Monte talks to Dave Evanson
11/08/2006 - Monte Cahn
Monte talks to Dave Evanson. Dave Evanson started buying domains in 1999, with most of his portfolio purchased by early 2000. To date, because of his management consultant business in the strategic planning and marketing arenas, he has not really been able to devote as much time towards his domain portfolio as he plans to going forward. Dave has extensive strategic marketing experience. Before 1991, he held senior level marketing positions for two of the nation’s largest banks. He founded a consulting company in 1991 and for the past 17 years has been doing marketing, advertising & direct response consulting, boasting more than 20 Fortune 500 Companies as clients.
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Monte: Hello Folks. This is Monte Cahn. Welcome to another great week of Domain Masters. We’re just coming off of our highlight event of the live domain auction from TRAFFIC just a couple weeks ago. And as everybody knows, last week we ran a very special show and had the sellers of Cameras.com, which actually sold for $1.5 million for that domain sale. And we are going to have the buyer of Cameras.com for $1.5 million, I think, on the show next week. And as we’re following up from the auction, we are going to have David Evanson on our show tonight. David is a very large domain holder. He holds close to 20,000 domain names. He got into the domain business back in 2000 and Dave is . . . actually has such good names that we sold 53 of his domain names during the auction, both the silent and live auction last, uh, about a week-and-a-half ago. So we’re going to talk to David about his domain portfolio, his strategy, some of his successes in the business and get some good feedback and the good lessons learned from his experience, and hopefully that will help all of you as well. And, we will also talk about the auction itself and some of the strategies that Dave uses to position his names for sale and monetizes them and so on and so forth. Uhm, just a reminder, the live domain auction will be running live . . . I mean, the rebroadcast of that auction, again, will run right after my show tonight and so anybody that’s interested in listening to how $5.3 million worth of domain names sold just one-and-a-half weeks ago, you’ll be able to listen to it live following my broadcast tonight.
With that said, we’re going to take a couple commercial breaks, pay some bills, and be back on with Dave Evanson. Stay tuned.
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Monte: Hey, everyone, welcome back to Domain Masters. Again, I’m Monte Cahn, your host. And we’re still in our post-auction high and having a lot of follow up interviews from people that were at the auction and some of the carry-over from the domain auction, since it was so successful. To that end, we have a very special guest on – Dave Evanson. He started buying domain names in 1999, with most of his portfolio purchased by early 2000; so he got in fairly early. To date, because of his management consulting business and in the strategic planning and marketing arenas, he’s not really had much time to devote to his domain portfolio, but he does have plans to do so. One of the great highlights of working with David is that he was able to (or we were able to) position 53 of his domain names for sale at the auction, and so it was a pretty successful event for him. And, we’re going to talk about Dave’s domain history and a little bit about what got him involved in the domain world and have him on the show. Dave, how happy are . . . or congratulations on a great week, guess a week-and-a-half ago, and welcome to Domain Masters.
Dave: Thanks, Monte. It’s great to be here.
Monte: So why don’t you give us a little bit of background, like we always do, and find out how you got into domaining, when you bought your first domain name, and kind of what got you into the business.
Dave: Okay, great. I come out of the financial services category, where I held some pretty senior level jobs in the 70’s and 80’s. And, towards the late 80’s I was becoming very interested in the whole category of inheritance. And I had read an article, I think it was in early ’99, that over the next two decades there was a projection of about $192 trillion worth of inheritance to be passed on in this country. And, I thought about starting a business and I thought that probably the best way to do it would be around Inheritance.com; so that was actually the first domain that I purchased. And then . . . and then I started buying related domain names, all .Coms, that I thought could point to that domain. I guess back then it was called “URL forwarding” or “Domain Pointing,” etc., etc.
Monte: Yeah. Yes.
Dave: Uhm, and I had had . . . I had founded a marketing consulting company back in ’91; we’d been fortunate enough to work with many Fortune 500 companies in financial services, but also in a couple of other industries such as Yellow Pages, where I was very fortunate, personally, over a 9 year period; worked closely with the people at Verizon. And it had a whole to do with the roll out of SuperPages.com. So we understood the Yellow Pages industry and we also had a lengthy opportunity to work for General Motors, spending a couple days a week in Detroit for 7 years (we’re in Boston). I decided that we would go towards a vertical, such as automotive and financial services, direct-response-related, in particular. And we bought domains that were in those verticals and plus a few other verticals, like insurance and also goods, maybe furniture or items for the lawn or to fix up the house. And, we also took advantage of . . . we were very fortunate, we took advantage of an understanding of the Yellow Pages industry, both offline and online, and thought about, back in ’99 and 2000, we thought about how people would be thinking about accessing goods and services on the Internet 5 years out or 10 years out.
Monte: Right.
Dave: So, that was really the background.
Monte: So that’s, uhm, that’s some great vision. Uhm, so what was the first domain name that you registered?
Dave: It was actually Inheritance.com. We started developing that one. Believe it or not, this year, a few month’s ago, we sold that one. Uhm . . .
Monte: Can you share with us what you sold it for?
Dave: $61,000.
Monte: Good. Good. And so, you bought that one new from scratch, I guess, from Network Solutions for $35 back then?
Dave: Well, actually, that’s the only one that we didn’t buy from scratch. I think we paid $4,000 for that.
Monte: Oh . . . back then. So you were . . . so you bought a domain name in the aftermarket even back in 1999 when there was very few transactions and so you were able to buy that then?
Dave: We did it over the phone; it was a good transaction..
Monte: Great. Great. And, so, you’re portfolio is now approaching, what? Close to 20,000?
Dave: Right. Hm-mm.
Monte: And, how are you . . . are you currently monetizing those domain names now? So what exactly are you doing with them?
Dave: Some of them. To be honest, for good reasons, my day job (and that being in the management . . . as you mentioned, the management consulting arena) we’ve been very busy. And so over the last several years, after we got these domains, we started developing sites. And then, I guess it was 2001 when the ‘net went south for awhile, we sort of just put it on hold. And haven’t paid much attention, to be honest. Several month’s ago, somebody recommended the DNJournal and I spoke to Ron Jackson, read a few of his articles and found out about TRAFFIC; went to my first TRAFFIC. I’ve been trying to learn a lot and met some very, very bright people in the forum, you know, at TRAFFIC and started monetizing. We have been selling off, you know, we get contacted often for domains and if it’s a legitimate offer, you know, etc., etc., we’ll sell them off. And we’re getting ready to . . . we recently partnered with one of the people that we met at TRAFFIC, Gary Freedman from Evolved Marketing, and we’re going to try to find a partner to help us on the development side and we’re going to develop a bunch of these out. At the same time, we’ll be selling some off and using those funds to fund the development efforts, you know, the marketing efforts around those sites.
Monte: Right. I guess the sale of some 53 domain names at the auction, both silent and live auction a week-and-a-half ago certainly helps with that effort, huh? [laughs]
Dave: It sure does. And I went into it blind, frankly. You know, we saw your emails about what you were looking for and how to set the reserves and the types of names and you know, we . . . we didn’t know if we’d make the auction, if we’d make the live auction, but we’re very pleased. And I think the auction was very successful. I obviously, I was pleased. But I think even if I hadn’t sold any I still would have thought the auction was run very well. It was very exciting, and it was run very well and I’m sure that as you go forward, I know that you and Rick Schwartz have committed to improving these auctions as you go forward, you know, learn, and take the feedback loop and proof. So I’m looking forward to the ensuing auctions.
Monte: Yeah, yeah, definitely. Well, just to give you a little bit of background, the very first auction, which was about a year ago, we basically did it all by hand, used little stickers to indicate interest – we gave everyone little stickers to indicate interest – put 900-some-odd names up on a wall and taped them with big pieces of paper and let everybody select which names they were interested, live, right in front of everybody and then manually input those names into a, you know, PowerPoint spreadsheet and did an auction. And then later had everybody start doing it by email and then of course, Excel spreadsheets and did it again. So we went from $450,000 worth of sales to $2.1 million worth of sales in May and then of course, we just . . . with some of the aftermath and aftermath interest of this last auction, we’re going to be approaching $5.7 - $5.8 million worth of domain sales.
Dave: Wow.
Monte: So, we’re definitely improving and we’ve brought it online and introduced the silent auction, which worked out pretty well for people and I understand you actually bought some names in the silent auction as well as sold some. So you actually saw some value in some of the domain names that were available, correct?
Dave: There were great names available. We actually bought about a dozen in the silent auction. And, uhm, we continue to do that. We’re buying and selling and thinking about better ways to monetize. We’re learning, you know; we listen to the people at TRAFFIC and I read some of the posts in Rick’s forum and I realize that I’m a novice and I’m trying to get up to speed very quickly. There are some other areas like affiliate marketing and some other areas that we’re trying to get up to speed real quickly. We are still buying, but I suspect that we will sell more than we’ll buy.
Monte: Right, right. And just a little bit of a hint – if you want to learn a lot about the affiliate side of the marketing side, there’s a great conference coming up in Las Vegas called the Affiliate Summit.
Dave: I registered last night.
Monte: Oh, great.
Dave: In January.
Monte: Great, great. That is the very best place for successful affiliates for people that want to get into the affiliate business and its also a great strategy for domainers to diversify their domain portfolio in terms of monetizing domain names by parking the ones you don’t use and monetizing through PPC; picking the select group of domain names you’re going to want to develop to turn into real good content and e-commerce sites; and then there’s the whole affiliate side, which is kind of in the middle, where you can sign up with Commission Junction or one of the affiliate networks and really promote some of the properties that who have and get onto the CPA bandwagon and get paid, you know, acquisitions, customer acquisitions and signed applications and committed dollars spent by customers when they go to websites. And so the combination of all three really makes a successful portfolio, especially one of your size.
Dave: Mm-hm; I think that’s great advice. Thank you.
Monte: Yeah, definitely; definitely. So, now that you have 20,000 domain names, uhm, now, I suppose that you had some of the same issues that I did back when I first started building a portfolio back in 1996; you got started a little bit later. But, when you build . . . you built your portfolio very quickly. From 1999, when you got started, to 2000, you quickly acquires some 15,000 to 20,000 domain names, is that correct?
Dave: Right. It was all . . . I think about 95% of what we had . . . 90%, anyway; we acquired between ’99 and I don’t remember the exact month, but I’d say, maybe by April of 2000.
Monte: And did you do that on an individual, one-by-one, registration type scenario? Or did you buy out portfolios?
Dave: I didn’t know any better back then, frankly. We were in a dial-up mode. I think we were able to get up to 10 at one time; and I had a bunch of college kids out of some of the colleges here in Boston, you know, part time and over the summers. You know, I was actually coming up with the vast . . . almost all the names, I guess. And . . . but they were registering them. And it was dial-up; it was Network Solutions and [inaudible] asked me what I thought of Network Solutions back then, but [inaudible] . . .
Monte: Are you saying that people think of them currently? [inaudible]
Dave: It was . . . you know, I’ve been in business since the mid-70’s and I’ll just never forget that experience.
Monte: Yeah, well . . .
Dave: With them.
Monte: Yeah. And, it makes it more difficult, especially back then when, like you said, everybody was on dial-up; processing was slow; things were done by paper. It was a lot of . . .
Dave: Mm-hm.
Monte: Definitely a lot of work. So, you slowly built up this inventory by individual registration and you must have had . . . were you financed? Or did you self finance this portfolio? Because that’s quite an expense.
Dave: Uhm, a little bit. I didn’t have very much left over for college educations for my kids but I had enough there and other than that, it was pretty much self-financed. But I did get a little bit of financing.
Monte: Well, that’s pretty . . .
Dave: It was $70 a registration back then, if I remember.
Monte: Yes, that’s correct.
Dave: So, but, but, today, when I go to an auction, like yours, or sell some domains, it makes it a little bit more palatable. But it was pretty painful back then. I had no intention when I started to register more than maybe 20; but then I got into it. And I thought, well, we’ll point these domains and we went on and on and on.
Monte: Yeah, yeah, definitely. And the good news, when I’m looking at your list (and I personally looked over the domain list for the live auction and was able to weed down the list and hand select) but your names were pretty unique as a group because you had a lot of good commerce-type names. You know, some of the names we sold in the auction were PortablePrinters.com and RentalCarRates.com and TickerSymbols – those things went hot and they were priced right, obviously. Some of them actually were at low reserve or no reserve dollars and they actually threw some of the most excitement in the room at that time.
Dave: Right, I do remember that. And I also remember getting emails from you late at night when you were going through names, so I believe that you went through them yourself. As I mentioned briefly earlier, we did deploy a strategy that to some degree was around the buy and sell concept that the Yellow Pages industry was developed on. In fact, up until right through now, for years and years and years, Yellow Pages . . . Yellow Pages is the most profitable division of the telephone companies.
Monte: Right.
Dave: And, uhm, anyway, so, they knew what they were doing and Portable Printers, I don’t think you could look up Portable Printers in the paper Yellow Pages ten years ago but if the paper Yellow Pages were being published this year, they would have printers and they might even have Portable Printers under there. Then of course, with the advent of the online Yellow Pages, uhm, we were fortunate enough to see how . . . we saw a lot of research being done in terms of how you put buyers and sellers together – what motivates and drives the buyers and how do you time the transaction and you know, that was very helpful.
Monte: Yeah, yeah, definitely. So let’s talk a little bit about your development strategy now, because now you have, uhm, you still have a big portfolio; you’re buying and selling like you said. So you’re helping to fund . . . would you say that you’re funding your domain renewals at this point, ah, by your sales?
Dave: Yes.
Monte: Okay; that’s good news. That’s always the goal.
Dave: Or even by PPC.
Monte: Right. By PPC and a combination of PPC and domain sales, you’re funding your portfolio expenditure, which is great, so you’re actually budget neutral and you’re actually making money on your domains, I suppose.
Dave: Right. Well, we’ve been making money on our domains for several years now. Just selling off some names. I’m sorry, I didn’t mean to interrupt but ah, the answer’s yes, we’re in the black.
Monte: And, would you say you’re in the black for the entire investment from the very start based off of what you’ve been able to accomplish from sales and PPCs now?
Dave: Honest answer? I think the honest answer is (I have to look at the numbers) but the honest answer is I think we’re . . . we just broke even perhaps early this year and now we’re definitely in the black and going forward. But we were way behind until this year.
Monte: Great. Now, lets talk a little about that strategy. So let’s talk about the sales strategy a little bit, because a lot of people don’t know at what point to sell. A lot of people think their names are worth more than they really are. Knowing that you had so much invested into the market, where did you draw the line on saying, okay, this is a fair price; I’m ready to sell it? Rather than hold onto it. Because a lot people, as you know (and you met a lot of these domainers at the conference last week) . . .
Dave: Right.
Monte: . . . everybody has high expectations of what their names are really worth; others realize that this is a return on investment game and that in order to reinvest into the market, you need to off load some of the inventory that you’ve been holding and so, how do you go about pricing your portfolio or parts of your portfolio properly so that you get a fair return on your investment and able to fund your future investment?
Dave: That’s a great question, Monte. With some of the learning’s that I’ve had over the last couple months, I think there’s more ways to rationalize that process now. I know Dan Water wrote a great paper that I agree with whole-heartedly with on how you can value your own portfolio. But in terms of the actually one-by-one sales, in the beginning, you know, there were no cops; it wasn’t very rational. Most people that contacted you (and I’m sure a lot of people that are listening had the same experience) most people that were contacting you were either telling you the truth or they were lying but they were all saying I never bought a domain before, I don’t know what these are worth. And I had in my mind that I knew I didn’t have the best domains because, unlike someone like Rick Schwartz and some others, you know, that were smart enough to do this back in ’95; ’94, ’95, ’96; you know, I knew that I didn’t have the Business.com for $7.5 million but I do have, perhaps, 200 domains that start with “business” and then there’s a word after that .Com. Like maybe BusinessConventions.com, BusinessAffairs.com. So, I knew that they were worth less than the $7.5 million but more than the $35 or $70; I knew it was a lot closer to the $70. So, basically, it was trial and error. And I tried to be fair and I still try to be fair. I’m not looking to be too greedy but at the same time it was trial and error. And it was based on . . . I tried to understand the buyers behavior. In fact, I don’t know that domainers (myself included) as a group understand enough about what motivates the buyers. I think we know some of the drivers . . .
Monte: I know live auctions do!
Dave: Excuse me?
Monte: I said, I know live auctions do.
Dave: Oh, absolutely. Absolutely. But we’ve all received emails like, I remember one, some guy wrote me an email from Hotmail.com, you know, from a generic domain, and he told me, I think it was Digital or something dot com, and he told me he was starting up his business out of his garage and I quoted my associate and I said, I think this guy’s a rejected vice president of IBM. So, you know, it depends upon if they’re spending their own money, if they’re doing it for a corporation, ah, how badly they want it. I was able to . . . as a matter of fact I was going to post (when I get a chance, I’m going to post some of this information) I was able to figure out certain ways to learn, at least not all the time but three quarters of the time, learn who I was dealing with, if they were coming to me blind, by looking at similar domains, sometimes a dot net or sometimes a two word domain with a dash or sometimes the same domain without the “s” or with the “s;” and very often, very often, that domain, if I went to WhoIS, I’d find that domain was just registered that day and the guy would have his name and his address and sometimes he’d have the corporate name. So, ah, I tried very hard to get a handle of the buyer’s motivation and the buyer’s budget.
Monte: Right. Before you come up with a sale price?
Dave: I don’t have sale prices.
Monte: You don’t use an analysis based off of PPC earnings or anything else to give you what you would take on a given domain name? You’re using gut instinct most of the time.
Dave: Well, in actuality, we are moving towards rationalizing and using sales prices now. With PPC, I don’t think it’s a good (personally) indicator by itself.
Monte: Right, I agree with that. That’s kind of like a core-based, low-end valuation, depending on what you’re multiple on it is, that is.
Dave: Well, but, something like PortablePrinters.com you know, I don’t remember what kind of traffic it was generating . . . but that may not generate a lot of traffic but yet, it could be a terrific business for somebody to run and make a lot of money on, you know, with that domain.
Monte: Right.
Dave: So, as . . . I think the valuation of a domain is a combination of PPC, if you’re doing that; but at the same time, it’s potential. What’s the likelihood that domain will be purchased, you know, in the next 2 – 5 years, let’s say, and for what amount of money? I tried a few years ago, a couple of times, I tried to list domains on a website with prices; I categorized them, like, you know, a lot of the sites – your company as well and several that do that – you can search by category, with prices. We’ve also tried . . . we tried way back when (I think it was very early) . . . we tried, as an example, taking some flower-related domains and running an ad in the flower trade publication. We tried some automotive domains in the trade publications. Just like DNJournal, which I happen to believe is excellent, you know, every industry has a publication or several publications, if they’re mature industries . . .
Monte: Right.
Dave: . . . and we tried to advertise in those publications. And what I found back then is that I just assume wait until somebody contacted us and its just a lot easier. Uhm, there were a few times when we wanted to raise some cash, we got a little bit aggressive. We sent some emails out to some people that had similar domains or companies – like for instance, CarRentalCompanies.com. We contacted the big car rental companies back in ’99, told them we had this domain. Back then we had to explain what we were really talking about. That was quite interesting. But we are rationalizing the processing more now.
Monte: Right, right, right. That’s great. Now, let’s move over to the development side and give us an idea of what you’re going to be doing in terms of the development of your portfolio. Where do you learn from your past experience, both in your current consulting business and in holding these domain names, and starting to develop them and putting a stop on that when kind of things settled in the market? What is your strategy going forward? What kind of sites are you going to focus in on? How are you going to efficiently and effectively build out some sites that are going to bring you some nice return on investment? Give us an idea of . . . what’s your go-to-market strategy on the development side?
Dave: To be honest, the go-to-market strategy is in the incubator process right now. We don’t have all the answers. I know that we have some pretty good marketing skills. We don’t have good development skills. Gary Freedman is going to help us with that but we also need . . . we’ll probably have to partner with some development companies, you know, whether they’re offshore or here, I’m not sure yet. But, I still like the idea of verticals. I know it’s not called URL forwarding or pointing anymore and its different, but in a lot of ways its still the same. I like . . . we’re thinking of developing categories such as financial services, credit cards being one; I have to come out of the credit card industry originally, so we have a bunch of credit card related . . . as a matter of fact, I think we sold platinumcreditcards.com, as an example, in the silent auction . . .
Monte: Yes, you did.
Dave: Automotive financial services, uhm, uhm, household goods, uhm, uhm, whether its furniture or interior paints or window replacements; then, then, we’ll probably have a couple of semi . . . semi hubs or hubs within those categories. So like, automotive, as an example, if we develop that out far enough, we’ll have an SUV category or you know, a sedan category and those would be separate sites. I’m not sure. We can’t . . . we don’t have the resources, the dollars and the people power to develop too many of them, so we have pick out the ones we want to develop and what I don’t have a good feel for is how quickly PPC and affiliate marketing and whatever else is coming next is going to change our plans.
Monte: Right.
Dave: You know, it may turn out that we’re better off staying with just a small number . . . developing just a very small number of sites but going with what a lot of people are doing today. You know, partnering with companies like yours or Domain Sponsor or whatever.
Monte: Right, right. Uhm, now, Dave, we’re going to take a short commercial break and pay some bills here. But when we come back on, I’d like to get your perspective on two things: #1, what you thought about the Madison Avenue Panel, which was one of the most interesting panels that was at TRAFFIC; and how you apply some of those things that you got out of that panel to what you’re going to be doing in the future; and then I’d also like to get a sense of your own, just core business and consulting experience and how one can go about (who hasn’t gotten into the market yet or maybe some of the domainers that are listening) can be better and more effective at what they’re doing using some the experience that you have as a consultant that you know, obviously you’re in front of businesses and people trying to make their businesses more successful every day, and maybe we can get to some core issues that we can apply across what brick and mortar companies are doing and across what Internet companies can be doing or what domainers can be doing to be more successful. That sound fair?
Dave: We’ll do our best.
Monte: Okay. So, stay tuned, we’re going to take a short commercial and be back on with Dave Evanson.
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Monte: Hey, folks, welcome back to Domain Masters. Just a short commercial break; back on with Dave Evanson, who’s a domainer since 1999, owns a portfolio of close to 20,000 domain names. We sold 53 domain names of his in the live and silent auction just a week-and-a-half ago. So, Dave, we were discussing a little bit about some of the factors that you put on in terms of selling domain names. Uhm, give me a perspective from your consulting and business experience . . . first of all, give me a description of what you currently do in terms of your management consulting business. What type of clients do you manage and consult with? And how do you help them be better business men?
Dave: Okay; we’ve been around since ’91. Now there’s 19 or 20 of us. We’re focused in marketing, all aspects of marketing. We’ve, over the last 8 or 10 years, we’ve worked over 20 Fortune 500 companies in financial services, credit cards in particular, uh, telco, publishing, uhm, uhm, some real estate and we help them with their marketing strategies. Most of them have been offline until now. But their marketing strategies have been direct response, their branding, their product development, their growth strategies for the most part. And [inaudible] . . .
Monte: And, do you spend a lot of time on any online type type of . . . like, are you using your domain experience to help people get and cover their domains when you’re talking about their marketing strategies?
Dave: We do some online work but its not domain related. On the few occasions – I haven’t done it in a couple years now but on the few occasions where I have talked to clients about domains that I thought they might be interested in, it didn’t go very far. And it wasn’t even necessarily my domains that I thought that they should buy; you know, it was domains, period. And it didn’t go very far. And I found some of the conversations at TRAFFIC in Miami, Hollywood last, a couple weeks ago very interesting, because they rang true. And I think what’s happening now is that more and more corporations are getting it. We have . . . some of this is not original thinking but I actually heard some of this but as the marketing managers get older and start moving out, and the younger folks in their twenties and their thirties get more and more decision making authority, they’re beginning to put more dollars online, of course, but even their spending it on keyword buys and they’re being to put more money into domains. I think that, for the most part, these folks have budgets up to maybe $5,000 and in some cases up to $10,000, and making [inaudible] domains without any questions asked. But once it goes to the premium domain level, you’re talking about a hundred grand or fifty grand or certainly a million dollars – they have to stand up and stick their necks out and convince older, senior management that this is a good buy and that its going to generate enough business for them over, say, a two-year period that it makes sense. But I sense that as domainers we’d like to see that happen sooner than later. I sense its happening; its just going to take a little bit longer than maybe some of us would like. I also think that an analogy that I can draw from my consulting experience is that over the years, advertising agencies, Madison Avenue, have recommended trillions of dollars of media spending on TV, print, radio to Fortune 500 companies. GM, alone, ten years ago spent $3 billion a year on offline advertising. The advertising agencies (and it may have changed recently but I don’t think so) never (never’s maybe too strong – hardly ever) recommended to their Fortune 500 companies that they advertise in the Yellow Pages. And I’ve maintained for years that the reason that was the case was because advertising agencies used to get paid 15% of the media placement. So on $3 billion, whatever that it is - $450,000,000 worth of media commissions would go to the agency. But for Yellow Pages spent, the agencies got zilch.
Monte: Right.
Dave: They had no incentive. What I would like to see happen, and I was actually planning on talking to some folks about this in Florida and it just didn’t happen, is I’d like to see if domainers in the industry can get together somehow and figure out some sort of incentive plan so that agencies do make some profit off of recommending that their clients spend money on domains. In fact, if their clients were spending money on domains, that would probably come from the same budget that the client would have for advertising; its not going to come out of, you know, an operating budget. So, the agency has disincentive to scare money away from TV or even online where they are making money. But there certainly is disincentive to recommend domain names, because they don’t make any money on that.
Monte: Right, right. And, obviously, we got a little bit of taste of that – you did attend the Madison Avenue panel, correct?
Dave: Well, I was actually hoping you weren’t going to ask me that directly – to be honest with you, that was the one panel I had to miss; it was one I wanted to see but I did have a long-standing conference call that I had to take so I did miss that one.
Monte: Oh, okay; well . . .
Dave: But I heard about it. I heard it was terrific and I know that its one of the themes – Howard Neu mentioned it’s the theme for the next time around.
Monte: Yeah, yeah. So, this very basic groundwork is now starting between domainers and our industry and Madison Avenue, the big advertising folks that make the choices and help the large corporations and the Fortune 500 and Fortune 1000 spend these dollars. And I think that both sides kind of got a good perspective of where people where sitting when it comes to why aren’t the big corporations, you know, jumping on the bandwagon here. You know, why is it that someone like Rick Schwartz owns the name “Candy” and Hershey’s or Nestle’s or Cadbury does not. You know, why is it that Jim Beame and this huge conglomerate holding company doesn’t see the value of buying Whiskey or Bourbon.com, you know, when they could own . . . especially when you probably could get a good perspective of this but I, as a domainer and also as somebody who’s been in healthcare for long time (that was how I got started) and finally some of the healthcare companies are starting to get it. For example, GlaxoSmithKline bought Asthma.com; so now they own that disease and are responsible for the content and the direction that they get potential customers and end users and asthma patients to go and be drawn into their product and into their brand slowly into viral marketing by owning that particular domain. Uhm, Johnson & Johsnon’s ownership of Baby.com and how they’re now taking the responsibility of guiding mothers and people with children and babies and newborns of what’s going to be on that website, you know, forever, you know, probably a hundred years, because that’s an old family established organization. And so what’s happening is I think that the corporations, after a couple more Madison Avenue panels, the information will funnel down on how important it is to not only own a brand for customer acquisition and education and information and viral marketing, but also to prevent competition from not . . . I mean, the ownership of a name with natural type in traffic is totally geared towards a particular industry that a company owns is far more valuable than trying to go spend it and not being able to measure through TV and newspaper ads. I mean, do you have that same sentiment and feeling?
Dave: Absolutely. The point’s well taken. Absolutely.
Monte: So . . .
Dave: Let’s not forget, it’s only been about 10 years. And the industry’s come a long way in 10 years and the buyers, the marketers of these large corporations, you know, maybe today they see a lot more than they did 10 years ago. Five years from now I think you’re going to see a lot of movement, you know?
Monte: Yeah, definitely. And that’s our purpose of . . . our company and our marketing folks actually help put this panel together for TRAFFIC and we want to use the combineation of the auction format and the panel to draw the corporate buyers in to why they should be owning domain names and be able to do that. And actually, there were a couple of corporate buyers that actually came to the auction, uhm, they didn’t actually win the domain names they came out to get but at least they showed up. 1-800Flowers was there, for instance, and they were bidding on Flowers.mobi and they wanted that name bad; so bad enough that they made the trip down, they bought the one day pass, they wanted to be there and they thought that they were going to get it. No one knew, obviously, that that domain name would sell for $200,000; they stopped their bidding at forty. [laughs]
Dave: Well, you know, Rick showed them that he wanted it.
Monte: Yeah; and he did want it and he believes if there’s any extension that could have a future, it could be .Mobi because it’s a whole new platform, so that was a surprise to all of us. The good news is that for the next auction and the next TRAFFIC meeting, we are going to vary [inaudible] point the marker to the corporate world to bring them to the table and it would be also good for them to be in attendance when we’re talking about the Madison Avenue panel again, when they see that kind of conversation going back and forth between the folks that own some of these key generic domains and those that are looking for . . . don’t know that they’re sitting out there to be acquired, and that they can be acquired, for what some people think could be reasonable prices now. But in the corporate world, when they see it’s taken or even in the Madison Avenue world, they just move onto another brand and don’t even bother.
Dave: Mm-hm.
Monte: You know . . .
Dave: I agree. I agree with that. In fact, I think it would be great if the association that we’re forming or have been formed, or maybe . . . and/or some of the companies like yours could participate in some way in the large . . . at the large advertising conferences. I happen to be in New York the other day, so I did walk through at AdTECH . . .
Monte: Yeah, we were there; we’re the only registrar that actually exhibits there, so [laughs] . . .
Dave: I know. And you had a full page ad in the . . . you had a full page ad in the conference guide, uh, book, whatever you call it
Monte: Book. Yes.
Dave: See and I frankly think that went a long way for the industry.
Monte: Yes, definitely. That’s why we’re there. We started attending AdTECH a year and a half ago and we’re the only registrar there and still are the only domain asset management company is what we really are. And so we are trying to get it through their heads in different angles and different ways and it’s, like you said, it’s going to come around, you know, its definitely going to be there. Well, as we wind up, Dave, perhaps you could give some insight, uhm, to those that are just starting off or those that maybe think its too late or those that actually hold domain names – can you give three or four major points that you’ve learned from your experience not only as a consultant for strategic marketing positioning for your corporate clients, but also as a domainer? How does one really go about being successful now, in todays world, with both the momentum that we have and the challenges that are ahead of us utilizing some of the things that you learned that maybe some other people don’t know? Some of the things that aren’t really basic to people. Can you give us some pointers on what to do to really be successful in this business?
Dave: Well, I appreciate the question. I certainly don’t have all the answers. But, I think diversification is a good thing to think about – sell some, buy some, uhm, develop some, monetize some. I think the exchange that I’ve seen in one week that I’ve been involved with in Rick’s Forum is phenomenal. I think the industry is sharing. A lot of very smart people, I think, that there’s a very healthy exchange of ideas that’s leading to good things. I think trying to understand the buyer, who the buyer is, what motivates the buyer and setting realistic expectations in terms of what the buyer can do and what you really want to do. Because there is the chance – I happen to be very bullish on the industry – but there is a chance that there’ll be some kind of technology shift or uhm, or, or a major policy change that comes down from the government, you know, that makes it less advantageous than it is today to hold a bunch of domains and have traffic. But I think we’re doing a lot of the right things. I say “we” and I’m just getting involved. But I think working with the various Streets – Wall Street, Corporate American, Main Street, uhm, Madison Avenue – I think as we do that as an industry, I think we understand a little more about who they are and figure out what our role can be with those, uhm, sectors or targets of . . . of . . . targets of interest, I think we’ll carve out a very interesting and meaningful and relevant niche within the industries that we are surrounding, or that are surrounding us. But in terms of your own portfolio and if you’re thinking about selling, there’s . . . I see a lot of tools. Maybe you’re familiar with them but I’m just getting comfortable with them. Like in the real estate market, a real estate model, the comparables like when you’re buying a house. Or selling a house. You look for comparables. Well, there are some sites now that give you comparables and you can . . . you have some choices now in terms of valuation.
Monte: Right.
Dave: So, uhm, I think continuing to exchange ideas and I think we should all be nice to each other when we’re contacted about domains, you know, we should try to understand where they’re coming from, try to tell them where we’re coming from, whether it’s a buyer of one domain or a portfolio. I think . . . I don’t really know a lot about the affiliate industry yet but I hope to soon but I think we have a lot . . . there’s a lot of potential there. I’d like to see some rationalization of the . . . or even an equation, if there is a way to do it, a quantitative formula that ties together a domain name with type in traffic, keyword search and paid search and you know, maybe there’s a way to value along those lines as well. I know that, uhm, some people say it already exists and maybe it does but . . .
Monte: Yeah, we actually provide that service through our appraisal service and actually are in the beginning stages re-engineering the entire domain appraisal data based off of the current – even more current – metrics to help really get to a value of what a domain name is worth, uhm, using very similar technology and philosophy as the real estate world uses for, you know, evaluating properties and houses and buildings and so on and so forth, and getting very, very close to really saying, hey, this domain name is overpriced, its under priced, its at market. Uhm, you can count on this evaluation; here are the reasons why, here are the factors, here are the comparables and so on and so forth.
Dave: Makes sense to me.
Monte: Yeah, definitely. Definitely. Anything else that you’d like to add, or any other tips, tricks or secrets that you feel are valuable to share across the community?
Dave: Just that, as a newcomer – I mean, I’ve had the domains for 7 years or whatever – but as a newcomer to the industry, so to speak, and to the forums and the conferences, I think its important that we step back and realize, it’s only been 10 years. Ah, a lots happened in 10 years. The technology’s moving fast. The comprehension around what it all means is moving in the right direction. The whole industry, the marketing, the buying and selling of commodities on the ‘net, domain names as well, its still only 10 years old. And I think five years from now we will move more than we moved the first ten years, so I think there’s a little bit of patience required but not a lot.
Monte: Good. Good. Well, David, I really appreciate your and your experience and your willingness to share. Uhm, you know, your core, non-domain experience and how you’ve applied to your domain success and I’m glad that you were able to get into the TRAFFIC conference and that you’re going to be at the Affiliate Summit, so we’ll get to sit down and talk again and also, we look forward to working with you as a company and help you be more successful as a domainer and help increase the value of your portfolio.
Dave: I appreciate that and I certainly appreciate the opportunity to speak with you tonight.
Monte: Yeah, definitely, and it was great to have you on the show and I know it’ll be a great download and podcast for those that weren’t able to make it tonight. So thank you very much for your time.
Dave: Thank you.
Monte: Alright, take care.
Dave: Thank you; bye-bye.
Monte: Alright, with that said, thanks again to David Evanson and again, he has 20,000 domain names and has just – although he didn’t have the final numbers – he . . . sounds like he just got into the black earlier this year from the entire investment that he’s made. Now this is an incredible acquisition because he basically, with the excepetion of one name that he bought for $4,000, which was the very first domain name that he bought (which was Inheritance.com in 1999) he acquired 20,000 or 18,000 domain names in a single year period, from 1999 to 2000. And so there was a huge . . . if you think about that expenditure, you know, its $70 a piece here – he spent a huge amount of money. So, uhm, he had to be able to monetize that and sell some and build out a strategy so he’s just now getting into developing his websites and he’s been able to sell enough names and buy enough names where he’s able to offset his expenses and be able to become positive, so hopefully everybody that’s listened to this has taken his feedback and some of his tips that he’s laid out and will be successful if they do.
For those of you that want to just check on the status of the auction and its close, or read about the auction that we had a week-and-a-half ago, DNJournal just published a cover story about the whole event at TRAFFIC and there’s a great part about the auction in that site, so go to DNJournal.com. Also, right after following my broadcast, there’ll be a rerun of the entire domain auction, all 4 hours of excitement, or 3 hours of excitement (I think they’ve tailored it down) and you’ll be able to listen to the show, listen to the broadcast of the domain auction and see how $5.3 million worth of domain names sold live in front of everybody’s eyes.
A reminder for next week – we will be at WebMaster World and most likely be doing a live show from the show floor at WebMaster World. I’m also speaking at the conference and we’ll be talking about domain names and the legal challenges and ramifications and opportunities there are in owning domain names. I’ll be on the panel with Howard Neu, actually, from TRAFFIC and we’ll be talking to a roomful of audience about the domain business and how to be successful in holding and protecting your domain names from a legal standpoint.
With that said, I will see you all next week, live from WebMaster World with the WebmasterRadio crew, live in Las Vegas, at WebMaster, uh, the [inaudible] conference in Las Vegas. Be the master of your domain and I’ll see you next week live on Domain Masters. Take care.
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