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We’ve all seen this before: Auctions go underway, item is overpriced, no interest whatsoever, auctioneer whispers “Pass”. Why is this happening? The seller really did not care that much. He sets the price and watches from the sidelines. The seller in this instance may as well just be testing the waters. If the item is overpriced (as many of them are) and sold, he is happy , and if not, he got great exposure, for free. It’s happening because a seller did not price according to the market. For the auction house though it is a burden. No accountability by sellers means wasting time for potential buyers, which then means the auction house loses its appeal as buyers choose to spend their time, and money, elsewhere, as well as buyers aren’t as eager to come back.
These days the burden is on the auction house to force accurate pricing by declining to accept some listings. So far this method did not work very well as it is too much burden on the auction house. Auction houses have employees, technologies, and businesses to run and taking the time to educate and negotiate accurate pricing with sellers, especially if you take scalability in mind (there are many millions of domains for sale), is inviable.
To do it right the initiative for accurate pricing should be on the seller and the seller only. The auction house should facilitate the transaction and spend its time running a business, in particular, getting exposure to the listed items.
These are some of the thoughts from our internal meetings here at Bido, and some of the issues we see within the industry that if addressed properly can move us all further to better vibrant and liquid market.
Further thoughts about making the auction market better, see Rick Schwartz Blog.
Have a great day,
Sahar
Look Sahar when you try to educate and negotiate accurate pricing with sellers you are imposing a very rough guesstimate of a domain’s value that is no more accurate than their own. It seems pointless educating domain sellers when you consider the extremes of previous domain sales. There is very little, if any, correlation between domain sales.
If I was told to guess which one of two domains like ireport.com and fixedloans.com would sell for $700,000 and $9,000 in the coming year I would not hesitate in predicting that fixedloans.com was going to be the big money domain. How extremely wrong we can be! Domain appraisal is nothing more than a sport because the one important factor we can’t appraise is the unpredictability of circumstance.
“There is very little, if any, correlation between domain sales.”
Worth repeating again
I am a big fan of no-reserve auctions..
Everything else… Blahhhhhhh
Sahar,
A half decent domain is worth what the market will bear unless the owner sees it worth more than what the market sees.
You can’t really teach a domain owner how to price his domain. There’s too many variables. A domain that earns x number dollars per year is at face value worth about 10 x that value. But the domain developed might be worth much more.
Same with a domain that can’t even earn reg fees. Developed properly it might be worth much more. And it might be so lousy or uninteresting that it remains worthless.
That’s it! And that’s the way it is. The best thing to do is “four wall” the domain at auction anywhere and everywhere several weeks before the auction starts.
So you call in favors at domaining sites and you put up a banner there. And you trade banner space with sites where the domain might attract interest. You do press releases. Get people talking if you can. You put the domain out there where people might see it. That’s about all you can do.
There are people who want to sell now and people who wish to hold. My target here is those who wish to sell, the liquid market. If you can wait forever be my guest, that’s perfectly fine. However, if you wish to liquidate, generates sales, than there are approaches which may work.
For example, Spyware.com, one of our names. It is a million dollar name for the right client, no doubt about that. But what is its value if I want to sell it today? Because of my urgency I have to be more realistic, I have to target the liquid market, those who buy and sell domains on a regular basis. If someone comes and outbid them the better (!!) but if not, I still wish to move it. Listing Spyware.com for 2M and wanting to sell today the likelihood is slim to none. But, listing it for 100K and it is highly likely to be sold within one hour and get the attention of many potential bidders and spectators.
What’s the difference? The 2M (as it could have been 10M in our example) is an end user sale, once who may come and more likely will never come. The 100K pricing is realistic with market expectations, and market I mean the liquid market.
Listing Spyware.com with a live/vibrant auction operator (such as Moniker.com) for 2M is really a waste of Moniker time, money, and energy.
How do you solve it then? The seller must price accurately to sell or there is no sale to be made, and everyone loses, that is, besides the seller.
Businesses cannot operate that way. Things must change. It is why there is not one company in the domain space who have figured out as of yet the liquid market. I don’t claim that we have as of yet, but we do understand the problem, and are looking for solutions.
Cheers
Sahar
Sahar - Bido is a great concept. Better that it is a work in progress. Adaptation will be the key to reaching higher levels of success a greater audience. It’s clear you guys are testing new ground.
The current auction market is so incredibly teeny tiny, but someone will find a way to generate a broader interest level, eventually. There are many industry-specific generics, which when auctioned off one per day, could capture the interest of companies within a specific business class: real estate, legal, hotel, finance. Not sure if it’s within Bido’s plan, but to actively contact interested parties about a name highly relevant to their business is the needed approach (i.e. brokering which feeds the auction)
Building the whole model around instant liquidation (with high risk low reserves) I am afraid will set a very low ceiling. Unless your sellers of quality names are desperate to sell, Bido will be confined to third and fourth tier names. Focusing exclusively on liquidity sales will paint Bido as a non-premium, discount retailer whose clientele is bargain hunting domainers.
Please set me straight if I’m wrong. I’m trying to better understand what is the long-term goal of the Bido site.
—-answer—-
Bido is still in pre phase 1. A lot is still in the works, we expect to get to phase 1 in the next couple of months as we will open the platform for multiple listings. Adaptation as you said is key, we’re well aware of it. We plan on testing a number of models and try to find what works. The current system has its flows, no doubt. We were aware of it before we started and we are aware of it now. The current system was designed for us to test the auction system, work out the kinks, and develop some of the interesting features we have in the works. In addition it helps us get further feedback from the community in order to design a better system. Bido is a lot more than domains and a lot more than an auction system. While I cannot elaborate fully on all we do, time will tell the whole story.
Thanks for your support !!
Cheers
Sahar
Obviously some sellers have visions of grandeur that auction houses
haven’t curbed in the past.
Perhaps the worst was the (pre-’01/02 crash) Great Domains
madness, and to a lesser extent TDNam now.
However, to pompously blame the seller for what actually is
multi-layer auction-house shortcomings is a disappointing and
spurious argument from you Sahar.
It seems to be de rigeur today for auction houses to force a ‘no or low’
reserve on the seller, then fail to attract the eyeballs that would pay a
reasonable price for their domain asset.
In these no/low-reserve situations the seller is entering into a trusting
‘act of faith’ that the auction house will market their asset to a wide
audience, and maximise their outcome - as promised.
Sadly, many ‘auction houses’ presently in, or entering, this field
appear to have no-idea/no-intention of marketing the valuable
assets and worse, no history or skills in that complex field.
To blame the seller for this skills/action vacuum is outrageous.
How should a seller value a domain ? The standard that you have
alluded to is parking rev. x months.
Ok. here’s an example of the seller’s difficulty.
I recently removed a nice generic dot com from (NameDrive)
parking that has modest, but regular (non typo/tm) daily traffic
and set it up with a simple affiliate (no adsense) site.
It’s presently earning 35 times the previous monthly parking rev.
If I was selling, how should I value it ? Parking rev. or affiliate rev.
x months - plus some magical ‘intrinsic-worth’ factor ?
Only a skilled marketer with experience could tell.
Get some on board before you criticize the asset owners who trust
you to do a top job. If you can’t do that, then get out of the field.
Otherwise, YOU are the problem in this situation, not the seller.
With your record so far in auction selling, I wouldn’t be
criticizing anyone Sahar.
As sellers. we know those buyers are ‘out there’ because they
are writing to us and buying privately from us at prices close to
what we would consider to be a reasonable reserve.
If you have NO PLAN to reach them then you be doomed to run a
boutique dilettante wank, and will be rolled over by the next generation
of professional sellers/marketers to enter this space.
—-answer—-
There’s a big difference between sitting on the sidelines for that right inquiry and make a sale vs. moving inventory when needed. Our focus is moving inventory, not when the right buyer comes, but at a time a seller needs to sell. It’s called liquidity. Live or scheduled event auctions allow liquidity. Bido allows liquidity. I touched on the subject many times before and won’t go into it now. In short, liquidity is completely different than end user sales, especially those that find you.
We do market to end users, it is no guarantee they will get it when we need them to get it. Matter of fact, it is unlikely they will. Prices at active (live/event auctions) auctions should be towards active traders in the space. As in ANY market, active traders are what make the market and they follow industry events, auctions. If you cater to them you will make sales and if an end user comes and get it, the better. An auction house cannot survive with no sales and without accurate pricing towards active traders you will not be able to move inventory, especially in current market conditions.
And by the way, I do not value domains based on their income, traffic. Each domain is unique. How to price right? Google didn’t go the extra mile to teach people how to buy trafic but they built a system, that by interacting with it you pretty quick learned how to buy traffic. This is what we intend to do, not sit here and educate one person at a time how to accurately price domains, that is impossible in our eyes. But we are building a system that hopefully has the right dynamics for those who wish to sell, to price accurately, and move inventory.
Thanks for the feedback,
Sahar
Sahar,
Here’s an idea. Take a web board. Isolate the original posting form from the users. Post from your secret posting form about a domain that recently sold and the price and then comment on it.
Let people then comment about your analysis and their own. As you go along doing this (and you could have other trusted industry experts and employees post domains, too) you’ll be building a searchable knowledge base about domain sales.
And you could advertise Bido domain auctions there on the main page and in the replies. It would take a little work to setup but would help bring in buyers somewhat. And, as the knowledge base builds up, sellers would have a place to do pricing research.
I’d go for a mix of good domains that sold well, great domains that missed the mark, really high dollar sales, and some that just broke even. You know, the two year old domain that sells for $20.00.
If you guys don’t do this I might do it myself as I have web board software that would be perfect for this.
—-answer—-
Not what we have in mind but getting the community involved is definitely important.
Cheers
Sahar