Frager Factor

Wednesday, May 02, 2012

Alan Dunn Gems: Who are these people buying these awful names?

"Real buyers (not domainer to domainer sales) are starting to come. I could go on and on about the wealth of premier domain names that have been scooped up by people who understand development and then ask why anyone is buying 95% of any of the junk sales reported every week but this is what makes a fascinating industry. Domainers every day watch trends and try to chase patterns but when in fact most of the money made by development is in lead generation.
From finance to shopping to games – the Internet mainly revolves around 15 or 20 key lead generation verticals and when you understand that then you will NEVER have to chase any pattern." ~~Alan Dunn


I just did a piece about Alan Dunn who implemented what is arguably the smartest marketing strategies around bringing a parked domain to life in a way that shines around a smart idea and the value it creates.

I've known and admired Alan since our interactions in the early days of Rick's board. He is on the good guy list of the smartest domainers alive.

For three years, Alan blogged at until declaring it an unproductive and thankless job (something I can really see his point about).  yet, his blog was one of the most intelligent and now sorely missed around.

Often I go back there to learn and relearn lessons myself. So I thought you might find it interesting to see what I learned today, years after the blog closed and few think of it as I do as having everlasting value.

Who are these people buying these awful names?  

A commenter writes, " In truth, many of those delving in this ‘industry’ can barely put a sentence together, let alone think about a Business Plan. Can you spell ‘Monetization’?  Wake up people, do some dam research before you spend you cash on domain names that even my dog is smart enough to know smell worse than her poop!!!

But, as you point out, there are also those way ahead of the pack. And there’s nothing like a weak economy to separate the wheat from the chaff…as witnessed by the flood of .99-cent domain names available on ebay these days."

With that statement made, its worthy to note there are (without question) some incredibly smart, talented and professional people but when you weed these out I can only assume many people buying domains are quite dumb.  Possibly even rich, dyslexic and easily inspired to order anything seen on a late night infomercial.

How can I say this?

Logical conclusion is the only way.

Have you seen the names that sell daily on drop lists?  How about those domains which have multiple bidders screaming to get in on the double hyphen auction or those “great” domains on NameJet’s most “active” auction list (this single email every day reassures me that even with an IQ of 70 its not hard to make money if you have a brain here)

Who are these people buying these awful names?

How much money do they lose before they realize all their purchases are worth less than the amount of toilet paper they used this morning?

We are talking about somewhere around 80% or more (in my estimate) of all names that get sold everyday while great names sit on buy it now venues such as Snap, Afternic, BuyDomains etc.

So whats the business plan here?

The more shit you buy the greater the odds the poop will turn to Gold. Maybe they are all part of a cult where the leader chants this mantra every morning. I’ve been confused since the late 90’s about this and expect to be so for another decade or more.

How about advice?

Why are people looking towards the names of this industry to see whats hot?

Most of these people who sell names are … oops… domain SELLERS – not your best friend, development partner or financial advisor. Just because a few names with an I or E in front of them sold for a pretty penny doesn’t make the whole freaking sector worth $500 or $1,000 per name or more.  In fact, they are pretty much all worthless yet people still listen or get excited to get a “deal” on a name that comes with a dream.

Stop right there.

“A name that comes with a dream”

Holy mother – listen to this quote and understand this

Every name has a dream. Every name has a story. Every name could be something.

The only thing that matters is what YOU DO WITH IT.

Doesn’t matter if I owned it, some cowboy owned it or Mother Theresa herself.

Once you pay the bill its yours – Mother Theresa is gone to say prayers, the sellers are back to selling names and you are alone.

So How DUMB are you?  Really dumb if you get caught up in the world of buying names from people and think they have a resale value for more than what you paid just because some “domain celebrity” owned the name before you.

You have to do something with the name to maximize its value.  Truth be told not everyone wants to maximize a name but rather just sell for a profit but if you buy a domain that has NO exact search, a stupid extension, a random collection of keywords that really make no sense used together, have i’s and e’s in front or back to sound cool or a number of other stupid valuation factors many domainers use to put their “pitch package” out for other stupid investors to buy then you’re pretty dumb for not learning how to advance faster in this industry

As for Development and SEO – why are you listening to people who blog day after day about domains and only have a few projects that have never transpired into anything more than Adsense sites.

How DUMB are you?

Pretty dumb if you are typing in a domainers blog to understand SEO when there hundreds of SEO blogs, forums and experts online dedicated to providing more knowledge than 99% of domain investors could ever give you.

Look – this industry is great with many great people like the Castellos, Michael Berkens  and more

But if you are someone who wants to make a living, create something from nothing, supplement income and/or secure a piece of the internet you always wanted then its time to act smart and look for information from the sources who have resumes to back it up, invest in assets that provide value after the sale and in general – stop following the herd.

Just remember – those who are great sellers are many times not great builders. How do you fix the problem?

The is no substitute for knowledge and experience

Real world experience, understanding of the importance of keyword domains, SEO talent, proper development, online marketing skills. For long term success most people need to understand that starting a website should be viewed no less important than as opening a brick and mortar company (albeit with lower costs) and most of us (even I) need to go back to school every now and then to learn about the courses which factor in to the success of a plan.

Although I do say the first is to stop reading domain blogs it is entirely understandable to peak and peruse what fellow domainers are doing but for the most part these blogs are entirely irrelevant to anything affecting your growth as a developer except to understand a little more how much your domain may be possibly worth.

Is that why you read blogs?

to check your domain value every day – note that day traders have the same addiction refreshing real time quotes.

For some its ok. Buying and selling domains is a business – a semi-respectable business (will delete semi when main street gets it) but its only part of being a domain owner for many.

Taking the next step: Building a Business … is something very few domainers can ever help you with.

Compare it to buying a car.

The car salesman can tell you all day long how great the new BMW 7 Series is compared to a Jag or Mercedes however when you leave the parking lot and come back a week later for advice on how to modify the car for performance, improve handling with come custom work or almost anything related to making the car you just bought better very few – if any – would ever return to the salesman who sold you the car for advice.

Domainers in general continue to return for advice from other domainers about development, planning a business, SEO marketing and more. Granted, the fellowship is nice and there ARE some people who really know a lot but most of these people do not blog in the vicous cycle of blogs on or NameBee (take the Castello’s for example – these 2 have done wonderful things but they do not blog and if you 2 are reading – dont do it … way too time consuming).

I remember when I started learning chess many years ago my chessmaster always told me – NEVER play with someone who you can beat.

That is exactly the same concept which should be applied to those seriously interested in development.

Something to think about.

Do you have an exit strategy?

Moreover, at some point every business owner (not just domainers) look to sell or “exit” the business. In this industry it seems many people are building and building portfolios so someday they will “exit” by selling the entire portfolio to a buyer.

Is this really a valid exit strategy?

It certainly sounds great but it’s also the elusive dream for many domain owners as portfolio buyers are few and far between – at least those that want to pay a fair price.

Keep your head out of the clouds (visit every now and then) and spend time developing a real exit strategy – one which is deeper than simply finding the right buyer. Remember, if you can’t find someone to pay $100,000 for your portfolio today what makes you think you have a better chance of selling a bigger portfolio for $2,000,000 (using the same logic) down the road. Sure, it’s possible but money gets harder to find the higher you go.

Develop an exit plan that contains multiple exit points. Build a smaller portfolio with some great names, have some developed sites, create a brand within a specific sector. So many options but each one will be an exit point in your overall exit plan.

All kinds of exit strategies exist but the question is – do you have one?

I hope this inspires you to relive Alan's blog archives for the solutions to your most painful challenges may lie within it.

About The Author: Owen Frager is an Internet marketing expert ready to help take your company to the next level.

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