With the announcement by the TRAFFIC show organizers yesterday that there would be up to three live domain auction at TRAFFIC the question is will this result in an overall higher amount of sales?
Here’s our take.
This is pretty much a zero sum game.
Lets say there are 500 people attending the conference in New York.
Each person comes with a budget in mind for buying domains. Of course budgets are sometime bent somewhat, but if someone has a budget of $5K or $50K, does that budget exponentially grow because there are three live auctions?
We think not.
We think there is only a certain amount of money each person is willing to spend and that sum will be split up amongst the auctions.
The only way of increasing total sales would be to get more than the usual suspects to the auction table to bid on domains.
We of course will have to wait until September to see what the results are, but this is our early prediction.
What you think??
Hi Mike,
I think the method behind the madness is multiple companies all promoting their domains to customers…..but more importantly, the end user and others. Each will be doing their own extensive PR. It may not end up taking in more dollars, but it does raise awareness in the #1 business city in the world. It does create competition and choice as well as expansion. It creates an exciting event at a time where things in the economy are not the best. It basically provides the industry with a bit of a spark. We are making extra efforts to get the media to cover these auctions.
This was not an easy decision. Something we have wrestled with for quite some time. From the initial reaction, I think domainers like what we are about to do. No question that this may be a game changer. I hope at the end of the day that it becomes what I envision. We have never been scared to try new things. I think when we left New York City last year the entire industry was elevated and now with the return and lots of new and exciting things, I think this will become a landmark in the evolution of the industry. That is our hope and goal. Time will tell and everyone will be watching how it all unfolds.
I don’t think the problem at the past few auctions has been buyers spending their budget as much as it has been domains with very high reserves.
An increase in supply (domains) with a constant demand (buyers) would hopefully create a situation where more total names end up being sold. At the very least, if x% of domains sell at the current reserve prices and the volume is increased 3x, then more total names will sell. If the increased competition encourages sellers to lower the reserves, then an even higher volume of domains will sell.
Or maybe not… I’m surprised at the domain business every day.
Rick
Thanks for the insight.
Of course we are all hoping that this move will increase the total number of domains sold and total sales price.
If additional marketing can pull in non-domainers the game will have changed.
“Each will be doing their own extensive PR……Each will be doing their own extensive PR.”
This is what will make THE difference!!! This could be Huge!
Added to this, hopefully the new auctioneer will not have a similarly Draconian exclusivity clause… I’ve talked with more than a few folks that won’t even bother to submit names now thanks to that little item… now that Snap, Moniker, and DomainSponsor are all under that same restrictive contract, it makes perfect sense that Rick would create another option. Good job Rick.
Low ad exposure for live autions?
It look likes a subject I have been pesting about many times in the past…
NO COMMENT.
If you really want to generate some meaningful PR in the domain auction space, convince Southebys or Christies to enter this arena.
Just that event alone would create excitement & broaden the audience base.
The recent Monet auction (Christies/June 08) generated $80 million for one painting ‘Water Lily Pond’.
And there were no problems with min. reserves!
Rob
Rob
Go to work on it.
At thie stage of the economic situation, it is more important for this industry, that more domain names are sold, (even for lower prices) versus a few domains selling in the millions.
The total sales amount in dollars may or may not go up, but the volume needs to go up. Otherwise, a lot of small domainers will get fed up, and we will see a consolidation in the industry, with just a couple of companies or individuals holding all the good stuff.
In the long run, this is not good for the industry.
More live auctions is the way to go. Keep it up Rick.
Mike,
” This is pretty much a zero sum game”
I don’t agree, in theory, it should add to sales as Rick pointed out with multiple PR channels.
A comment Frank Schilling made in February in regards to the TRAFFIC Las Vegas auction was pretty insightful.
“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.”
The budget whether 5K, 50K or 1M is irrelevant if they go home without getting close to spending a majority of that budget.
The issue of sales lies with the reserves.
They go home empty handed or nearly so, not because of the quality of names, but because of unrealistic price expectations.
This is a classic case of a falling economic market where there are buyers still willing to buy albeit at lower price points.
We are in the lag period where sellers price expectations (reserve prices) have not kept pace with economic reality.
When reserves are lowered selling will pick up, but not before this happens.
Having 3 auction co’s may possibly expedite this if they understand this and have a more stringent screening process based on declining prices and make sellers readjust their reserve prices downward before excepting them for auction.
IMO I don’t think this will happen, yet, as domains only recently have experienced this economic constraint. It will take some time for auctioneers and sellers to either cave in to the new pricing reality or unless they have a dire need for cash.
Koz