or via a broker is pretty much dead from where I sit.

There is some speculation .co domains and there will be speculation in the next dot whatever too but established .com portfolio owners are either selling, developing and/or dropping domains but generally they are not buying.

There are a few portfolio owners who are adding to their portfolios IF they are presented with great domains that are a perfect fit for them AND priced reasonably.

There are end users who are buying but they are on the “mom and pop” end ($500 to $2500) or the real high end with start up with venture capital backing. I don’t have hard stats but I’d say the $5000 to $50,000 pricing for sales to end users is way off.

Also, the usual buyers in most of the drop auctions are just not there. I have watched LOTS of domains expire so I could hand reg them while several years ago I’d have to pay $69 to $250 for just low value domains that I wanted.”

Toby Clements

“When someone asks me how the industry is doing I only think of one thing every time. What have sales been like, and how does my bottom line look?

Well, this time is no different. When Elliot asked me about this I thought about the past two months of being back in the saddle selling names. Most of you that know me, know that am a salesman at heart. One thing I know for sure is to keep tabs on what is selling, and more importantly, what is not selling.

What I have been seeing is the less expensive names or “value oriented names” have taken a front seat for the masses. Names that sell from 1k – 6k are no brainers to most anyone that invests, and for those that are new to the game or don’t have large bankrolls, these are the most attractive.

I have done five, six and seven figure deals. I like all of them, but it’s my opinion that right now the really hot, and consistant sales are the smaller ones.

It’s great to hit doubles, triples, and home runs. It’s the best feeling in the world when you hit a grand slam, but don’t forget about the singles because they can win the game too.”

Dave Evanson of Sedo

“The current domain market may not be sizzling but it isn’t on ice either. It’s holding its own and doing much better than the rest of the economy. Buyers continue to be selective with many looking for their favorite verticals (such as insurance), categories and types of domains with monetization strategies and price ranges in mind. Money continues flowing in from pockets of global wealth, money managers, twenty trillion dollars a year in inheritance in North America alone to younger, more web savvy generations and from companies large and small shifting offline advertising dollars to online marketing including domain holdings.

Domain sellers are a bit more aggressive today given high levels of premium inventories on the market. Some “long time” domain investors need or want to raise cash while a growing number of them are coming into retirement age after 10-15 years in the business. Premium keyword .com names are appreciating nicely whereas .net and .org are hanging in there for now. With the new TLDs .info and .us may be on their last legs.

The creative talent behind .co is continuing to inject excitement into that baby. The 2,000 or so yet to be born extensions will have a few survivors. These, along with companies (like Facebook) promoting and using their own domains, will create more clutter in the space and the result will be a halo effect leaving the .com as king. The industry is becoming more sophisticated as evidenced in part by its ability to distinguish between, and appropriately valuing, end user and domain investor sales. An increasing percentage of blockbuster deals are staying private especially among non-public companies and domain investors.”

Pat Calvoni of Afternic

“In the past many purchases were made based on speculation—in the hope that the domain could be flipped for a significant profit. Now, with the economy still weak I think that buyers—both domain professionals and end users—are more cautious about their purchases than they were a few years ago. People are coming to the table with a specific business model, or a clear investment strategy in mind. This caution really means that we have to be more focused than ever on the “value sell” when negotiating.

People will spend, but only if they are really clear about the potential ROI from the domain purchase. I think that is where we provide a real advantage to both domain sellers and buyers. We’re here answering questions and clarifying the value proposition, which gets a lot of “on the fence” buyers sold.”


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (13)

    BullS

    From BullS (Creative CEO) of……..

    Domaining is great…I have all the BS fun …

    July 6th, 2011 at 2:25 pm

    Rob Sequin

    Elliot,

    Thanks for posting my input in the article above.

    The way I read it, all the brokers seem to offer a similar points of view.

    If current and potential domain investors want to take something away from all this I would suggest this:

    1. Buy quality and not quantity
    2. Invest in what you know
    3. Don’t speculate outside of your area of interest or knowledge
    4. Today I think it’s wiser to focus than diversify.

    What other constructive comments can readers add to this great article?

    July 6th, 2011 at 4:34 pm

    SL

    Great article Elliot. Nice to see some down-to-earth observations and advice from folks in the trenches.

    At the risk of turning this thread offtopic, I’m genuinely curious if brokers are seeing any action in the whole “future trend” space. Are any end users buying ahead of tech that is a couple years away from mass adoption?

    July 6th, 2011 at 4:51 pm

    Rob Sequin

    “future trend” is the definition of speculation so from my experience I haven’t seen any interest or investment in that direction.

    July 6th, 2011 at 5:01 pm

    SL

    @Rob: Ok, that’s what I suspected. Thanks for responding.

    July 6th, 2011 at 5:22 pm

    Gazzip

    Great article Elliot, very interesting read.

    July 6th, 2011 at 7:45 pm

    jblack

    Good article Elliot. But this phrase “…twenty trillion dollars a year in inheritance in North America…” is in serious need of a fact check.

    July 6th, 2011 at 10:31 pm

    Dave

    @ jblack. Great catch. Rough numbers of course but I meant to say twenty trillion dollars per decade or two trillion dollars a year.

    July 6th, 2011 at 11:41 pm

    domainer

    Very true. The domain industry has hit a slack, and sometimes I also wonder which domains to keep and which ones to let go. Moreover, everytime I quote a price, I try to reduce it by few dollars which I would have easily increased in the olden days.

    July 7th, 2011 at 1:08 am

    patrick

    Quality Quality Quality product service domains.
    Keep only the best descriptive domains and hold them.
    Icann new tld releases and blog speculation makes the domain market look like the stock market.
    The fewer domains you have the easier it is to sail through the slow periods.
    I have invested in some future trend domains after a lot of research on the subjects, energy storage, vanadium redox batteries this one was a gamble but is now poised to be the top grid/solar/wind storage battery but only because of many converging paths,need huge mineral finds a nearby rail and shipping infrastructure and increased storage capability venture capital ect, also bio fuels and waste and water and environmental management all growing industries but not yet there.
    Read science journals financial news green technology sites read everything and hope you got it right.

    July 7th, 2011 at 2:04 pm

    Seymour Fees

    Wonder if the notable, recent aggressive increases and escalations in brokerage fees & sales commissions by some entities will have an effect on the volume of trasactions over next year or so ???

    Those increases might backfire on some brokerage operations and domain sales platforms, whereby they end up making less money rather than more because the sellers balk and do not list/engage as may domains beacause of the hefty fees.

    July 7th, 2011 at 3:41 pm

    Kevin

    The market just requires a lot more time now to sell domains because it’s flooded with tens of millions of domains for sale and buyers are much more selective than ever and demanding bargain and realistic prices. If you have a quality domain and it’s priced fair you can find a buyer. It’s just not 1 2 3 sold anymore. You have to do marketing work to find buyers.

    There are still big 6 and 7 figure sales happening. Most of those are under NDA’s and not publicized.

    This is a good time to do creative deal structures offering owner financing for example or doing sales and joint ventures with retained equity for the seller like Rick just did with Property / Properties.com.

    Also expand beyond the normal marketing channels. Search “Domain Names” on Facebook groups and you’ll find lots of new marketplaces to publicize your available domains for sale. You can also find niche groups on Facebook outside the domainer world to market to.

    July 7th, 2011 at 10:17 pm

    seriously

    “Also expand beyond the normal marketing channels. Search “Domain Names” on Facebook groups and you’ll find lots of new marketplaces to publicize your available domains for sale. You can also find niche groups on Facebook outside the domainer world to market to.”

    Yes by all means lets all go to facebook and spam each other our domains just like the good old days on afternic. We should all tweet our names on twitter too I bet.

    July 10th, 2011 at 2:58 am

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