Categorized | Domain Name Auctions

Thoughts About the ROTD NamesCon Auction

Posted on 25 January 2017 by Andrei

In my opinion, it’s important for domainers to figure out exactly what they want from live domain auctions because right now, there’s a lot of confusion in the air. Therefore, I’ve decided to share my thoughts about the ROTD NamesCon auction today.

Let’s get started.

A grand total of $1,400,000 – $1,500,000 in sales is decent; not spectacular but definitely decent in my opinion. About 77% of the domains sold, which is really, really great; I love the fact that NamesCon auctions have very high sell-through rates because at the end of the day, that’s what I think domainers should want from a live event, a venue through which they can generate liquidity by selling inventory to other investors. I think the sell-through rate is a much better indicator of success than the grand total.

Why? Simply because the grand total can easily be skewed by even one blockbuster sale. To illustrate this, let’s imagine a scenario.

We’ll assume an auction event takes place and that 100 domains are offered for sale, all of them at very high reserves which would make sellers very, very happy. However, this also means buyers won’t be tempted to participate and in the end, only one domain sells: for $7,000,000.

A headline about the auction could easily be something like “Auction Event Generates $7,000,000 in Sales” because again, the grand total is a very limited metric. Someone who didn’t know about the auction might think it was a smashing success despite the fact that only 1% of the domains sold. This is an exaggeration of course but I’m sure you get the point.

What I’m trying to get across is that I’d take an auction with a high sell-through rate and a lower grand total over one with a higher grand total but a low sell-through rate any day of the week. And twice on weekends.

At the end of the day, what is a live auction anyway?

It’s an event at which domain investors bid on inventory.

If you’re listing domains at auction with the intention of hitting the lottery, you’re doing it all wrong. You should be listing them because you want or need liquidity and are as such willing to accept a market price that’s lower than what you’d get by selling to an end user. Maybe you get lucky and a bidding war brings prices higher than expected but the same way, maybe the price will end up lower than where you would have wanted it to be.

Some people have been saying that auction houses should bring end users to these events… I don’t get it.

An event like a live auction is anything but the proper venue if you want end user sales. Getting end users to show up at an exact date, finding end users for all of the domains that are being auctioned and all that… why? Why would that be the best solution?

In my opinion, it might be one of the worst.

If you want end user prices then:

1) Hold your domains and wait for end users to contact you (a strategy which tends to generate higher sales prices)

2) Find potential end users and reach out to them

3) Hire a broker to find end users (no I’m not saying this because I want people to hire me as a broker; I charge a mere 5% and therefore ONLY pitch domains to other investors, I’m the exact opposite of the person you’d want to hire for this; I’m a better fit for brokering short domains where broker-dependent price variations are lower and as such, my low 5% commission ultimately enables people to keep more of their money)

… all of these are much better approaches for those who want end user prices than listing them at a conference frequented by domain investors, thinking that the auction organizers will or should find end users for you and get them to start bidding on your domain at a precise time. Seriously? I mean come on, most end users can barely initiate a transfer. You want them to:

1) sign up for a NameJet account

2) go through the verification process

3) be online at the exact time of the auction; what if they’re from Europe like me and this would require them to stay awake until 5 am?!?

4) go through the hassle of waiting to be contacted by the auction organizers, perhaps even being asked to use an escrow service if the sales price is too high?

… again, does this seem in any way logical?

Most end users are:

A) close to Internet-illiterate, in which case even getting them to do basic/easy stuff is hard

B) companies with specific and most importantly inflexible policies… what if the auction is held after business hours or even when it’s 4-5 am in their country?

C) people/companies that quickly lose interest; to get them to bid during the auction, you’d have to contact them weeks or months in advance and as pretty much all of you know, a lot of potentially juicy sales will be lost this way due to end users moving on or losing interest

D) deeply entrenched in their comfort zones, which means getting them to do something outside the box will be an uphill battle to put it mildly

… again, it just doesn’t add up.

What I for one want from a live auction is simple: liquidity and reasonable prices.

The ROTD NamesCon auction sold a lot of domains. Again, 77% of them. Major plus.

For most domain categories, the prices were higher than I would have expected them to be, which is why I didn’t buy any. New gTLD sales have been a disaster but that was to be expected because well… they tend to suck for investors. For everything else, the prices have been either at or above market value. As such, it’s clear the auction didn’t obtain a 77% sell-through rate by sacrificing sellers. Not at all.

The system, as in live/offline bidding integrated with online bidding, worked quite well. I placed a few bids and found the process fairly straightforward. Again, another major plus.

Oh and the inventory was juicy, with a lot of domains being offered at no reserve. I would have most definitely NOT stayed up until 5 am otherwise.

For these reasons, I for one consider the auctions a success.

I don’t work with ROTD, I have no affiliation with NamesCon either. No skin in this game at all for me. I do however believe that DomainingTips shouldn’t just involve me telling domainers what sucks (for example new gTLDs as investments!), we as an industry and me in particular really do need to develop the habit of congratulating people when they do well.

And the team that organized this event did very well.

Congrats and keep up the good work!

3 Comments For This Post

  1. Martin Says:

    End users in a live auction is like adding fuel to a fire. A definite yes.

  2. Andrei Says:

    @Martin: the thing is, finding end users requires a lot of time/energy and it would therefore come at a price. Would you for example be willing to pay a 2x higher commission?

    Otherwise sure, if the commission stays the same, I’m all for any extras that are free 🙂

  3. Web Hosting Jobs Says:

    Yeah new Gs suck for investors, this auction showed it.

    Also this shows how weak the .NET market is. I mean .NET is great for development but not clearly you have to choose wisely. I thought some of those would go into 5 figures.

    It’s investors selling to investors…