REDC the company that bought the domain auction.com for just $1.7 million earlier this year, announced that they just completed an online nationwide foreclosed property sale, using the domain auction.com.
The sale generated $31.7 Million in sales.
The online auction using auction.com, offered 770 assets in 45 states and saw traffic from thousands of online bidders from August 3 through August 23.
The properties auctioned ranged from million-dollar mansions to smaller single-family houses.
“This was our most aggressive foray into auctions on a national level, and it was a tremendous success,” said REDC/Auction.com CEO Jeff Frieden.
The next monthly auction, to be held from September 21 through September 26, will feature foreclosures in more than 40 states.
Makes that $1.7 million paid for the domain looks pretty cheap, doesn’t it?
#1 Case study for Dummies for Domainers.
Not so fast Mike and BullS. These are not related events.
They would’ve rung up a similar amount even with their previous domain name. While the better name doesn’t hurt, the $1.7 M will take many years to pay for itself.
Dc
How do you know?
The domain I’m sure helped in the marketing and getting bidders.
No one is saying all these sales couldn’t have been done under the old domain but some additional exposure might be directly due to the domain.
All it takes is one multimillion dollar sale to pay for the domain.
I emailed them about a house and never heard anything. So they may be doing well but the customer service is non-existent.
No one knows for sure, but I think you’re being too presumptuous in the power of a domain name in your write-up. You’re only basically stating the obvious: ‘a company that makes a lot of money can afford a big domain name’
Thx but, that doesn’t tell me much.
I love you blog, but you’re too biased on this one.
I agree with dcmike77. The domain name auction.com definately helps, but it will take years to make $1.7 Million profit from the domain name alone. The $31.7 Million that they generated are from sales…after looking at all the marketing costs and all other costs involved, how much did they actually profit after all those sales? Definately NOT $1.7 Million…not even close!
Never underestimate the psychological power a category killer like Auction.com has with its audience. How do I know? Because we see it all of the time with our major generics. We just cut a major deal today with our Whisky.com and I can assure you that we would not have landed the client if the site was called My FavoriteScotch.com. How do I know? Because the client told me flat out (we saw the same thing last month with our Bullion.com). Believe me, recouping $1.7 million with a name like Auction.com is not a problem. There are a myriad of ways that name will enhance their revenue. On the other hand, if their customer service stinks no name will help that.
I agree with most of the comments. This does not mean the domain made the money for them, also, 31.7 million in sales hardly means that they made 31.7 million in profits.
While cat. killer domains are an awsome commodity I feel that it is importiant that we don’t promote them as more tahn they are. The bottom line is that Auction.com needs a sound business behind it to really be successful.
Business people allways say how the domains don’t matter, but is the business behind it. Domainers wont stop saying that it is the domain that makes a business successful, the truth of the matter is that both are right. Domains help a ton, but in the end Pets.com can’t make a profit with a crappy business model, just like Auction.com wont make a profit with a crappy business model.
Troy:
100% agree. Pets.com (and their dopey sock puppet) still haunts the domain industry to this day and no name can help a bad business model. On the other hand, there were far greater debacles than Pets.com, but most people remember the Pets.com disaster because their name was so memorable!
That doesn’t mean they made $32 Million. That money goes to the owner of the houses. At most they would most likely made much less than 1% so that expensive domain still has not paid for itself.
Interesting comments here.
I’m sure they would have netted the same amount without Auction.com right? (doubt that somehow) The advertising to get those sales would have been cheap? (yeah right) Flow on effect from the PR? (as if) Reporting that this auction.com really works? (umm, ok)
There are many more facets to value here, short of mentioning resale value in 5 years.
Wake up while you still can.
The domain appears to get around 500,000 uniques per month, so that must have some positive effect on their business. They charge a buyer’s premium of 5%, which amounts to $1,585,000 in the four months they’ve been operating with Auction.com and that doesn’t include commission (usually 5-10%??) on the seller’s side.
David,
Well said. “Never underestimate the psychological power a category killer like Auction.com”
to All
Why is it everytime a category killer name sells people jump on the bandwagon to say it cant be worth that for sure. Auction.com is worth 2 million or 20 million – because the end user who paid for it knew what it was worth to their business plan. Hell, it could be $100 million – doesnt matter. They paid what the name was worth.
My guess is that
90% of domain sales are between domain investors / small developers
10% to corporate end users
the % that gets sold to end users CAN NOT be used as comparison. Sure, it can help build a floor to ensure the end user a six figure is reasonable on market sales but thats it.
Each domain is unique
Every business plan is different
Every lead generation company has different revenue shares, revenue models – Every end user only cares what the name is worth to them
End users dont give a shit about industry sales
An End user pays $3 million for a domain (like Candy.com) its great for the industry to gain more attention and possibly more investors.
more investors = more interest = more bidding = more value.
As domainers we benefit from these million dollar sales in only ONE WAY, by bringing more people and more money into the industry.
Dont think for a moment any end user gives a crap what candy.com sold for – they only care what the name is worth to them.
Branding – you need to sell this aspect
Comparing other domain sales is like comparing a million dollar home in Beverly Hills to a million dollar home in Green Bay. Hey – its $1m sale so lets compare these 2 and I”ll tell you why its worth just as much.
Sure – $1m will buy you a crackhouse or a luxury estate in this case.
Its not the same.
You need to sell end users by comparing the cost of a domain to guess what – TRADITIONAL MEDIA COST, the long term value of any type in traffic and the intangible value by automatically becoming a leading brand (such as Whisky.com or PalmSprings.com)
This comment is too long already but the point is ANY sale of a domain for a million dollars or more is a deal.
The seller was happy to sell and the buyer was happy to pay.
When both parties are happy then nothing was overvalued.
We are not privy to all the facts but you have to consider all the variables. $31.7 Million in sales in less than a month is a hefty number which is probably fueled by the increase of foreclosures, what would be interesting to see if they can sustain those numbers when foreclosures are reduced. Sure the name had something to do with it, but I don’t think it was the main reason, it’s the basic supply and demand rule. At this rate though it shouldn’t take long to recoup the cost of domain. It sounds like they exceeded their sales quotas which may have caused their lack of customer service, keeping a balance is a challenge.
I agree, at face value the $1.7 million paid is cheap for Auction.com, making it work is another subject, but right now it’s working.
Congrats Mike on your well deserved nominations!