Does your domain portfolio need a spring clean? Here are a few things to think about to improve the quality of your domain portfolio. First you need to stand back and take a realistic assessment of it’s value. Secondly, you need to cut out the weeds and focus on the domains that really matter to you. And finally, you should consider future trends and where they might lead you.
Realistic domain valuations
Looking at domain sales, it is easy to think we can become overnight millionaires. Very often we fail to see the lead generation and marketing required to pull off such deals. And it really doesn’t help if “reputable” companies are handing out over priced domain valuations. Don’t get me wrong, the valuations by companies like Moniker are recognised by the IRS but that doesn’t go far enough.
I think accurate domain valuations are very important to this industry. Clearly there is a big difference between a desired return on investment and what you can realistically expect. One of the problems with domain investment is that renewals can be very cheap, many people just sit on their domains, holding out in vain.
Sometimes you find a disconnect between a professional domain valuation and the reserve price accepted for an auction.. not a good sign. I have seen this, where a reserve was set at 50% of a valuation yet rejected for auction by the same company. And while no reserve auctions are great crowd pullers, you better make sure you’ve done your homework.
It might be helpful to think about the value of a domain as a spread; a lower amount for which it would easily sell and an upper value for competent brokers and end users. Would you prefer low end liquidity or high end risks? - just remember, in a fast changing world, greed can hurt you.
Raising the quality of your domain portfolio
Fortunately, improving the quality of your domain portfolio is quite easy.
Be clear with your intention. When buying a domain name, will it be a short term flip or a long term investment?
Budget for domain renewals. A lot of people will buy a “hot” domain only to let it slip their mind as more important projects come online. Equally, a lot of people over-stretch their mark; buying up lots of domains and having cash flow problems one year later. Know your limits.
Be ruthless. Cut out the weeds or segregate all the stragglers in your portfolio; the ones with no traffic or of no real interest to you.
Think branding and specialisation. What motivates you? Modify the focus of your investment and concentrate your efforts. There are a few approaches you can take. You could, for example, protect and strengthen your brand by aquiring domain sets; same domain with different extensions (.com .net .info etc). Another way might be to concentrate on quality domain extensions with industry high renewal fees such as .fm and .tv. High priced extensions motivate people to build on them. Putting more of your money and effort into just a few names will focus your mind.
Build your domains. When you focus on fewer domains you will build on them. And the more you build, the more income you make and thus supporting a higher asking price.
Future trends
As the domain industry matures, I see a greater role for insurance, allowing companies like Moniker to put their money where their mouth is when they claims “no domain lost”. That should help to bring more realistic valuations.
I also see a huge market for designer and invitation-only domain extensions; anyone up for dot Gucci?
Listening
Grapevine