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Location, Location, Location – The Morgan Schwartz case study

By April 27, 2010 8 Comments

One of the things I really enjoy about what we are doing at Epik is helping folks become effective domain developers.  One guy who is on the way to building a pretty sweet portfolio of income-producing properties is Morgan Schwartz.  He has figured out what I think the majority of domain owners have yet to really master — the art and science of separating the wheat from the chaff.

Location, Location, Location

Domaining is really not all that different from real estate development.  In fact, I often find myself talking about a name being “one block off main street”, e.g. referring to a name that is good but not great, at least by the classic evaluation criteria. For example, a name that is hyphenated and/or not a .com.  To a developer, I have found that good is often good enough if you know what to look for to assess development potential.

I see a lot of domain portfolios.  People send them for a variety of reasons — they want to sell them, they want help developing them, they are wondering whether to renew them, etc.   What I have learned from this exercise?  Two things in particular: (1) Domainers have acquired a tremendous amount of crap domains, and (2) Domainers spend far too much time obsessing about the NUMBER of their domans, rather than the QUALITY of their portfolio.

There are of course many domains that we fall in love with for one reason or another — a brandable name, or a name to which we have some emotional attachment.  By all means keep renewing those names if you must. However, if you really want to be methodical about what I call “Keep or Toss”, you have to rely on the DATA. And by data I am referring mainly to (1) Exact search, (2) CPC, and (3) Ad competition.

Why do I like these metrics?  Mainly because they are a good indicator of what private equity investors call “Addressable market”, or what a layman might describe as “How high is up?”. If you know these metrics, you can mathematically derive the theoretical value of being #1 on Google for that term.  It is an objective indicator and will keep you from renewing useless names that you are unlikely to ever develop or sell.

Morgan Schwartz — Friend of Epik
Morgan Schwartz is one of Epik’s earliest clients.  He is also an active user of our Drop Catch service.  He is finding premium names on a near-daily basis by visiting our free site — where we catalog the daily drop.  On each detail page, you can backorder the name.

On Monday’s drop we acquired for him, which is now being developed into a product portal for a grand total of $249 — INCLUDING the name itself!  Estibot values the domain alone at $1,400 based on 15K+ searches, 1K+ exact searchs and $4+ CPC.  We appraise the name even higher.  Once the site is developed, indexed and ranked, I expect the value will go even higher.  I say, good one on Morgan.

Here is the rest of Morgan’s haul from the past week using Epik’s “Catch and Develop” service:

Domain Appraised
Avg Search
Volume 570 high 0.55 10,044 5300 high 3.32 1,091 2700 high 3.54 18,352 1600 high 2.19 8,184 2100 medium 0.84 892 4600 high 1.65 1,98

What are you waiting for? Come catch with us.

Join the discussion 8 Comments

  • Tim says:

    Rob….with all due respect. I would not pay $2 for that domain. I don’t consider that separating the what from the chaff.

    If that is premium, then I have nothing to worry about and I can go ahead and retire b/c I have thousands of domains each of which is 100X better than that.

    First off, let’s look at the word “face”. Okay……wrinkle cream for the face as opposed to what? To the arm, leg, back, foot? That is just dead wood in the domain and a way that most surfers won’t search.

    .Net. Again, not premium and .net domains as everyone knows are not easy to sell.

    Three words. Although not a deal killer, but not preferable.

    That is just not a good domain. Maybe it is good for what you are doing and maybe value can be built into it using your service, however for you to say it is worth over $1,400 right now before you develop it is just a really bad appraisal.

    I would venture that you could own this domain for 10 years without developing it and never receive a single offer.

    Just my opinion, but I have been buying domains since Aug. 1995 and have been doing it full time now for a decade.

  • One other critical factor is phrase competition. Even for highly-searched phrases, if the domain’s keywords have millions of competitors, it may still be difficult to rank without a concerted development & backlink effort (particularly at Google).

  • Rob Monster says:

    @Leonard Britt –

    If the category is highly competitive, having a development-worthy domain that is keyword-relevant is a source of competitive advantage. If there is more competition, I think it is even more important to have a defensible IP and brand position in the form of a keyword-rich domain name.

    For example, yesterday we sold By domainer standards that name is not worth owning. A retail buyer with a large gold-related domain portfolio thought otherwise. We could have developed the name but sold it within a few days of acquiring it.

    As they say, one man’s trash is another another man’s treasure. Of course after a year, if a domain is not covering its costs, one may have to re-evaluate.

  • Rob Monster says:

    @Tim – Thanks for the note.

    Please see my related post on the related topic: https://localhost:8888/epikblog/please-give-me-your-hyphenated-domains.html

    The same logic applies to .net. It may also apply to other TLDs.

    On the other hard, your Vintage 1995 Domainer logic is perfectly correct if you are determined to be the classic domain merchant. However, the reality is that most names never sell. I don’t care if you have them listed at Sedo, BuyDomains, DDN.

    The odds of a successful sale for more than peanuts is about 1%. If I recall correctly Sedo has 9 million listings and sells 40K of them in a good year. That’s an 0.4% sell-through rate. Well, that’s certainly a strategy but the only organizations that I think are making any serious money on that arrangement is (1) the auction house, and (2) the registrar who is banking the annual renewal fees while your parking revenue is down 70%.

    These stats may not speak exactly to your personal situation but it is pretty representative of the domainer reality whose business model has been turned upside down by plummeting parking revenue, and an immature market for retail sale of undeveloped domains. If you are very good at selling domains to end-clients, then the classic domainer model may well be working for you, however, most folks have only mastered the 3 step process: Buy, Park … Pray for a miracle.

    Personally, I prefer the following model:

    – Acquire
    – Develop
    – Operate
    – Sell

    The good news for Morgan is that after 1 year, if he has not sold that name/site, I will buy it back from him for $249, and will do so happily because I have seen first hand what a developed name can do both in terms of operating revenue, but also in terms of end-client sales appeal.

  • Very true – buy, park, pray for a miracle doesn’t work for most domain portfolios.

    I thought I had read somewhere SEDO had 15 million domains but anyway the sellthrough rate is abysmal.

  • TJ says: that is a very nice name. I missed that name.

  • morgan says:

    @Tim – I’m seeing over a 1000 monthly searches for the exact phrase “face wrinkle cream” with a high CPC. That may not be how you search and its certainly not a deluge of traffic, but people are searching – and furthermore, i suspect they are searching with an intent to buy. Epik’s product portals allow you to close the gap between a user hitting your domain and an actual sale considerably.

    Another 3 word domain I have developed with Epik is currently on page 1 of Google for that exact search and it’s only been live for a couple of months. This is a name that was earning next to nothing parked and is now on track to pay for itself and hopefully a couple more Epik portals.

    @Leonard Britt – I think your comment about phrase competition makes a lot of sense and it will definitely be an uphill battle to rank for variants of the keywords in these domains. But as with the baseball helmet name mentioned above, exact match domain names seem to do well in Google if they contain relevant content. Furthermore Epik’s portals are wonderfully interlinked and over time, I believe, will capture tangible and targeted traffic from within the network.

    At the end of the day, while I don’t plan on selling any of my names back to Epik – sorry Rob 🙂 – I really have nothing much to lose given Epik’s commitment to buy back any domains after a year and I frankly wish Rob would stop blogging so eloquently about the opportunities he’s providing domainers here.

  • Attila says:

    I think what the mass majority of the people (like Tim here) is missing the key points in the value of a generic keyword domain.

    Firstly, its a keyword. Once you own the keyword, you can almost with little to no effort jump on top of most search engines shall they search that “exact” keyword. While sub prime keywords might be a stretch, they do rank slightly better then those with type domain and url efforts.

    SEO has so many keys that require turning in order for you to fight your way to the top. While back linking is important, its sometimes not required depending on your domain, url structure, layout, and uniquely written content. I am not saying back linking is not required, it helps by far, but some small niche industries or keywords is not required at all.

    I have been testing for months now and found that owning specific keyword related domains (dot com or dot net) will rank quite well in the engines. The ws, me, tv, info don’t rank well compared to com, net, org. So I heard dot US ranks well for yahoo engines.

    As for resale value. You simply find an end user and explain to them the benefits of owning such keyword mini sites. Most mini sites target people to click on a link or banner so they can earn PPC. Now what if the end users links and banners are all over the website…if someone clicks and orders, isn’t that more valuable then a PPC revenue? Most small business owners put in $1000-$2000 USD a month on average. Most medium business owners will put in $5,000 to $10,000 USD a month in advertising on average.

    Now I understand you’re all not a car sales man and won’t pick up the phone and sell someone a domain let alone a fully built mini site, ranked well in the search engines and explain to them how it would be beneficial to their bottom lines. However you need ask them,

    Why wouldn’t you pay $1000 USD for a mini site that IS ALREADY ranked highly in search engines, get this many traffic and already generating targeted leads?

    My two cents. Rob is a great guy and my friend. All in all I support his company, however this was not the purpose why I posted this comment. Merely to educate those people, like Tim, who haven’t quite excelled in the domain industry like some of us already have.

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