All About Domains w/ Andrew Allemann from DNW

Esdiel

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It's all about domains... with Andrew Allemann from DNW 15.07.2021

Domain names can be a regular investment product: buy them and sell them at a higher price. Do you want to play the domain game? Find out how to build a solid portfolio with what we are most fond of: domains!

When it comes to investing, the main categories of products the public generally thinks of are stocks, bonds, funds, and ETFs. Most people are not aware of this, but the internet community plays its own game: we invest in domains! It requires time, knowledge, and effort, but some very smart investors have managed to live off domain investing. You need to acquire and sell domain names with a strategy and build a solid portfolio meant for short-term and long-term sellings. Keen for a challenge?

To learn more about turning domains into investment assets, we turned to Andrew Allemann. He is known in the industry for being the editor of DomainNameWire.com, which he has run successfully since 2005. Andrew also has significant experience with domain name acquisition, sales, and monetization. In this interview for our series "It's all about domains", he will explain how to build a solid domain names portfolio.


How does one start investing in domain names?
Every domain name investor's story is different. I got my start in domain investing when I was in college in the late 1990s. I registered a couple of domain names to build websites. I registered others that I thought would make a good investment. Back then, it was pretty expensive, and I was a poor college student. Many domain investors I talk to stumbled into domain investing because they had to register a domain for a project. They learned the process and got to understand why so many domains were already registered.

The barriers to entry are low. Getting started can be pretty straightforward. All you need to do is register a domain! The next step, becoming a profitable domain name investor, is much more challenging. Many domain investors make mistakes and waste money before figuring out how to invest in property.

I recommend reading the NamePros.com domain forum to educate yourself. Check out domain blogs like Domain Name Wire and consider a course at DNAcademy.com, which is the industry's gold standard for learning how to invest.


What kind of domains is worth investing in?
The goal of investing is to acquire domain names that a business or person might want to use in the future. Think about popular industries and terms related to them. Discover new terms in trade publications, books, blogs, etc. that might be valuable.

Then, there is the question of which domain extensions, i.e., which top level domains, to invest in. I primarily invest in .com domain names, which is the de-facto standard in the United States. Many potential domain buyers first look to .com domains, so it makes sense to invest in these first. The aftermarket, where already registered domains are sold, is most robust for .com domains as well.

I know that some people are pretty successful in investing in other domain name extensions. I heard of a domain name investor in India who has profited over $100,000 from .xyz domain names. I also know people who have done quite well with .co and .io domain names, which are very popular with startups right now.

I occasionally invested in other domain extensions, and I always maintained about 90% of my domain portfolio in .com. I haven't had any big sales outside of .com. I have sold a handful of new top level domains, such as .xyz, .vip, and .cloud, for about $1,000 each.


How is a domain name price set?
Domain names are unique assets, so the prices have a lot to do with the seller's negotiating position and how motivated the buyer is. Four aspects are particularly relevant to determine the value of a domain name:

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As already said, in much of the world, people prefer the .com domain. Still, in some countries, they desire ccTLDs, such as .de for Germany. Most two-three word .com domains sell for between $1,000-$5,000, but they can sell for more than this. You can see previous sales at NameBio.com to get an idea of what domains are selling for.


How can domain investors build a solid portfolio?
It takes time and patience to build a good portfolio. Don't jump in feet first: Try things out and have some success before investing too much.

Most domain investors report selling 1-2% of their domain portfolio per year. This means they hold onto domains for many years before selling them. If you acquire hundreds of domains per year and sell at this rate, it can take years before you start turning a positive cash flow. In other words, it's usually a long process to hit profitability.

Some domain investors make outbound sales, e.g., calling prospective buyers, to increase their sell-through rate. This is a time-consuming process and is not for everyone.

Most domain investors I know acquire the majority of their domains through expired domain name auctions. These are auctions where domain registrars sell domain names that people decided they didn't want to renew. It is an excellent way to build a portfolio quickly.


[ How to proceed with selling your domains via the auction process on the Sedo marketplace. Domain auctions at Sedo at a glance ]


How do you identify and reach your potential buyers?


I sell my domains this way:

1. I create landing pages on each of my domains. I announce there that the domain is for sale. People can contact me to negotiate a purchase.

2. I list my domain names on marketplaces such as Sedo and Afternic to get more exposure. They syndicate listings to other sites, including the domain name registrars, where people search for domains.

These are the two primary ways that most domain investors sell their domains. As I mentioned earlier, I generally don't make outbound sales, but this could be a possible approach as well.


What does the partnership with domain brokers look like?
Domain brokers usually take a cut of the sales price. They only work with the more valuable domain names, such as high-quality one-word domain names and industry-defining terms. So unless you own these great domains, it is unlikely a broker will help you sell your domains.

There are no qualifications or licensing required to become a domain broker. It is important to interview potential brokers to find out how they will market their names. Ask them about success stories. It is like hiring a real estate agent. The entry bar is low, so it is up to you to figure out which domains are best.


How do investors profit from domain parking while their domains are on sale?
Domain name parking pays domain name owners every time someone visits their domain name and clicks on an ad. Domain parking does not earn nearly as much as it did a decade ago, but some domain investors still park their domain names to make money.

I choose to list only "for sale" messages on most of my domains. I want users to focus on my final goal. Parking a domain can still be a possible solution other investors might want to pursue if profitable for them.


[ Find out how to monetize the domain names in your portfolio with domain parking services while looking for the best buyer. How does domain parking fit into domain investing? ]


Investments always come with a set of risks. What should investors be aware of?
Like other investments, you can lose every dollar you invest in domain names. If you register domain names that infringe on trademarks, you might be sued.

Even if you're a successful investor, it might take years to get where your sales revenue is more than the amount you are reinvesting to build your domain name portfolio. So start slowly and learn the basics of domain investing first. Keep in mind that domains are illiquid investments. If you suddenly need cash, the price you can get for your domains is probably less than you paid for them.

The key to reducing these risks is to educate yourself. Read domain blogs, domain forums, and learn from successful domain name investors. Never invest money that you can't afford to use.


[LINK TO ORIGINAL ARTICLE PUBLISHED ON INTERNETX.COM: It's all about domains... with Andrew Allemann (DNW)]
 
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Esdiel

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Pretty basic stuff but still a very good summary of issues, especially for people somewhat new to domaining. It covers lot of different things which are good to keep in mind, and there are quite a few links which lead to additional topics where they go more in depth.

What do you guys think of the 4 aspects they note as "particularly relevant to determine the value of a domain name"?

He noted these 4:

1. Commercial Value
2. Easy-to-Spell & Simple Form
3. Short Length
4. Meaningful Keyword

He obviously meant to keep it simple, and uses the word "particularly", but I think it's a very concise/catch-all summary of relevant aspects. The language he uses touches on other things that often to come to mind... Like the radio test, which would fall under "2. Easy-to-Spell & Simple Form"... Or two-word keyword domains, which is somewhat of a combination of #4 and #2, but yet also somewhat conflicts with #3 (but again, he's trying to keep it simple, and it's true in general that the shorter the better).

What do you guys think? Anything "particularly" important he failed to mention when determining the value of a domain?
 
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Esdiel

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How do you identify and reach your potential buyers?

I sell my domains this way:

1. I create landing pages on each of my domains. I announce there that the domain is for sale. People can contact me to negotiate a purchase.

2. I list my domain names on marketplaces such as Sedo and Afternic to get more exposure. They syndicate listings to other sites, including the domain name registrars, where people search for domains.

These are the two primary ways that most domain investors sell their domains. As I mentioned earlier, I generally don't make outbound sales, but this could be a possible approach as well.

I've been considering scrapping the #2 strategy he mentions since I get the impression it often just encourages people to avoid my Dan landers and lowball me elsewhere if they can (like GD auctions, Afternic, and Sedo - happens all the time).

While I don't always use BINs at Dan, I usually have the "make offer" setting at all the other marketplaces because it's too complicated to keep bin prices consistent across all these additional marketplaces. Thats said, I do think I would make more sales if I did include BINs everywhere... but it just seems too difficult to stay consistent and I'm afraid to make mistakes where I regret certain sales because i forgot to update my price(s).

Furthermore, I suspect having the domain listed on multiple marketplaces can also confuse some endusers. For example, they see a domain (w/ a Dan lander) where the price is $2000, but when they search for it on GD it says the minimum offer is $20. Some people definitely don't understand what's going or how it's possible. Almost like they think they can buy it for $20 at GD, even if it's an ultra premium listed at Dan for 50K... and/or maybe they think there's more than one version of the domain. I once had a guy ask me if the capital letters showing could also be minuscule. As if "Canada.ca" and "canada.ca" were different domains somehow.

In short, I'm afraid multiple listings confuses some people all too often, and if they don't understand what's going on then they are likely skeptical of paying too. "How can this domain be for sale in more than 1 place, and why is it cheaper on GD... etc etc etc?"

One downfall about abandoning this strategy is you need to ask whether someone who searches your domain on a site like GoDaddy will take the extra step to actually visit the domain... Sometimes I know they don't, since my analytics says they haven't. On the flipside, I can see people visiting a domain at Dan for 10 mins, and then go lowball me at GD moments later (even if they had the option to make an offer on Dan).

Sorry for the long-winded posts, but I've been thinking about this for a while now and wonder what you guys think.
 
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FM

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FYI: Sedo & InternetX are sister companies.
 

Esdiel

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FM said:
FYI: Sedo & InternetX are sister companies.

I did not know that but it makes a lot of sense. I really like InternetX, they are a great resource and publish a lot of great stuff.
 
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Bob Hawkes

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Esdiel said:
Furthermore, I suspect having the domain listed on multiple marketplaces can also confuse some endusers. For example, they see a domain (w/ a Dan lander) where the price is $2000, but when they search for it on GD it says the minimum offer is $20. Some people definitely don't understand what's going or how it's possible.

I agree the people probably find it confusing that the same name is listed various places with different minimum offer and possibly different BIN. Would be interesting to know if there was significant difference in exposure and sales from just listing one place.

If Dofo really got traction from retail buyers as the one place to find domain names, no matter the marketplace, it would make it less essential to be multiple places.

Bob
 
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