All That Glitters Is Not Necessarily Gold

glitterAs a full time domainer / domain investor, I have learnt to keep a tight ship when it comes to monitoring and managing my domain portfolio. With a large inventory of domain names (99% of which are com.au), if I didn’t do this, then I’d be throwing a lot of money down the gurgler.

One thing in particular I have learnt over the past decade that it is very easy to fall in love with some of your own purchases. In the heat of the moment, we can all justify an acquisition or two.

With .au domains, they have to be renewed every two years. As it often happens (2 years down the track), domains that at first blush seemed to have so much potential are sent to the scrap heap. Ouch.

The Analogy

Having done a bit of gold prospecting in my younger years, domains and gold have a lot in common.

There’s gold – and then there’s “Fool’s Gold”. The latter is described in the dictionary as:

  • “a mineral that is found in rocks and looks like gold but is not valuable”
  • “something that you think will be very pleasant or successful but is not”

I know for a fact that some of the domains I bought in the early years were definitely “Fool’s Gold”. And I learnt the hard way – as most of us have to do.

Whilst I’m still by no means perfect in acquiring “nuggets of gold” when it comes to domains, experience over the years has enabled me to more readily recognize “Fool’s Gold”. This has helped reduce the number of domains that I let “drop”.

These Are Some Of My Thoughts

What I describe below is based on the business of domaining – buying, selling and trading domain names on a daily basis. This is totally different to just holding a small portfolio of domains for future use or investment purposes.

  • The simple success factor in any retail business is to try and stock what sells. Domain names are no different.
  • To achieve the above, the most important consideration is common sense. Analyze the aftermarket – see what sells; and for what sort of price. Try and carry a decent range of well-priced stock to give yourself the best chance of success. Look at trends from overseas and ask yourself if they could apply to the .au market.
  • However, as any retailer will tell you, despite the best of your intentions and astute buying skills, not everything will sell. Fact of life. Be prepared for wastage!
  • Radio test – one of the most important aspects in deciding whether to purchase or renew a domain name. Don’t try and convince yourself that something is good when everyone around you is shaking their head. Pig with lipstick comes to mind as an analogy.

pig-with-lippie

  • Search statistics aren’t everything. Some people tend to get fixated on this aspect – I don’t. The fact is there are domains that have supposedly excellent search – but they simply don’t pass the “radio test”.
  • There is “long tail” that works – and there is “long tail” that doesn’t. These days, I try to stick to a maximum of two words – three if there is a geographic location attached.
  • Whenever I contemplate buying a domain these days, I ask myself the simple question: “Do I genuinely believe I can sell this for a profit within a reasonable space of time?” If I can’t, then I don’t buy. This rationale applies whether it is a $100 domain or a 5 figure domain (yes, I have bought a few of the latter).
  • When it comes to renewals (and I have a lot of those), I’m trying to get really tough on myself. If I don’t think that I could firesale / wholesale a domain to a 3rd party for a minimum of $200, then I let it drop. If I see someone else pick it up, I don’t stress. I just have a chuckle to myself and move on.
  • Finally, be ruthless in your decision making – otherwise the only person you are fooling is yourself.

The above is not an exhaustive list – and as with anything in life and business, there will always be exceptions and contradictions. Knowing the difference can sometimes be a combination of skill and luck!

Exceptions

Having looked at my enquiries and sales statistics for the year to date, there is one niche that is way out in front. 3 Letter domains. As I wrote in this article, they are simply “lethal weapons” for businesses.

Not a day goes by that I don’t get at least one enquiry or offer on a 3L domain name. My record is 6 enquiries in one day. My conversion rate is excellent – believe me when I tell you that the article above really helps!

There is also no rhyme or reason as to what letters sell. I’m amazed sometimes at the offers I get – the letters may be obscure to a general observer; but to others they have a specific meaning.

So that’s why I purchase a lot of 3L domains – and I generally always renew them. I’ve only let a handful drop over the years. I’m also realistic enough to know that I will never sell all of them. But as long as I keep turning them over, I will continue to buy stock.


Hope you enjoyed this article – as always, I’d appreciate getting your comments, suggestions and tips.

Ned O’Meara – 28th September 2016

17 thoughts on “All That Glitters Is Not Necessarily Gold

    • Ned O'Meara
      September 28, 2016 at 1:14 pm
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      Coming from you Don, that’s a real compliment. Thanks. ­čÖé

  • Avatar
    September 28, 2016 at 12:28 pm
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    Another article worth its weight in gold. Thanks mate.

    Jeff

    • Ned O'Meara
      September 28, 2016 at 1:13 pm
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      Thanks Jeff. You’ve done well for yourself along the way!

  • Avatar
    September 28, 2016 at 12:42 pm
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    2 years “down the track” and I’m letting around 300 names drop at the moment. I am┬áhopefully┬ábecoming a good domainer, online business developer and domain broker as I learn from these costly┬ámistakes ­čÖé

    • Ned O'Meara
      September 28, 2016 at 1:12 pm
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      The university of hard knocks Robert. Nothing like it!

  • Avatar
    September 28, 2016 at 1:02 pm
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    Excellent advice Ned! One of the most important lessons I learnt when building my portfolio was to buy domains with traffic, and/or ones that I could potentially develop with ease, and on the cheap. This was to mitigate cash flow risks during lulls in sales, and because of the potential to create steady revenue streams and add value.

    • Ned O'Meara
      September 28, 2016 at 1:11 pm
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      Steve – great to hear from you! You’ve been around even longer than I have, and you’ve had some amazing domains. Don (who posted a comment earlier) and I have both purchased some brilliant domains from you in the past.

      You’re also one of the smartest operators out there as most knowledgeable people would attest (but very quiet in recent times). What have you been up to?

      • Avatar
        September 28, 2016 at 1:39 pm
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        Yeah you guys picked up a lot of my gems! I hope they’ve done well for you.

        Thanks, but you’re the smarter operators ­čÖé

        In a nutshell, I’ve been enjoying an early retirement, travelling and various volunteering gigs.

  • Avatar
    September 28, 2016 at 2:04 pm
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    Thank you for the article Ned. It’s a great post!

    • Ned O'Meara
      September 28, 2016 at 2:34 pm
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      Thanks Nikki! Please feel free to share with your Netfleet readers. ­čÖé

  • Avatar
    September 28, 2016 at 2:07 pm
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    Love the article Ned.  This should be mandatory reading for anyone new to the industry.  Even those who have been around for a while for that matter.

    Dropping the losers is such an important part of the game. ┬áThe old “$10 a year lottery ticket” theory just doesn’t stack up if you’re serious about domaining.

  • Scott.L
    September 29, 2016 at 11:30 am
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    So, I should forget registering the domain name

    Australian-Domain-Name-Registration-Services .net .au

    ­čÖé

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