Advice to Domain Investors

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Advice to Domain Investors

The other day on NamePros someone asked what advice would domainers have with respect to their first attempted or realized domain sale. I decided to answer the question more generally than only the first sale attempt. Here is my advice, expanded considerably from my original reply on NamePros. I have put some of the key phrases in the figure below, but please read the entire list for the complete set of suggestions.
Start slowly. Resist urges to go out and quickly hand register or drop catch or bid on a bunch of domains. I know it is natural to be excited about gems you have found, but a slow start is something almost all experienced domain investors recommend to newcomers. I would set limits for yourself on number and dollar value of domain names you will acquire in your first six months. Be realistic. While it is human nature to focus on the big success stories in the domain name business, hand registered or cheaply acquired domain names that a few months later sell for five figures, those are the exceptions. Even in a portfolio of solid names, not much more than 1% of the portfolio will sell in any one year. Also, the median sales price, the one you are most likely to encounter especially in domain names recently acquired at modest cost, is only a few hundred dollars even for those names that sell. Emphasize quality over quantity. Almost all of us register too many domain names, especially in our first year, and impulsively purchase some that we later realize lack enough quality. The advice that most experts give to emphasize quality over quantity of domain names in your portfolio is indeed wise. Join NamePros. Basic memberships in NamePros are free, although with restrictions. The one million plus membership of NamePros has a wealth of accumulated expertise. From trends and news, to help with technical problems, this is a lively and valuable site. That being said, there are some opinionated views not supported by evidence found from time to time on such a large and diverse community. Therefore be sure to take responsibility for your own informed decisions, but definitely join, learn from, and contribute to NamePros . Did I also mention that it is fun and satisfying to be part of such a vibrant global domain name community? It will also help you not get discouraged during lows, and share your excitement with successes you find in the industry. Price your domain names correctly. It is easy to fall into the trap of thinking your ‘almost as good’ domain as one that sold for a huge price will also command a high price. Small differences like plural vs singular, the extension, etc. make a big difference. Do your research on what has sold. Lots of domain names are listed for sale with completely unrealistic prices, and don’t let those sway you into what your prices should be. As part of that, see the next item. Even if sceptical of their worth, learn to use automated appraisals, but know limitations . By far the most well known automated domain name worth tools are Estibot and GoValue . While you can use them simply (enter the domain name and press return!) to obtain an automated estimate of domain worth, they each provide much more than this. You should know the limitations – Estibot sometimes splits words incorrectly, and as a result values them as <$100. While they don't relate their algorithm for obvious reasons, the checked extension availability in Estibot seems outdated. Estibot give you search and advertiser cost per click (CPC) information. This is valuable information, so note it for each domain name including how CPC has varied over time. Estibot gives search and CPC stats for both the exact and broad term. For example if your term was 'duck' the exact search is for those who did searches for just that term, while the broad one would also include searches like 'lone duck' or 'black duck'. You are permitted two free Estibot searches per day, and they have plans for those needing additional features, like lead generation, as well as larger numbers of searches. GoDaddy GoValue has only been around about a year, but because it is freely available and GoDaddy has such great brand recognition, it is already well known and used. Estibot does not handle brandables effectively and will value most at <$100 (this is because of their emphasis on search and online advertising). GoValue overall may provide in my opinion slightly better estimates, but with new extensions they rate almost all extensions at the same value, which clearly makes no sense. This means that you need to interpret their estimates by applying a correction for how well the name and extension match. Estibot does attempt to meaningfully differentiate extensions, although to me it seems to have extension biases lacking clear evidence. One important point is that GoValue estimates of worth change almost daily, sometimes by a factor of 2 or even more. At least on the names that I checked, Estibot values seem to stay constant over long periods, although others have reported that after sales of a name are publicly reported the worth in Estibot is adjusted to that value, or very near it. GoValue provide many comparator sales that do not show up in NameBio, and this is one of the most valuable features of the service. In most (not all) cases the automated appraisals will be more than you can likely get for your domain name. Also, in some cases they will be wildly wrong in either direction. Because potential purchasers may well use these automated estimators, you need to know about them, even if you are personally sceptical of their quality. Really learn to use NameBio fully. With more than 610,000 domain name sales recorded, and a cumulated sales totalling more than $1.6 billion, NameBio is a treasure chest of information both on what has sold and at what price and the venue. By learn to use fully, I mean learn how to do searches for domain names that start or end with a certain word, or are exact, or that contain a certain pattern of numbers or letters, or are from a certain category. Do pay attention to the date sold information when you look at results. Results can be ordered by ascending or descending date sold or price. You can obtain statistics such as average sales price and number of sales for any search. Get your names listed. The most important mistake that I made when I started was to sit on domain names without them being listed anywhere. At first I was waiting for the 60 day ICANN transfer period to lapse, but even after that I sat waiting to decide how best to sell the names. Don't procrastinate, and get your names in front of potential buyers. That brings us to the issue of marketplaces covered in the next point. Learn the marketplaces. You have many options for listing your names – Afternic , Flippa , GoDaddy Auctions , NameJet , Sedo , SnapNames , ToughDomains , Undeveloped and many others. Don't overlook the registrar marketplaces at sites like Namecheap and NameSilo that are easy to use and can be ideal for domain names being sold at value prices. Depending on your type of domain name, there may be specialized places to sell (e.g. the various sites to sell brandable names). By learn the marketplaces, I mean do read their terms especially all fees and commissions, as well as restrictions, if any, on whether you can list the domain names elsewhere. I review a number of marketplace options in this posting . Consider Efty. Although you can set up a personal marketplace on Efty , it is a different type of service than the marketplaces. You pay a subscription fee, but in return any domains sold on Efty do not have commissions. You can have secure landers for your domains and can opt into a secure setting for your marketplace as well. There are a host of customizations for each landing page. Efty also offers incredibly powerful portfolio management services to provide insights on your domains, offers, sales, etc. Especially if you do not have a web hosting service, Efty may be a good option for you. Read more in my review here . BIN once, offer everywhere else. If you do use buy it now (BIN) prices make sure that you list a BIN price only once, with all other listings of your domain name being "Make Offer." The reason is that you don't want any possibility of two simultaneous sales of your domain name. That would be unfair to the purchaser, and also would probably get you in trouble with the marketplaces. Once you do get an offer, take down the name from the BIN location, so there is no chance of a double sale. Yes, it is true that the odds of two sales the same day are slight, but it does happen, as the archives of NamePros shows. When selling at auction, first disable other listings. I know some people leave active offer listings while an auction is on for a domain name, but I don't think this is fair. An auction means it can go to the highest bidder, assuming the reserve, if any, is met. I feel it is deceptive to allow someone else to make an offer knowing they don't have priority on the domain name. Consider parking pages, landing pages and mini-sites. This is a topic that deserves a post all to itself, but over-simplifying here is a brief rundown. A parking page is a page that a user goes to when entering your domain name into a browser, and at that page there are a set of links to (hopefully related) websites, as well as normally a link to a for sale page for the domain name. In the past domain investors could get significant revenue from parking, and it seems that a few are still doing so, although returns from parking has decreased over the years due to differences in how Google search operates and users find content. A landing page is in some ways similar to a parking page (a user that types your domain name goes to the page), but the focus is on promoting the sale of the domain name, rather than on monetized links. There are of course hybrid options that are mainly landing but with one or more monetized links as well. A mini-site is used much more rarely, but in it you set up a small website, possibly only one page, containing authentic content related to the topic of the domain name. You show somewhere that the name is also for sale (if it is) and obtain revenue from Google Adsense or similar monetized ads. If you have an unrestricted web hosting plan, particularly if you intend to hold the domain name for an extended period, this makes sense in my opinion. Before you acquire a domain name focus on who might want the name and how they would use it. Actually make lists of potential uses and purchasers. A good domain investment is one that you can sell for more than you bought it for. Period. Any domain name will not sell if it is not deemed valuable by at least one purchaser, and it will not sell unless you manage to connect the name with at least once potential purchaser. Don't let your own views that a name is cool sway you to pick it up if you can't also identify potential users. I call this topic The List , and I regard it as the single most important advice in the entire post. Never acquire a domain name before considering who might want it! Be prepared for hard work. Too many enter domain name investing thinking it is just a matter of registering a name you think is valuable, and then waiting for a big offer a few months later. I think it is fair to say that most successful domain investors work really hard and have excellent skills at selecting and promoting domain names, as well as the ability to negotiate a good price. You must be willing to work hard on all aspects of domain investing just to break even in this business. At times, even the most skilled, will get discouraged. As I write this I have not had a sale for about 40 days, and no active queries. It is discouraging at times, and be mentally prepared for that. When you don't have active queries, have the self-discipline to still work on things like finding potential leads, improving presentation and exposure of your names, working on related side gigs, etc. Interact professionally. Be honest, open, polite and professional. Always. There is a difference of opinion on whether you should always respond to an offer, even if it is very low. It is my opinion that you should. Don't get emotional when someone makes an offer that you think is insulting. Respond as promptly as reasonable as well. Some say it is better to delay responding to not appear too eager. Establish a personal brand as a domain investor. Someone should in one sentence be able to describe what makes your work in domaining a bit different from others. You will find it useful in coming up with such a branding statement, and reviewing it every year. Don't be scared to evolve your personal brand over time – perhaps you started with an interest in the investment domain niche but gradually evolved into shopping related domain names. If you don't know your personal brand, no one else will. Consider both history and the future. While it is always important to look at what has sold in the past and for what price using NameBio , balance this with seeking new ways to use domain names. Be creative and forward looking. Domain investing in future trends carries considerable risk, but can be highly rewarding when you get it right. In January I forecast some topics that I thought had growth potential . Figure out how much domain investing risk you can handle and take that much, but not more! This is so important. I think too many edge into more risk than they are comfortable with. Your level of risk will be related to various factors including your overall financial situation, whether you have a secure other job, your age, and your personality. It is possible you will never sell a domain name. How much are you really prepared to lose? On the other side of the argument, if you are looking to make domain investing your only job, taking into account typical sales to domains held ratios, you will need a considerable initial investment. Be alert to domainer addiction. I don't think that domainer addiction is a recognized psychological disorder, but I do think it is real. It is too easy to get trapped into spending too much money and time in domain investing. Don't spend all of your time looking for gems or discussing domain names on NamePros. Keep balance in your life. Set limits on how many domain names you will acquire (e.g., some set a limit on their total number of domains, they must sell one before they acquire a new one), or the amount you have invested in domain names (don't buy more until some sales with profits have happened). Especially in early sales, don't be greedy. If you have an acceptable return on investment (ROI) with the sale and an offer is approximately at the level you had in mind when you acquired the domain name, don't try to squeeze out more and maybe lose the deal. Trust me, that first sale will feel good. Even if in dollar values it is not that significant, the fact that you chose a domain name, and someone else liked it enough to pay more than you had invested in the name, is a good feeling. I still remember the day I got my first sale email from a marketplace! Keep a written domain diary . I don't just mean for the tax man, although that is important, but also so you can look back at what your thinking was in 6 months or 2 years time. Keep a domain diary where you note ideas, what the pros and cons were, your thoughts re possible uses, etc. Also keep track of queries, if any, on each domain name, since that will help guide which names you want to renew. For queries that did not result in sales, write down reflections on why you think the name did not sell. Periodically reflect on new ideas for a domain, or how technological or societal changes may have expanded or contracted demand for a domain name. Grow as a domain investor. You should be a better domain investor each year, more discerning and accurate in predicting value, more logical in your domain investing choices, more quantitative in your business plan estimates. Ask yourself each year what have I done in the past year to make my knowledge of the industry more complete, and to improve my skills related to domain investing. I find it helpful each January to indicate a few things you plan to do in the coming year for your domain name professional development.. Educate yourself. I believe in the value of education, formal and informal. Within the domain community we are fortunate that Domain Name Academy provides a sound education in many aspects of of the domain name business. It is directed by respected domain industry guru Michael Cyger who brings a wealth of business and analysis expertise from both outside and inside domain investing into the program. Michael is a domain name hall of fame multiple recipient in several categories including blogger, goodwill ambassador and investor. In the program you learn how to select and value domain names, elements of purchasing and selling, and how to set up your business, among other topics. The program also comes with discounts to certain services and access to an online community. Note, I have not personally taken the course yet, but hope to some day. You can get a taste of the program through their YouTube channel- see bottom of this post. Beyond the Domain Name Academy program, there are opportunities to expand your knowledge in related areas such as business plans, startups, technology, branding and marketing through the wealth of courses offered on the large MOOC sites such as Udemy , Coursera , and EdX , among others. Your local college probably offers part-time courses in these programs as well, and sometimes the public library system will also include options. Be organized. Keep track of expiration dates, prices, where stuff is listed, etc. Don''t be the one that sells a domain and then leaves it up on another market. I suggest using spreadsheets for tracking things if you are not using a service like Efty . You can't be informed about how you are doing without complete and accurate records. Use evidence and data and don't fall into (too many of) the traps in deceptive logic such as survivorship bias. Make a reasonable projection of acquisition, holding and selling costs, and your likelihood of sale and price, to predict quantitatively if a domain name makes sense. I plan a future blog post on exactly this topic, including examples. Costs matter . Use tools like TLD-list (there are others) to find the best registration, transfer and renew cost. Look out for short term promotions to save on what you are already planning to do. Also be alert to other costs on related items such as web hosting . Learn all laws and regulations. While you are not a lawyer, you need to know the regulations regarding both domain names and operating a domain selling operation. Learn the advantages and disadvantages of different types of business organization such as a sole-propietorship, a registered business, or a limited liability corporation. Learn about trademarks and how to do basic trademark searches yourself. Look at UDRP cases and in particular what the requirements are to prove a UDRP case. If you invest in domain names that have residency requirements, know those. Be authentic and open . It is natural, especially in the sometimes cruel online world, to want to hide behind privacy, and i do understand that. However, those who are considering a major domain purchase from you will want to know, especially for direct domain sales not being handled by a third party, who you are. Some marketplaces encourage real identity more than others. One feature I like of Undeveloped is that they encourage, but do not require, real identity by sellers. Prioritize your time. There will always be more time that could be devoted to managing your portfolio than you will have available. This means you need to establish priorities. Is it better to look at today's drops, list your domains at more auctions, research new possible niches, contribute to a NamePros discussion, improve your personal website, find some leads for outbound queries, etc.? If you have expiring domain names, inquiries from potential purchasers, or new sales that need domains transferred, those should always be at the top of your list. Also, remember to keep balance in your overall life for your own mental health and the well-being of those you love. If you do outbound at all, make it professional and personal. Never send out a standard query to a bunch of organizations in the off chance that it will appeal to one out of that long list. It is far better to send 3 carefully researched, personalized, meaningful queries to organizations you honestly believe could benefit significantly from your domain name than it is to send 50 form type notifications. Quality over quantity refers to queries and leads as much as it does to domain names! Don't just interact with domainers . As fun as it is to spend time on NamePros or to have a social media account with mainly other domain investors, most end use sales will not be within the community. Therefore stay active with business owners, venture capitalists, non-governmental organizations, startups, experts in your fields of expertise, etc. Prepare a selling case for each domain name whether you share it or not. I am surprised that the vast majority of domains listed on marketplaces have no descriptive information beyond standardized bullet points established by that marketplace. If you really believe in the value of this particular domain name, doesn't it deserve something specific to that name? I realize not all domain name investors agree and I will discuss the pros and cons in a future posting. Even if you have no intention to give your promotional sheet to a buyer, you should have a sales information sheet for every domain name in your portfolio. It could include things like possible uses for the domain, what similar domains have sold for, search and advertiser statistics for the name, language considerations, brandable opportunities, changing trends that favour the domain name, possibly other domain names you have that might interest the potential purchaser, automated or human third party estimates of worth of the domain name, the registrar and registration period, purchase options (such as which marketplaces it could be purchased from and if you offer distributed payments), any restrictions, registration period, etc. Have an exit strategy for each domain name. It is good advice in stock investing to have an exit strategy. Some even have this coded in their discount brokerage that the stock will be sold automatically when the price reaches upper and/or lower bounds. For each domain you own, prior to contacting any potential purchasers and prior to actually acquiring the domain, decide on the minimum price you would accept as well as the price you feel the name could reasonably sell at. In addition, if you get no queries over the first year, will you renew and hold for a second year? Be smart about renewals. I think that some domain investors too often have a default renew decision. You should do the numbers each year to make sure that is wise for those names that have generated no interest, or that are in topics trending downward. It may well make sense to renew, but not always. On the other hand, I think some new extension domain investors default to the opposite, never renew any domain name, even if it has significant value. When you do renew, be alert to what are the best rates using sites such as TLD-list . Keep up with the domain news. Things happen in this business. Trends in what is selling change. But also ownership changes at registries or changes in rules (e.g. many country codes that were reserved are now open) can have impacts. That being said, part of being a smart news reader is to not over-react or think you need to respond to each new idea you hear. Do a few things well. We all have strengths in this business. Think about what are yours, and make the most of them. This means deciding what you will do, but also what you will stay away from. For example, I have trouble really understanding the brandable market, and coupled with my generally risk averse nature, I therefore stick away from most brandable domain names. I also don't find numbered domain names personally interesting, so even while I know they can be profitable and are among the most liquid domain assets, I have never invested in them. I also don't invest in domains in areas that are contrary to my personal belief system, such as adult names. Be active (but not over-concentrated) on social media. It can help you get known, and perhaps even indirectly sell your domain names, if you are active on LinkedIn, Twitter or FaceBook, among others. I do see value in these, but like many things, keep it in balance. Never use social media as ways to spam your own domain names. Also, don't put all of your effort into social media. When you sell a domain name finish the job. If you have your domain name listed on multiple sites take the name down immediately everywhere. If you have it listed on your own website or Efty take it off. If you have personally interacted with the buyer, send a brief thank you note expressing your appreciation and wishing them all the best with the domain name and their business or organization. Only if the purchaser wants it, publicly congratulate the new buyer on social media and/or your website. Update your records (e.g. spreadsheet and/or Efty), and make sure you have documentation for tax purposes. In your domain diary write some brief notes about the transaction. A little money is better than nothing. Not all domain name investors will agree (and I totally accept there are arguments against this strategy), but if you have made a firm decision to drop a domain name, why not try to pick up at least enough money to cover your initial costs by offering it at low price to other domainers? The Bargain section of NamePros is an ideal location for such sales, as well as their auction site if you set the initial price and increment both to low value. The registrar marketeplaces are also suitable for this purpose. Personally, I find it satisfying to at least get back the amount I have invested when I give up on a domain name. Some others never sell for low prices, and would rather have the name expire, and I do understand that view as well. Consider side gigs. Many who are seriously into domain investing, I think most, make at least some money from associated activities such as writing about the domain industry (either for domainers or a broader audience), consulting, domain appraisal services, monetized blogging, teaching or speaking, etc. One big advantage of this is that a portion of your income is more steady than domain sales will be. When you do have a big sale, be disciplined. It is natural in the elation of a big sale to rush out and either use the money personally or to invest it quickly in domain digital assets. Don't rush into either, remembering that it may be a considerable time before your next big sale. Be clear if you are in this as a job. There are many in domain investing that do it as a part time job, others as a full time career, and many as a hobby or pasttime. You should be clear on which you are. If you are in it as a job, your returns must not only cover reasonable gain on your invested funds treated as passive investments, but also enough to cover your costs including a reasonable salary. If it is more a pastime, as long as you don't lose money you may be happy. Hang around domain smart people. You may not be able to physically hang around with smart domain people, but it is easy through blog postings, NamePros, Twitter, etc. to benefit from the expertise shared by others. I am sure I am leaving out some, but among those who have a lot valuable to share are Aandrew Allemann (DomainNameWire), John Berryhill (domain and IP law), Kate Buckley (Buckley Media), Michael Cyger, DomainGang, Domain Shane (DSAD), DomainSherpa, Raymond Hackney (TLD Investors), James Iles (who writes on NamePros), Gerald M Levine (IPLegalCorner), Morgan Linton, Ron Jackson (DNJournal). Darryl Lopes, Kevin Murphy (DomainIncite), Barbara Neu, Kathy Nielsen (Digital Strategies Marketing), Jen Sale (Evergreen), Elliot Silver (DomainInvesting), Jamie Zoch (DotWeekly) and Konstantinos Zournas (Online Domain). Twitter is an excellent way to follow these and other experts in the domain industry. I could have added many other names, and probably missed some that definitely should be on your first priority list. While listening to others, be you. We mentioned personal brand earlier. If you look back on your domain involvement, say ten years in the future, what do you want to be able to say? We each, in this and every aspect of life, can make a positive difference in the world. How will you do it? Be positive and help others . No explanation needed! I am learning still almost every day. Therefore, I am sure that I have left out some important points. I hope, nevertheless, that this will be helpful whether you are just starting out or part way along your domain name journey. Please feel free to comment and make suggestions for improvements. As I refine this I will keep a list of the changes below, so you can readily see if anything has been added since you last accessed this page.
A Few Last (Important) Things The good folks at NamePros have put together a superb collection of resources for those new to the domain name business. The directory is at this link . There are sections for everything from the terms used in domain investing to I Use This Tool on the various tools and resources used to help analyze domain name information. I really like Joe Nichols six lessons for beginners from a beginner .
Another incredible resource as you start in domain name investing is the DNAcademy YouTube channel . Here you will find such topics as return on investment to where to list your domain names.
Links: Afternic Coursera Domain Name Academy DNAcademy YouTube Channel EdX Efty Estibot Flippa GoDaddy Auctions GoValue Marketplace Choices NameBio Namecheap Marketplace NameJet NamePros NamePros Resources for Domain Beginners NameSilo Marketplace Sedo SnapNames TLD-list ToughDomains Udemy Undeveloped Our site NamesThat.win – thanks for visiting Permanent link to this blog post
Original post Aug 17, 2018.
Aug 18, 2018 Permalink fixed and last section re other resources for domain beginners added. Also addition of last sentence in "Who will buy this domain?" section.
Disclosure: I do not regard myself as expert in domain investing, but hopefully some of the points in this posting will be helpful to you. It is probably fair to ask what my experience and expertise is in domain investing. I have owned one domain since 2001, and a couple of others since about 2006. Most of my domain name investing has been in the last two years. As of the date of writing I have sold 31 domain names, with 26 of them during the past year. None have been sold for large amounts. In semi-retirement I am risk averse, so personally have a modest amount invested in domain names at any one time. I believe in a diversified domain portfolio, and do handle .com, .net, .co, .me, .ca, .pw along with a host of ngTLD domain names. The majority of my portfolio is in new extensions. You can see bout 97% of my portfolio at this link . I have graduate degrees in science, and have done quantitative analysis for more than three decades and have authored more than a hundred research reports and scientific papers, as well as books and chapters. With this background, I have particular interests in science and technology. Use of domains in marketing phrases is another niche for me, as well as domain names suitable for non-commercial organizations.
Fine Print This post is offered for informational and educational purposes only, and should not be considered domain name investment advice. While an attempt has been made to be accurate, there is no implied or explicit warranty, and you are responsible for verifying any information of importance to you. You also accept full responsibility for any domain investing decisions you may make that use data from this post.
I try to be fair, balanced and objective in my analysis. If you feel this post does not meet that standard, please express your concerns to me.
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