Current State of the Market: Domain Broker Point of View
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.
“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.”
“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.”
“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.”
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