What Happens in Vegas .. Happens Everywhere
I just spent a few days in Vegas at the TRAFFIC convention.. man that town will chew you up and spit you out if you let it. 
The night I left town Josh sent me this link which focuses on an interesting observation.
While $4+ million worth of domain names just sold at the Las Vegas TRAFFIC auction, the real story is that actual bidding totalled more than $30 million.. I bid at least a million dollars for names that I didn’t win.. Others did too. All-tolled there was more than $20 million of unrequited love, bids never to matter, a desire to own domain names that would not be satiated.
Again for impact, more than 20 million dollars of cash-money was bid in about a day (8 hours over two days) by a handful of people who wanted to own just a smattering of domain names. Some of these names were good, many were just average, few would have blown the average man-on-the-strip’s hair back. The would-be suitors were there with cash in hand, and many (like yours truly) went home empty handed.. or nearly empty handed.
All this happened during a week in which markets corrected, new credit/banking problems came to light, mortgage rates inched higher, inflation made headlines and other generally bad stuff happened or was foreshadowed to happen in the broader economy. It happened with less than 600 would be bidders worldwide in attendance! How can that be? Several reasons..
–1– Because for the most-part, domain names are un-leveraged.. they have no debt on them.. and sellers can afford to tell you how they really feel by declining what you view as a generous overture. There is no incentive to “sell now” when your cost of carrying the investment is nil to low.
–2– Because the shift of offline publishing to online is only getting warmed up. Much promoted but under-delivered, just 7% of advertisers are online vs. 93% offline.. Domain registrants who understand the significance of their investment are sitting on the sidelines whispering “come to Papa” under their breath, knowing that you are not the first (or last) guy to try to wrest a name away with the siren call of cold hard cash.
–3– Because a good domain name is like a storefront.. and you can’t buy a decent storefront for 50,100, 200 thousand dollars these days. You can’t buy a bad storefront in Rachel Nevada for that, you can’t even buy the bathroom fixtures in a storefront on the fabled Vegas strip for that. Not good ones.. not a bad ones.. Not any-ones. Only about 7% of all domain names registered (11 million names worldwide) mean anything to anyone at all.. The rest are pretty much speculative crap that somebody has convinced themselves are good.. a virtual boulevard of broken dreams – or breadcrumbs of back-fill massaged into the meat of good portfolios; painstakingly built by smart investors like you.
Those truly good domain names are what constitute the entire “visited” Internet. The “Internet that matters” exists on the domain names which matter to anyone other than you.. More on that another time.
If there’s one thing I know for-sure folks, it’s that Las Vegas is not the only home of lonely hearts and unrequited love. What happened in Vegas the other day, happens all around the world each and every day.. Hundreds of millions - billions each year are offered for domain names which will never sell.
What’s a domain lover to do?!? Sigh.. Perhaps I’ll have more luck at the Affiliate Summit Domain Auction at the Rio Suites this coming week.
Reading your story of attending the auction, bidding over a million dollars in bids, and going home empty-handed….has to bring a moment of pain to anyone with a business mind. “Damn, we got this guy to travel across the continent, show up for our auction, and then he goes on home with over a million dollars in his pocket, which could have been ours…..” or something like that. Now, I recognize that you might not have ended up spending a million if some of your bidding was successful. But regardless if you would have spent two hundred thousand or a million, I still get a feeling of money left on the table….or inotherwords, the event is over, and there was still money in the room that didn’t get spent. Regardless of the market outlook going forward that those consignors must have had, it is clear that there were too many high reserves in the auction.
I know that you are a vintage car enthusiast, as am I. For many years I attended vintage car auctions, and usually the average was about a 35% sale rate. But once in a while, there would be an auction with a 100% sell rate. This was because one of the three D’s was at play (death, divorce or debt) and a collection was being sold that was all owned by one collector, all at no reserve. So any top bid would win the lot, no matter how low. What always amazed me, time and time again, is that at these auctions there would be a big turn-out of people and often the prices would be sky high. When I first saw this phenomenon, I thought, “wait, this is supposed to be a fire sale, this is supposed to be an auction where there will be deals, because it is no-reserve on every lot”. But I came to realize that precisely because of that, people knew each lot was going to result in a sale….and they ended up bidding up to the moon.
So jump to the Barrett-Jackson auction, which you link to on your blog. For many years, there were at least two big auctions of vintage cars in Scottsdale in January, and B-J was not necessarily the big sale. Kruse put on a great sale too, and Dean Kruse was the king of collector car sales.
B-J would have their sale, and if a car did not sell, there was often an effort to put together a post-block sale. At the end of the weekend, there would be one total for dollars on the block, another total of dollars for post-block sales, and then quite a few cars going home. Often the no-sales were due to high reserves. Well, Craig and Brian Jackson were smart guys. They saw this and they decided that they were going to scrutinize the consignors at consignment time…hard. If your reserve did not make sense, your car was not going to get consigned. And many people said they were brutal about it, but it paid off big time. Now you didn’t have a situation where a nice car crossed the block, lots of bidders tried to win it, and then it went off as a no-sale due to a high reserve. Less bidders were going home after the auction with money still burning a hole in their pocket (I am picturing a cartoon of Frank looking out the window of a circling private jet, smoke is seeping out of his clothes because the money is burning a hole in his pocket, and he is surveying the landscape below, desperately trying to find an auction where he can spend his money!).
Then Barrett-Jackson went one step further. They proclaimed that their entire auction would now be completely ‘no reserve’. Everyone in the industry at first said ‘no way will this work’. But enough consignors went along with it so they didn’t have to worry about the naysayers, and the rest is history. The B-J auction has gone on to be the most successful in history. Each year now they are selling about one hundred million dollars of cars over a long weekend. Bidders attend knowing every lot will be sold. I imagine there are bidders that do not attend other auctions and just go to B-J because they know there will be no disappointments with unrealistically high reserve prices.
Watching the TRAFFIC auction this week, and hearing of your experience, reminded me of this.
“Only about 7% of all domain names registered (11 million names worldwide) mean anything to anyone at all..”
“Those truly good domain names are what constitute the entire ‘visited’ Internet.”
“No domain names, no Internet.. Buy all the domain names, control the Internet.” (from your Nov 9th post)
It’s all starting to click
Hi, Frank. I’m the one who posted the original post on this on my Big eDuh site at http://bigeduh.com/domainnames/the-bigger-story-domainers-are-offered-and-walk-away-from-over-26m-in-bids-at-live-moniker-auction/ and am getting blasted for it. (I’ve been tracking this “not sold” phenomonon for a couple auctions, after blogging real time on the sales, paddle numbers, and high bid on what is not sold.) People who are being critical of the numbers (that I was merely reporting), are focusing on the reality that on some of the numbers (I wasn’t in the room) the auctioneer was the one bidding. I mistakenly thought that was only the case for the first bid. Nevertheless, there was an awful lot of money left on the table, (either by rejected bid, or high reserve) that domainers are walking away from, and that to me, is the bigger story that nobody has talked about until now.
[…] SevenMile.com The link in question is here. Note that many of the 26 mills unaccepted bids were not real, as the […]
[…] SevenMile.com The link in question is here. Note that many of the 26 mills unaccepted bids were not real, as the […]
Niiice, leste om deg i “dagens it” . Skjønner meget lite av det dere greiene du driver med.
DU eier 370 000 adresser, jævla mye det.
Hva du gjør egentlig, eier adressen så leier den ut til et firma som er intressert i den hjemmesiden ? Er Insane Intressert i å starte i det små, hadde vært konge om du hadde hatt noe bra tips/triks eller noe som helst utspill å komme med
Kind regards Norway
Because a good domain name is like a storefront - Welcome back Mr. Shilling! I like to think of good domains as commercial real estate. My domains are my office building(s)- High Rise!
Bears make money, Bulls make money, Pigs get slaughtered.
Forgive me Frank, but you seem to be chastising these domainers lower down the food chain, while you yourself wouldn’t sell a domain for anywhere near a reasonable market value. I know that for a fact because I myself, along with about a dozen of other domainers and developers I know, have made you substantial offers on mediocre domains in your portfolio, to which you didn’t even bother to respond. You are of course absolutely entitled to ignore unsolicited offers, but at least don’t come out swinging on people that are taking your own “grand slam” reseller approach. I have a tremendous amount of respect for the you and your accomplishments, but this particular blog entry seems to have a slight under current of frustration.
***FS*** Thanks for this and sorry if it came off that way.. I don’t respond to offers.. that doesn’t mean I shouldn’t.. I just don’t aggresively pursue sales. I think many of the names that were offered at traffic were cheap from an ‘end-users’ perspective, but the traffic show mainly caters to domain investors who are looking to offset the cost of their investment with cashflow.. and many of those names didn’t have enough of that cashflow to warrant a deal so to that end those names were pricey. Hope that makes sense. I know what you mean.. I should probably spend more time engaging sales but there’s an oppty cost there. In the final analysis I wish all those sellers the best.
They need to stop with the Shill Bidding/Bidding for the House/Bidding on behalf of the seller….whatever you want to call it.
Those bids aren’t real, and it doesn’t matter if they announce before hand that there will be FAKE bids or not. It is not in the best interests of anybody for legitimate domain auctions to include bid amounts that absolutely nobody is prepared to pay.
It is a disgrace, and ranks right next to appraisals when it comes to dishonesty in the business.
They may say it is common practice in auctions, but I would never spend ten cents in this fraudulent atmosphere. I hope they go out of business for trying to entice people to bid by using these dishonest tricks.
Frank,
Sorry to disillusion anyone here, but the Moniker Auctioneer bids himself below the Reserve price on behalf of the Buyer. I know this to be true because Monte told me himself. If you listen carefully at the beginning of the Video coverage you will hear the Auctioneer mumble something to this effect.
Apparently, this perfectly legal in the old USofA, but don’t kid yourself that those passed bids actually mean anything. I can assure you most of them don’t.
During a month, I may bid on 30-50 names, but typically only win 5-10 of them, using the majority of my budget.
The bids I place in terms of dollars, may be several times what my budget is. If I won the first few names, I would not be bidding on the others.
From my perspective, it’s irrelevant whether the non-winning TRAFFIC names were bid to $2k, $20m or $2b - to discuss it as if it matters is just fluff and nonsense. The only thing that matters are actual sales.
I see $2.5M was bid on customerservice.com. In your last post on “Ask Frank a Question” you said you’d pay 50k for that name. What’s up with that?
***FS*** I personally think that name was overpriced.. that was my gut as to the value-line at the time.. Perhaps I was a bit low but I’d still peg it bellow 100k
If you attend the auctions, it is very easy to tell if the domain sells or not regardless of the actual auctioneer bids at the beginning. If it sells, the winning # is announced. I can see this being harder to discern online, but they place lower bids to get action even below reserve. In person and if paying attention, determining which names actually close with a sale is not that difficult.
Here is the one thing that is more difficult to tell…guys in the live room who are actually bidding online. I know 1 guy who was doing both, hiding some of his bids yet making others known. Obviously part of his strategy.
Would be extremely interesting to get a bit more insight in the technology, software etc that you are using to manage your domain names. I’m currently using http://www.bulkowner.com but it doesn’t support management as many as 370.000 domains
Great blog by the way!
Cheers from Isle of Man and Sweden
Hello Frank,
It’s so hard to evaluate what value in a domain is.
This week I have my first domain in auction. It’s going for $2000 (reserve met) at SEDO.
When I read your post I feel like I’m letting it go for a song. On the other hand, I could probably replace the domain with another 100, including four or five as good for that money. In February, the domain earned $101 from 2000 visitors. In fairness, every month has been at those figures.
The name of the domain is a DogRule.com.
The domain would be great for dog training site. I had this domain planned for development in this direction: a dedicated review site to dog training methods. But we have a lot of web development projects on the go.
So, here I am selling off a pretty good domain but it’s going for pocket change. I wonder would a domain like DogRule.com have done better at Traffic?
I put it into auction, as one never fully understands a system until one goes through it. So as a first SEDO auction and a first domain auction, I’m hoping to have a real handle on the selling end. I have some pretty good ideas on how to buy but without an idea of how to sell, there’s not a lot of point, unless it’s invest and hold or invest and develop (both very capital intensive).
On the other hand, I do hope I’m not letting a jewel go for a song.