Rick Unleashed on Auctions….Part 2

Part #2

I am sick of falling asleep in the auctions. I am sick of the hype without
the substance. Domainers bare some responsibility. Stop submitting domains with
no stats. NO STATS = NO RESERVE! If folks don't want to provide stats then folks
should understand that auctions are not the proper route. Plus no reserve does
not mean 'No value.' It just means that it is going to sell right then and there
for what the market deems is a fair price.

1. Forget what the auctioneer tells you is the proper way to handle bidding
at an auction. He is wrong and I will reveal why in a moment. Not every
commodity being auctioned off works the same. But for starters, starting at a
low but reasonable number engages more people as opposed to trying to get the
'Price' right out of the gate. Even if I were to target that domain to buy, why
would I?? Why would anyone? If not a single peer will pay the opening bid THAT
says a lot. It says you are overpaying the market value in almost all cases. Why
make an overpriced bid? May as well wait until after the auction and make a deal
at a lower price. So you don't need an auctioneer if he won't run the auction
for DOMAINS. Not houses, not art, not jewelry, not collectibles.....Domains!

2. If you have a domain and it is priced over $10k it MUST include stats of
some sort. If not, then there should be no reserve. Simple as that. Alexa
numbers are not stats. Tell me how many unique visitors it got last month and
how much it made. That isn't asking anything other than 'Is there an engine in
that car?' If you want to sell the domain stop being scared to release stats. A
domain with 100 monthly visitors may have great value to someone because you can
grow that 100. It is infinitely harder to grow from zero.

3. Start low. On a $50k domain maybe $10k. If nobody is willing to bid
$10k, move on and do it quickly. If someone does bid $10k don't waste everyone's
time looking for $10,500 or even $11k. You should go to $15k. Point is the
increments are important. It builds a foundation of bidders and THAT creates
excitement and a better chance of a sale.

When 4 people bid $10,000 on a domain it create a 'Floor.' A Value. So then
the $50k becomes less of a risk. If 4 are bidding $40k you have an idea that
others see value as well. That gives people confidence to bid it up higher
because the true value comes to the surface. Even if the domain does not sell
and the top bid is $22k, the seller can come back next auction and instead of
$50k, he may be at $25k and that may be a different outcome. If many people bid
at $40k I realize I can buy that domain at $50k and likely have customers at
$40k. Then the sale is not a $50k RISK. It becomes a $10K risk and that is a
HUGE incentive to buy. It's a huge difference. It's a confidence builder in a
world that has yet to put much confidence in domains.

4. Reserves should not be announced before the auction. Loose price
categories are fine. 'Under $10,000' '$10k-$25k', '$25k-$50k', $50k-$100k'
$100k-$250k' $250k-$500k, $500k-$1M, $1M-$2M, $2M-$5M. Does not have to look
exactly that way, but it is a better guideline.

'No reserve' domains can even open up with a minimum starting bid. That is
the way you do it if you want to start the auction at the reserve price. But
those have to be less than $5000. It does not work on the higher end domains as
was the original motivation for this post.

5. Bidders create value. They are the true valuations of the worth of a
domain assuming you have a qualified audience. Walking away with not so much as
a REAL valuation is really shortsighted. I even believe records should be
memorialized to show the high bid of each domain.

Not showing reserves will help eliminate 'Show bidding.' What is 'Show
bidding?' It is when you bid high on a domain that you know what the reserve is
but don't go to the reserve with the only motive to look like a big shot in
front of everyone. In other words, let's say you have a domain on the block with
a $10 million reserve. The bidder bids $9M knowing there is no way they would
buy it at that level and knowing there is no way the seller will sell at that
level. I know some that do this over and over again and without advertising the
reserve in advance eliminates this problem and these showoffs can take it
somewhere else.

6. Stop telling me how great a domain is. Show me the damn stats and stop
the BS! Tell me how many visitors last month. If it is zero, then what justifies
the price to wholesalers if they can't buy and get a 2x, 5x, 10x return? Alexa
is NOT stats. Google is NOT stats. If you are not prepared to share stats, you
are not prepared to sell the domain name. We are wholesalers not end users.

7. Great domains at reasonable prices will always sell. Computer.com and
Camera.com would still sell today even in this market. Great domains are great
domains in any market.

There are so many more points to make. I probably have not done an adequate
job of articulating everything I am thinking. It is difficult to explain. It is
a big subject with many subcategories. But I hope this opens up the
conversation. I don't have all the answers but I sure as hell know when
something is not working properly. We don't have the luxury of getting it wrong
in the future. Way too much time has already been wasted on crap that won't sell
and prices that make you chuckle with disbelief. I will post Part #3 soon

Have a GREAT Day!

Rick Schwartz

5 thoughts on “Rick Unleashed on Auctions….Part 2

  1. Andrew

    I’m perplexed. I thought you were anti-stats in the past. Intrinsic, generic value. Or are you just opposed to revenue multiples?

  2. Rick Schwartz

    Different domains and different audiences require different weights given to different attributes of each domain. I see no rule of thumb. Just guidelines. Some domains are one dimensional and stats are the only thing. A really good domain has many other attributes to consider. Stats is just one. My problem with everyone is why hide it? Let the buyer give the proper weight in their eyes.
    On the other hand as an investor not flipping domains but holding long term, I am not interested in selling my domains wholesale to the industry. My focus is different. So when a guy wants one of my domains and he has only one dimension that he considers, I won’t waste my time.
    I wear many hats and I look thru the eyes of many people. Stats inside the industry can only help make the sale.
    I think domainers that are seriously wanting their domains to sell should want to provide stats. I think I would rather put a domain in an auction with stats than without. So if you get 100,000 submissions, and 1000 have stats. I would start with those domains with stats and give them more of a chance to reach the live auction.
    Also separate live auctions from silent and any other type sale. In a live auction, your duty is to give the info. If that is not something folks are willing to do, then I say auctions are not the proper venue.

  3. Kristoff

    “On the other hand as an investor not flipping domains but holding long term, I am not interested in selling my domains wholesale to the industry.”
    “I think domainers that are seriously wanting their domains to sell should want to provide stats.”
    I think you’re starting to get closer to the real issue with these comments Rick.
    Wholesale venue + inferior products, coupled with a retail mindset and price expectation, yet no supporting quantitative data (which is what drives the D2D market)
    = Lackluster interest and abysmal sales

  4. Terence Chan

    Sorry, I’m a bit puzzled about the mathematics here. Hulu.com had no stats to shout about, today they are a highly profitable outfit generating more profits than Youtube.com with a name many domainers would consider unmonetizable.
    Should everyone selling a domain in an auction resort to pump and dump domains with the hundreds of shady companies out there offering this service? How will a bidder trust a regulator for these stats after the dirt and ‘look the other way’ in the subprime fiasco, Wall Street and Madoff are still fresh in people’s memories?
    Just puzzled.

  5. Successclick

    Hi Rick,
    Thanks for allowing me to comment. Let me be Devil’s Advocate here if it’s okay.
    First of all, in today’s totally upside down PPC revenue monetization paths, STATS MEAN CRAPOLA. They don’t say anything about the value of the domain and I will bet that 90% of your readers will agree to this…
    Why is this? Because there is no transparency in PPC rev payouts. Who knows what the PS’s are keeping and what percentage they’re paying out? Unless you have a direct friendship relationship with the execs at these companies, you’re GOING TO GET BURNED, save one or two PS’s I still believe in. I lost faith in one I’ve worked with for years, made them hundreds of thousands of dollars, but I suppose their acquisitions kind of put them in the”hole” a bit, so payouts dropped 80%, and my refcomm was cut to 5%…
    These types of moves show even less confidence in”stats”. Stats from whom? Stats on what? Uniques? Visitors? Hits? CPC avgs, CTR’s? WHAT???
    A domain now has to be looked at from its RAW VALUE and evaluated by someone who has years of experience in understanding the many intricacies of building a domain’s value.
    Did you EVER expect ireport.com to make you $750k? Nope, and I bet that without CNN, your stats on that domain put its value at about $15,000.
    I own”i” prefix domains more prominent than”ireport.com” and I don’t get anything that would come close to the real value of the domain if it was sold or built out and branded.
    You cannot continually make your arguments about domain values based on your knowledge obtained from your investments and experience back in 2003 or even 2007. This is 2009, and the landscape in domain valuation has changed drastically. Every domainer knows this. (If they don’t, they’re not a domainer).
    Those times are over, my friend. I know many domains, just as BRANDS or future trends, that can pull in $100k in an auction if SMART END USERS were involved, not incestuous domainers recycling domains hoping the next domainer will give them a 20% uptick on their purchase price a year before.
    Unless you are a PS with 400k domains and able to analyze your daily income reports based on typein or other backlink or templink traffic FROM THE SOURCE, you are just a pawn, and you’re going to lose value on your domain every day you allow it to exist without getting it developed with some sort of content, hopefully original. With PPC landing pages, your domains will never be SE indexed, and consequently, will never bring in organic traffic value or build that”confidence” image that so many end users want to see on a domain when you offer it up…
    End users don’t like going to a domain and seeing it loaded with adlinks. Period. Or doing a search on the domain’s generic phrase and not seeing the domain name website (landing page) coming up because SE’s don’t index parked domains.
    So auctions aren’t boring because”stats” aren’t available, and domains aren’t”over-rated” if they don’t show stats, because I have domains that are making only 20% of what they made every year for four years. Are those generic descriptive domains worth less because PS’s and their ad aggregators are playing games with their payouts? No way.
    I’m not selling DOWN my domains because the PS’s are consolidating and acquiring. Those who control the revenue path from Google and Yahoo don’t have to reveal anything to you, and they can adjust their rate of payouts whenever they want. You are their sucker if you believe your domain’s value is based on what they’re paying you.
    Thanks for letting me speak about this. I’d like to hear your thoughts about domain values based on an OVERALL perception of their value, from the view of a variety of monetization paths and a good understanding of marketing a brand name.


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