Over the past couple of weeks, I’ve had an interesting conversation with Spencer Yao of smallbusiness-domain.com, a provider of domain name, web hosting, and e-commerce reviews, rankings, comparisons, & coupons. Spencer was telling me about a recent domain sale his company was involved in. He walked me through the life cycle from the initial purchase to the sale. Spencer’s scenario provides some good food for thought when buying domain names with the intent to sell and I asked him to summarize his experience to share with you.
Back in mid 2009, we were approached by a seller looking to quickly dispose of some premium domain names in the beauty and apparel vertical. The acquisition was opportunistic and serendipitous and we did not have much time to decide because the seller wanted to move fast. Although we had no direct experience in this beauty/apparel category (our group had substantial technical and monetization experience), we purchased one of the better domains because we thought it was truly “premium”, had decent type-in traffic, mapped to a common search term with clear commercial intent, and at an adequate discount to mitigate the risk. Unfortunately, we cannot disclose the name, but that does not change the content of this article.
Below is a summary of our strategies to maximize value and eventual exit for the domain.
|Strategy 1||Build an ecommerce site similar to Diapers.com or Hammocks.com||Highest potential reward and risk.||Requires most technical & financial resources. We had no direct industry experience in this vertical.||Industry was too low margin and fragmented to support such a business.|
|Strategy 2||Turnkey site based on shopping engine listings. Hope premium domain name helps in SEO results.||Much less work and maintenance than Scenario 1. Use API to auto generate sub categories and pages.||Development costs to properly access & publish API. Little to no original content.||Hard to monetize. Parked domain generated more revenue even though site had hundreds of pages.|
|Strategy 3||Park, hold, and sell the domain.||Little to no work involved||Not adding any value to the domain. Hope we paid a low enough price to hold and wait for a buyer||Last resort. Chose this scenario after exploring #1 and building #2.|
We determined Strategy 1 was not feasible after 4-6 weeks of post purchase research – this sub-category within Beauty/Apparel was too low margin to support an ecommerce business like Diapers.com or Hammocks.com It took us 4-6 months to build out and vet Strategy 2 – we determined that parking the domain generated more revenue with lower costs than the turnkey site.
Unfortunately, we were left with Strategy 3, which meant parking the domain and hoping for a buyer. To try and garner as many buyers as possible we looked at the following services:
- Domain Listing Services like Sedo and BuyDomains. We found these services provided little to no value even though they charged a substantial commission for listing a domain in their database.
- Domain Brokers. We retained several brokers who actively marketed the domain and emailed buyers on our behalf. Through several cycles, we received a handful of offers for about 50% to 80% of our target price which did not include the 10%-15% commission the broker earned if the sale was completed. The offers were from domain speculators who wanted to sit on the domain and flip it. This meant it would be hard for us to achieve “full value” through a broker.
- “For Sale” sign on the parked page. This is how we eventually sold the domain at our target price to a buyer who wanted to develop it into a website. The upside was that we received full price without having to pay a commission, but the downside was we held the domain for over 3 years before selling it.
In summary, we purchased the domain (for mid to low 5 figures) and sold it for 30%-35% more than we paid, not including the work we put into Strategies 1 & 2. Comparing this to an investment benchmark such as the S&P 500 (which gained 39% over the same 3 year period), meant we were better off taking those funds and investing them in the market. However, since we were forced into Strategy 3, we were happy to make a slight “profit”. We could have waited for a buyer willing to pay more, but that could have taken years to achieve.
If you are going to invest substantial dollars into a domain name, we learned the following valuable lessons: 1) Have a concrete development plan to turn the domain into a viable website. Direct industry experience is essential. 2) For maximum price, be prepared to sell the domain yourself and wait years for the right buyer. If you need liquidity in less than 6 months, use a domain broker and be willing to take 35 cents to 70 cents on the dollar.3) The market for premium domains seems to have peaked around 2007-2008 and has yet to recover to those levels. You have to consider this when looking at pre 2008 domain sales for comparison.
Luciana Bruscino has worked in the technology arena for over 15 years. She has always been fascinated by new technologies. She is particularly enthusiastic about the WordPress. Chad Edwards, a friend, assisted her in the development of the My Domain List plugin. He has been involved in the buying and selling domain business for over six years.
Mike: I’ve seen some other domain management systems, but I think this is the first I’ve seen as a WordPress plugin. What made you decide to take this route?
Luciana: We chose the WordPress framework because of its maturity as a technology as well as the number of sites using the framework. In our experience, we noticed that there weren’t many similar domain-focused plugins products in the market. Therefore, we thought it would be good opportunity to provide domain owners (I like to call them domainers) with a way to quickly setup their domain portfolio on their own site without the assistant of a website developer.
The wordpress framework also allows the My Domain List plugin to be easily installed and setup. The plugin leverages WordPress features to enhance the domainers experience by allowing them to customize their domain list via WordPress Shortcode and summarize the domain offers in the WordPress Dashboard.
Mike: Price is reasonable. Can you talk about the number of sales to date?
Luciana: I am pleased to say that the plugin has been gaining popularity. I believe we achieve that by understanding the needs of the domain owners and proving good customer service. The sales have been on a steady increase and it met our initial expectation. Most importantly, we are getting good feedback from our customers on the plugin’s features and on the great support we provide. Customers have been pleased and that is the key for increased sales. We encourage users to continue to provide feedback so we can continue to improve the tool to fit the needs of the audience.
We sell the plugin exclusively through Code Canyon, premium domain sales site.
Mike: How are people using the plugin today? Is it to manage their portfolio or to list their domains for sale?
Luciana: Customers are using the plugin in various ways. They use the plugin to market, manage and promote their domain portfolio for sale. The My Domain List plugin offers many features to allow domainers to use the plugin for their current needs. Because of features such as pagination, table sorting, and filtering, some domain owners use it to simply list their domain portfolio and link it to a sale site. Others take advantage of feature such as Price Setting and the Make Offer button to receive leads from their own sites. Also, because the plugin pulls data automatically from the WHOIS database, some domainers use the plugin to manage their domain expiration and registrar information from the Admin panel.
From my perspective, the My Domain List plugin seems to be fulfilling the needs of most domain owners.
Mike: What made you decide to create the plugin in the first place? Was it a problem you were trying to solve for yourself?
Luciana: We decided to create the My Domain List plugin for domainers because we saw a lack of domain driven tools in the WordPress framework. During our research, we didn’t find a tool that encompassed features such as pagination, make offer button, customization, WHOIS data, and table sorting into one tool. So, we thought a plugin with these capabilities would be beneficial. We also thought creating a WordPress plugin would provide domain owners with the ‘ease of use’ advantage, so they can start promoting their portfolio quickly. Another strong reason for creating this tool was to alleviate my partners struggle with setting up his domains for sale on his site. My Domain List plugin solved his needs and the needs of many other domain owners with large, medium or small domain portfolio.
Mike: It says on your site, and you previously mentioned, that the plugin collects the latest WHOIS information. Can the user import a list of domains or does it require manual entry?
Luciana: In the current version of the My Domain List plugin the users can simply add a list of domain names separated by comma or in a new line to a textbox in the Admin page. Once the user saves the domain list, the plugin uses a built-in API to collect the WHOIS data for each domain name. The data automatically populated for each domain is owner, registrar, extension, and expired, created and changed dates.
In the Professional version of the plugin, currently in works, the user will have the ability to import the domain names as well as other custom meta-data from a .csv file. The current import capability will also be available.
Mike: You’ve decided to use a hyphenated domain name. Did you weigh that against the option of a non-hyphenated domain?
Luciana: Since we created the website with the purpose to simply document the plugin’ features, we didn’t spend too much time looking for the best SEO domain name available. The hyphenated website was created with the intention of promoting and providing support and helpful information for current customers. The truthful reason for using the hyphenated domain name is that my partner already had purchased the my-domain-list.com name and we thought it fit beautifully for the plugin.
Mike: Do you have any other ideas for programs or plugins that can be beneficial for domainers? Can we expect to see other products from you?
Luciana: This is a great question. The answer is Yes. I am currently working on the My Domain List Pro version for the plugin. This version compiles a list of feedback from the customers to provide a more robust and scalable domain tool. The Professional version will have many of the features in the current version, but it will be enhanced to support category filtering, customized currency, meta data (i.e description, thumbnail, redirect URL), SEO options, Buy option via Escrow, Paypal, etc.
As a promotional campaign, we are willing to give 5 copies of the Beta My Domain List Plugin Professional edition. (Editor’s note: post a comment to be eligible and 5 random names will be selected).
Another plugin that I have developed that I believe is beneficial for WordPress users is Notify On Action. This plugin is available free of charge . This plugin allows you to send email notification based on a pre-determined template. The user has the freedom to decide when the notification is sent based on any action on their site. For example, this plugin works well with My Domain List plugin if the user wants to be notified or notify the customer when an Offer is made. Simply add the code provided by the Notify On Action, to the action code of the Make an Offer button and set up the template on the Admin site. If you need assistance in bundling the Notify Action plugin with your My Domain List plugin contact me at email@example.com.
The other day, I received an email asking me to confirm some of my contact information. The email stated “Some of your contacts use WriteThat.Name, a new service that updates address books based on the linguistic analysis of email signatures.” What first caught my eye was the dot NAME tld. But really, what a unique concept. I reached out to the creator to learn more.
Philippe Laval founded Kwaga two years ago with a simple idea in mind: help email users truly benefit from business data that is nested in the messages they receive. To do so, he leverage the experience he had in semantic technologies and actually strengthen it with a team of NLP (natural language processing) experts who have been enthusiastic about the idea. They are now 10 people strong, fully dedicated to making email the productivity tool it once used to be!
Mike: Tell me about your service, WriteThat.Name. What is it and how can it help people?
Philippe: Well, WriteThat.Name is a perfect illustration of my goal: it keeps your address book up-to-date automagically! Basically we recognize the signatures in the email you receive, and either we create the contact when it isn’t in your address book or we update the existing one – with a new mobile number, for instance.
We launched WriteThat.Name mid-May and have already created/updated over 100K contacts for our users! Talk about saving time…
Mike: What is your experience with the .Name tld? Why did you choose this over a .com?
Philippe: There was a great debate over what we should name this service, but finally landed upon WriteThat.Name because it instantly describes what it does – writes the name and contact information to your address book. Nevertheless, we do have WriteThatName.com registered as well.
Mike: Have you or your company owned any other domain names? How important do you feel the domain name WriteThat.Name is to your service?
Philippe: As a web-based company, our domain is as essential as the window display is to a shop along the street. This is the first thing that our customers experience, so we took great care in deciding on the perfect one.
Being a French-based company, we have registered WriteThatName.fr as well as the .com and .name domains. We also have both Kwaga.com and Kwaga.fr.
Mike: WriteThat.Name takes a good feature of Gmail, adding contacts automatically, and makes it even better. Where did the idea for this come from?
Philippe: I got tired of searching in my mail account for the number to call from the car every time I was late. I thought there must be a way to automate this, and, voila, WriteThat.Name was born…
Mike: Tell me about your revenue model. It looks like this is a pay service. Did you consider selling some form of advertising as opposed to charging users?
Philippe: WriteThatName costs only $3/month or $20/year for each subscribed email address. The first month’s subscription is free. And $20 seems really low compared to the time spent searching for the right contact info! Compare this to the price of a virtual assistant: for $20 you can have a virtual assistant for one hour OR WriteThat.Name for a full year.
We opted to forgo the route of selling advertisement as our detection system looks through your messages to find contact details and link them to a signature. We want you to be confident in our respect for your privacy. However, if you still think it’s too expensive, we also have a referal program where we’ll give you another full month free for every referral that signs-up to WriteThat.Name.
Mike: Kwaga is the parent of WriteThat.Name. What is Kwaga and what’s the company’s goal?
Philippe: Kwaga was founded in 2008 by me (founder and former CEO of Sinequa, an enterprise semantic search engine vendor) along with a team of seasoned software entrepreneurs, backed up by top computational linguistics and development talent. Kwaga has created KwagaContext for Google Apps Email that enriches the Email experience by providing more context about senders: social profiles, previous conversations and smart action-reminders. Kwaga is a privately held company. SeedCamp and Kima Ventures are both shareholders and have provided seed-funding.
Mike: Are there any other problems you’re focusing on that we may see a new service for in the future?
Philippe: At Kwaga, we are looking for new ways to enable people to continue working inside their preferred e-mail application and benefit from SmarterEmails™ without altering their habits. We are currently working on some extensions of WriteThat.name and will soon get back to you on that! In the meantime, please take a moment to check out our videos and screenshots to learn more about what we can do for you!
I have to admit, when I started domaining, I disregarded the advice of the pros and the veterans. They all suggested saving my money and instead of buying a pile of worthless hand regs and low dollar domains, to instead save an buy a good premium domain. In hindsight, that would have been the way to go. I wasted a great deal of time and money. Initially, I thought it was too risky to put that much money into a domain. However, it wasn’t a total loss. While using the low end domains, I learned about contacting end users, what other domainers were interested in, and how to gauge the value of a domain name.
Another thing I learned was that people were hesitant to pay a premium for domains. Not just me. Sure, we all want to get a great deal and, at a minimum, not to get screwed in the process.
Think about how much more willing you would be to buy if you knew there was no risk. Think about how much easier it would be to sell if you could assure your buyer that there was zero risk in the transaction for them. How do you achieve that? Well, you as the seller take on the risk.
Here’s what I mean. I recently found myself in a situation where I was contacting end users on a particular domain. There was a single company that responded and was interested. With all the effort I put in and only had a single bite, I wanted to maximize the opportunity and make the sale. After several conversations it became clear that the main contact was afraid to pull the trigger. I got the sense that he was feeling he was taking a risk with the name… that it might not do for his business what he hoped it would and the investment would be lost.
Once I realized that, I decided to take a bold step. I decided to offer him a risk free transaction. I put in writing that if he was not satisfied with the name 90 days from the date of the transaction, I would purchase the name back at the same price. BAM! Risk removed.
Yes, there are some drawbacks to this approach. Primarily, you might end up with the domain again and be starting from scratch. But here’s my logic:
- First, I don’t generally buy domains (anymore) that I don’t personally have an interest in myself. So if it ends up back in my portfolio, I am comfortable with that.
- Second, when I contact end users, I am setting the value on the domain that I am willing to sell at. That said, this process helps ensure a fair prices, since I may end up re-purchasing the name.
- Third, and most importantly, I am confident that they will find value in the name.
I’m not planning on using this approach in all situations. For example:
- I would not do this with a domain I did not find value in… which I shouldn’t be selling in the first place.
- I would not knowingly offer this to a fellow domain investor who would likely look to resell at a profit and return to me if he was unsuccessful.
This approach has worked for me and I will continue to implement it where it makes sense. There’s no reason it can’t work for you as well.
Lately, I’ve picked up a few dot org domains. There are still some great keyword dot orgs to be found at decent prices. While conducting a search, I came across Meat.org and the message it conveyed. I reached out to Joel Bartlett, Director of Marketing for People for the Ethical Treatment of Animals (PETA) to find out more about how they are using the name and how they are leveraging domains. I’m not a vegetarian by any means, but I can’t deny the impact this site has at first glance.
Mike: I came across the domain Meat.org and the strong message it conveys. How valuable has the domain name been in your campaign?
Joel: Sir Paul McCartney famously said, “If slaughterhouses had glass walls, everyone would be a vegetarian.” The next best thing to having glass-walled slaughterhouses that expose the cruelty of the meat industry is showing people actual video footage of slaughterhouses. We’ve found that nothing is more effective in changing minds and hearts, and that’s why the centerpiece of Meat.org is “Glass Walls,” our exposé of the meat industry narrated by McCartney.
Mike: For those who have not visited the site, can you explain what the main message is that you are trying to convey?
Joel: The best thing that you can do to stop cruelty to animals is simply to go vegan today.
Mike: Does PETA own any other domain names?
Joel: PETA has many domains for our various campaigns. On RinglingBeatsAnimals.com, you can watch PETA’s undercover video footage of Ringling employees beating elephants with sharp, steel-tipped bullhooks (devices that resemble fireplace pokers) and view photos of how baby elephants are stretched out, slammed to the ground, gouged with bullhooks, and shocked with electric prods in abusive training sessions that go on for several hours. On McCruelty.com, you can join PETA’s campaign to get McDonald’s to stop practices such as scalding live birds and instead adopt a less cruel method of slaughter. PETA has many more sites, including CanadasShame.com, DKBunnyButcher.com, and even LettuceLadies.com.
Mike: Did you acquire Meat.org as the original registrant or did you purchase the name on the after market? If the latter, can you explain the process that you went through?
Joel: Meat.org was created as a pro-vegetarian site by a forward-thinking animal rights activist in 1998. The site was given to PETA for free in late 2005 in order to take the message to even more people.
Mike: While dot org is often used for non-profit organizations, have you found it to be any less significant than a dot com name?
Joel: PETA does own both .org and .com domains, and when possible, we buy both for our websites. For our primary site, we feel that the .org is important because it highlights that we’re working for good—not for profit.
Mike: Can you share the number of visitors the site receives?
Joel: Meat.org has received close to 1 million page views in the past year! Every day, people who come to the page take the pledge to go vegetarian. Visitors to the site can also order a free vegetarian/vegan starter kit filled with delicious recipes and tips on switching to a vegetarian or vegan diet.
Mike: How has the meat industry reacted to Meat.org?
Joel: Our site’s subtitle is “The Website the Meat Industry Doesn’t Want You to See.” We know that the meat industry is feeling the heat from PETA’s online work. The following excerpt from the industry publication Feedstuffs provides just one example:
It took Hormel Foods Corp. 117 years to build its brand’s credibility but just moments to lose much of the consumer trust the brand had established, according to Brian Stevens, Hormel’s director of pork procurement. Stevens, speaking to delegates to the National Pork Forum in Dallas, Texas, reviewed what happened last year after People for the Ethical Treatment of Animals (PETA) released undercover video showing abusive behavior toward hogs by workers on a farm from which Hormel procured hogs.
PETA released two videos and demonstrated at customer sites, and animal abuse charges were filed against the identified workers over the course of four months— all of which created considerable media coverage, he said, adding that the consequent negative publicity generated more than 30,000 calls, e-mails and letters to Hormel, as opposed to 1,500 that were generated by the company’s largest-ever product promotion.
Mike: Any other information you’d like to share?
We encourage everyone to watch the “Glass Walls” video narrated by Sir Paul McCartney on Meat.org and take the pledge to go veg.