Learn Why a Domain Name Has Value
I think a majority of the comments I receive on my articles listing the previous week’s domain sales that took place at Sedo and Afternic fall into one of four categories:
- Most of those domain names suck
- My domain names are much better
- I don’t understand why names like that are selling
- [Domain Name] was a good deal for the [buyer / seller]
Instead of looking at the list of domain names and comparing them to what you own or analyzing them on their merits, I think you need to dig a little deeper and try to determine why each domain name sold. Do a Whois search to see who bought the domain names. When the Whois reflects the new owner, type in the domain name to see what the new owner is doing with it.
Check out Andrew’s post today about some of the interesting end user acquisitions from last week. While in a vacuum environment, it might not make sense that some of those domain names sold at those prices, when you dig a bit deeper, you begin to see why they sold. Oftentimes, companies with unique brand identities want to upgrade to a better domain name. Other times, companies have a marketing campaign and the domain name is beneficial.
As domain investors, we tend to crucify companies that don’t “get it” when it comes to domain names. They may try to be cutesy by using domain hacks or alternative extensions. They may also add a LLC to the domain name or an abbreviation like NY or CA to identify themselves. If they have the chance to buy the exact match domain name for their company, even if their company name seems to suck, it’s a smart move.
I may not think the company name Linens N Things is good, but it would be worse if the company used LinensNThingsNYC.com because their desired name was unavailable when they needed it.
When you are looking at the weekly sales, forget the sales prices on what seems like random domain names. In many of these cases, the sales price doesn’t really matter and may not make sense. The reason that’s the case is that it boils down to a domain owner’s need for money, negotiation skills, and the buyer’s need for a particular domain name.
If a domain owner doesn’t need the cash, he can hold out for a better offer on a seemingly average domain name. Similarly, if a company needs a domain name, they may be willing to pay more, even though they’re likely the only entity that could ever want the domain name. In short, the prices on brandable domain names shouldn’t really matter to you since they can’t really be used as comps.
The next time you read the weekly sales list, instead of complaining about the domain names that sold or lamenting about how much better your domain names are, why not spend an hour researching who bought what domain names. It will be more helpful to you and your business.
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