A domain auction seems like is a great way to go, right?
What better way than having 5 to 10 interested companies all bidding for their chance to control your valuable domain name. The time constraints along with competition might even drive the price beyond your expectations.
Or is it….?
Domain names are investments that appreciate in value. As an asset class, they have produced some of the best returns over the last 20 years.
When it comes time to sell your PREMIUM domain don’t make this rookie mistake.
If you have a valuable domain and are looking to maximize your return a domain auction may not be the best route to take.
Here are four reasons why this is not a suitable venue to sell your domain if it is valuable.
Two letter domains have appreciated in value and now regularly sell in the seven figures USD (see below). They are valuable assets because of how they create simplicity for customers to access brands and are easy to remember in any advertising.
There are only 676 two letter (.com) domains.
When you want to sell a domain of this caliber you have to create the desire and need in the future buyer’s mind. This takes time for strategic internal discussions. This is a significant purchase that will impact the foundation of a brands DNA. Auctions rarely align with the end user companies timing.
DomainGang.com captured the news on a recent auction of FO.com.
Here is a list of the top 2 letter domain sales from NameBio.com. These are only the sales that have been made public. I estimate that 75% of sales are not made public because of NDA’s or are private sales.
Clearly the auction bid prices for the auction of FO.com were not even close to market value.
First, it is essential to understand the general ways to sell your domain.
Different ways of selling your domain name will attract different customers who will value your domain much differently. Depending upon your needs each of these methods or venues will have a different appeal. Each of these ways to sell your domain will also have risks and produce different financial outcomes.
This is not meant to be an exhausted description for each of these methods.
Domain auctions will typically attract the wholesale or domain investor that is looking to buy and flip the domain for a profit. This means that they need to buy the domain well under market value. The positive side of this approach is that you will gain liquidity for your domain.
There is a strong market for selling domain names at auction. Many investors make their money just by finding great domain names and selling them at the different auction sites.
The key to being successful here is ensuring your domain name is priced to sell based on the audience you are attracting.
If you have a valuable asset and want to sell it, then using a domain broker is the option that I suggest. Domain brokers will do outbound marketing on your domain name. This is typically a combination of warm or cold outreach in the form of emails, mail, and phone.
One of the reasons why great domain names do not sell is visibility.
End user companies are limited by their creativity and options that are available. I often have startups & CEO’s telling me that finding a brand name with an available domain name and no trademarks is almost impossible.
If your perfect buyer has no idea your domain is for sale, then it will never be an option or them.
Using a domain broker will ensure your domain is marketed to end-user companies. Outbound marketing and cold calling is a tough game so make sure your broker has a robust marketing plan.
If your domain name is in front of decision makers, then when the timing is right your, domain will be an option.
Another strategy is just to wait for a buyer to find your domain and make an offer.
This can produce some of the highest sales for a domain name. You as the seller typically have the power position in the negotiation.
The drawback is that most great domains are never found. This method of selling your domain can take a very long time with no guarantee when it will sell.
Also, most of the people inquiring are kicking tires or investors looking for a great deal on your dime.
Think strategically about how you plan to sell your domain name.
Domain auctions are not the way we recommend to sell your valuable and premium domain name. Chances are your perfect buyer will have no idea your domain is at auction. Buyers need more time for approvals and building use cases for a premium domain name. This timing typically does not coincide with the auction timing deadlines.
A domain auction format can easily set an artificial ceiling in the minds of your perfect buyer.
Each way to sell your domain name will attract a different customer that will value your domain differently.
Establishing the value for your domain name is directly impacted by how and where you market it for sale.
Any questions? Feel free to contact me to discuss your approach.