In an announcement just sent out by the TRAFFIC organizers they are going to shake up the Live domain auction market.
As we all know TRAFFIC was the first conference to hold an live domain auction and through the years with Moniker held the most successful live domain auctions with some in excess of $10 Million dollars.
Over the last couple of years we also know that Live domain auctions have failed to create a lot of sale volume and even fewer high dollar sales with most failing to even break the $1 million dollar barrier much less the $10 Million of just a few years ago.
In an email sent out by TRAFFIC today they set out there strategy to shake up live domain auctions by controlling the inventory and allow people for a greatly reduced commission to get guaranteed placement into the live auction.
This is an interesting idea.
Typically the commission on the live auctions have run 15%.
What TRAFFIC is trying to do is us a blended rate, a payment from the seller upfront for position, which incentivizes the Seller to set a reasonable reserve and to market and promote the auction (otherwise they waste their buy in fee).
For the Seller it gives them a guaranteed placement in the auction and a huge savings off the typical 15% commission if they domain sells.
Actually under the sliding scale commission can be as low as 6%.
A $1,000,000 reserve domain would cost $5K to place into the auction but if it sells the commission would only be 6.5% and a savings off the typical 15% commission rate to the Seller of $82,000.
Here is the highlights from the announcement:
“We have been working on a new auction format and rules since October and discussed it a bit with this post earlier this year. So without further delay, this is what we intend to do in October to change the dynamics of the live auction.”
“The only domains that we will accept directly are the ones that have a flat fee paid in advance for the listing. ”
“All other domains MUST go through one of the brokers like Sedo, or Aftermarket.com or any of the other premiere brokers in the space. ”
“We will be publishing a list in the next few weeks. ”
“Each of those companies will submit their list to us and we will work closely with them to choose the ones we think will sell.”
“We will supply the venue, the auctioneer and the production.”
“Those supplying names to us for our “Guaranteed Placement Program” will pay a flat fee and a very attractive commission schedule that can save you a lot of money IF you are serious about selling and IF you want to participate in your marketing. If you have been frustrated by not having the auction houses select your name, this gives you control RIGHT NOW!”
“Even the more modest levels will save you quite a bit by paying a listing fee and showing folks you are actually serious about selling your domain name at an attractive price. On a $50,000 domain name you will save $2500 if you are willing to step up with $1000 up front to guarantee your placement in the auction. The savings get more substantial on higher ticket domains. A $1M domain name will save you $82,000. ”
“Plus, you can list TODAY and have 6 MONTHS to market, promote and be public about it. The last thing you want is to have it in just days before the auction. DUH! I think historically the auction list would come out 2-3 weeks in advance and that really was no way to do it. I hated that. I know it takes TIME to get the word out.”
“We are going to change the dynamics of the auction and we are going to see some excitement. We don’t need or want 200 domains for a successful auction. We just need motivated sellers that know we have the premier domain audience at our shows and all they want is a great domain.”
“Bids will start low and work up from there. ”
“The days of looking for suckers at high levels is over as well as narrow and high reserves.”
“This is a wholesale auction not a retail one”
“Every auction should be a contest. ”
“That is why I don’t care if there are 5 names in the auction, 10 names, 100 names. The only thing that counts is there are interested parties ready to bid and prepared to win. The days of 200 domains crammed in an auction to put everyone asleep are over. ”
“Bottom line, a serious auction for serious buyers and sellers. No fake bids or prearranged sales to save face. No return favors to include crappy domains that wastes everyone’s time. Our auction is the “Main Event” and it should look and FEEL that way.”
Rick makes some great points.
Auctions should always start from the bottom and work there way up. I always hated it when the auctioneer started a domain that had a stated reserve range of $5K-$10K at $100,000 then started dropping the price usually all the way back to $1K.
Stupid and a waste of time.
Aftermarket actually did a nice job in the Bahamas of running a live auction and although there were not any “big” sales, the sell through rate was over 50% and most of the domains that did not sell still got some nice bidding action especially compared to the last DomainFest that featured a huge amount of high priced domains, none of which sold and made for a very uninteresting auction.
Hopefully this new approach will shake up a format which has gotten pretty stale.