I find it amusing to see eBay auctions of .com.au domain names with price tags in the millions of dollars. Today I saw “paris hiltons party” .com.au listed for $5,000,000 (Buy Now). Now I’ve always been a firm believer that “worth” or “value” is only what someone else is willing to pay. However, if someone (stupid) paid $5 million for a domain name like that, does it mean it’s valued at that price? Certainly not. I guess if it went to auction and at least two people were bidding to that price, then maybe. You could always assume that some other stupid person was willing to pay that much, so its “worth” it.

A domain name’s sale price, especially .com.au, is extremely hard to evaluate. There are lots of methods and key indicators the industry uses to value a domain name, such as length (characters), extension (.com.au not .net.au), number of words, hyphenations, spelling, plural/singular, common words, search engine counts, branding ability and so on. There’s also precedent or past sales, this is one of the biggest factors for appraisal of anything, unfortunately, there’s not a lot of data on Australian domain name sales.

I was recently present at TRAFFIC Down Under, for the Aftermarket.com and Rick Latona domain name auctions. I’ve recorded some data that may help you to appraise your domain name. If you have a .com.au domain name for sale, or would like some help with appraisal, I am happy to discuss it with you. The following names (Aftermarket Auction) sold in USD, at the time of the auction the AUD was at 64 US cents.

Hunting.com.au sold for $1,500
JobListings.com.au was passed in with a reserve of $3,000
Undergraduate.com.au sold for $1,600
Camp.com.au sold for $2,600
Jackets.com.au sold for $3,000
Barbecuing.com.au sold for $500
Essays.com.au sold for $1,600
SurfingLessons.com.au sold for $2,200
Shout.com.au sold for $1,000
Rules.com.au sold for $700
Toons.com.au sold for $500
Jeweller.com.au sold for $9,200
Athletic.com.au was passed in with a reserve of $2,000
Knit.com.au sold for $700
Laughter.com.au was passed in with a reserve of $2,000
MensClothing sold for $4,000
CDs.com.au sold for $2,000
Branding.com.au sold for $2,500
Authentication.com.au sold for $500
Pollution.com.au sold for $3,000
Enter.com.au was passed in with a reserve of $2,000
Plans.com.au sold for $2,700
Parasailing.com.au sold for $1,700
DirtBiking.com.au sold for $500
JetSkiing.com.au sold for $2,000
Bake.com.au sold for $800
Broadcasting.com.au sold for $2,000
Up.com.au sold for $2,700

The following names (Rick Latona Auction) sold in USD, at the time of the auction the AUD was at 64 US cents.

Adopt.com.au sold for $400
CampSites.com.au sold for $1,300
CharterAirplane.com.au sold for $2,750
Friend.com.au sold for $3,000
History.com.au sold for $8,500
Instuments.com.au sold for $2,200
Snowboards.com.au sold for $6,000

I intended to post some more commentary about these sales, but it’s dinner time.

I ordered a couple of copies of the book about domaining, “The Domain Game” by David Kesmodel. They arrived yesterday. There is a great post at Domain Tools that shows you all of the page references to different people / companies of interest.

David Kesmodel is a staff reporter for The Wall Street Journal. His new book demonstrates how many regular people have become millionaires through owning some of the most valuable domain names.

Working in the industry myself for over 8 years now, I am specifically interested in the references to people and companies I know. Just skimming through it and I am very keen to read it. I am a very slow reader, however this could be the first book I ever read from cover to cover (unless the movie comes out before I finish). I’ll definitely throw a copy next to the toilet and have the other one with me for a few weeks.

Everything sold in a retail environment includes a “mark up”, the term is used to describe the difference between the cost of producing the product and the “juice” the retailer charges for the product.

Mark up often varies from store to store, but why? One assumes it is simply because businesses want to make more money. However, price variation occurs due to other factors such as distance, local area marketing, supply and demand etc.

Purchasing a computer in regional parts of Australia is likely to cost you more than in the city. However, purchasing fresh fruit is most likely priced the opposite. These price fluctuations are due to variables such as adding the cost of distribution and general supply and demand.

When it comes to purchasing “electrons” or something in the digital world, you might ask; “Why do prices at one domain name registrar have mark up more than 20 times that of another?”.

Well, in the digital world it comes down to things like marketing spend (recovering the cost to acquire you as a customer), customer service (helping you costs money, they want that money back), technology (some registrars software is substantially better than others, it probably cost them more to produce). Even with all that considered, you will quickly realise that the highest priced registrars probably just want the PROFIT.

The Australian domain name registrars mark up the price of com.au domain names anywhere from $5.40 to an amazing $117.45!

According to AusRegistry, Australia’s official wholesale domain name provider, there are currently 25 .auDA accredited registrars.

The Australian Domain Name Administrator (auDA) charges a fee of $4.95 with every com.au registration. The wholesaler, AusRegistry charges $17.60 per com.au domain, making the wholesale rate of a com.au domain name $22.55.

These prices vary for the different .au products, as per below:

Below is a table of the auDA accredited registrars and the current retail prices. As you can see, Intaserve.com is currently the cheapest com.au registrar in Australia. This list is produced in alphabetical order, is representative of the minimum 2 year registration term and includes GST. NameScout Corporation is incorporated in Barbados and does not charge GST.

A ‘generic domain name‘ is a term often given to internet addresses that are generic in nature and most likely to receive direct navigation or type-in traffic. Generic, given the meaning ‘relating to or descriptive of an entire group’ refers to domain names or terms such as ‘cola’ rather than specific, and often trademark names, such as ‘coke’ or ‘pepsi’.

When a user is ‘actively seeking’ a product or service online, for example ‘comic books’, there are generally two means to arrive at a destination website that will fulfill their desires:

1. Search Engine Query - a user can search for the phrase ‘comic books’ and then select from the result set a website that suits their requirements, or;
2. Direct Navigation or Type In - a user bypasses the search engines and navigates directly to a domain name by typing in the phrase with no spaces. For example, ‘comicbooks.com’ or any other gTLD or ccTLD, such as ‘comicbooks.co.uk’ or ‘comicbooks.com.au’. Traffic that arrives with no other website referrer, often from a list of bookmarks or favourites, is also considered ‘Direct Navigation’.

Both of the above means are considered ‘intent driven searches’, as opposed to a more casual ’surfing’ approach which may result in a visitor arriving via a click on a banner advertisement or hyperlink on another website.

In general terms, intent driven searches are ‘worth more’ commercially. Conversion rates of such a user is higher as this user is actively seeking a product or service.

Research released by WebSideStory, Inc. (Nasdaq: WSSI), a respected web analytics and marketing firm, shows that search engine traffic converts more than twice that of traffic referred via normal hypertext links. The figures provided are 2.3% conversion rate for search engine referred traffic, versus a measly 0.96% from other referred traffic.

However, direct navigation traffic is shown to convert at almost twice that of search engine referred traffic. Direct navigation or type-in traffic is shown to convert at an average of 4.23%.

So lets look at this from another perspective. If you are in the business of selling comic books, looking at those figures above, it would seem highly advantageous to own generic domain names such as comics.com.au, comicbooks.com.au or at least look to purchase the organic traffic those names can supply.

Granted that type in traffic volume is generally no where near the volume that ’search marketing’ can supply, with such high conversion rates, it should be considered a necessary addition to your marketing campaigns. Look out for a future post on ‘How can I purchase direct navigation traffic?‘.

Here are just a few Australian companies I have found that are already taking advantage of direct navigation traffic.

Intertan Australia Limited (aka Dick Smith / Tandy) ‘owns’ electronics.com.au - As a B2C supplier of consumer electronics, Dick Smith are cashing in on type-in traffic from this generic domain name.

Dulux Holdings Pty Ltd registered paint.com.au and resolve their main consumer portal on the name, taking advantage of a premium branding opportunity and increasing traffic and awareness of their product.

Flight Centre Technology Pty Ltd have got hold of flights.com.au. If you type-in flights.com.au, you’re flying somewhere! I imagine that domain name converts extremely well for Flight Centre.

Those companies are using generic domain names to ‘value add’ to their existing web presence. There are many other benefits to owning generic domain names, such as search engine optimisation (for generic keywords) and search engine visibility.

Consider the ‘visibility’ in search results for the term ‘flowers’, which result would you be drawn to? A premium domain such as www.flowers.com.au or something like www.jennifers24×7floweremporium.com.au. Domaining is probably the only place where ’standing out’ requires you to be ‘generic’.

Of course, it doesn’t stop with ‘value-adding’ to your web presence, there are some other very successful entities that have taken generic domains and created entire businesses around a name, for example:

Realestate.com.au Ltd, the only real name in property, built a business around the realestate.com.au domain name. Of course, they don’t stop there, they are also the proud owners of property.com.au and various other industry related domain names.

So on that note, domain names are the real estate of the internet. Just like land, there is a finite amount of premium locations and generic domain names are the beach front properties of the internet.

Late last week, Thursday 13th December, the Australian Domain Administration (auDA) board approved the recommendations from the 2007 Names Policy Panel.

Overall there was not much of a change, the Panel agreed that the current rules for .au domain registration, renewal, licensing etc are all quite appropriate.

The Panel did recommend some changes to the transfer policy (change of registrant / owner) to allow “transfer of a domain name licence for any reason”.

In the new year, auDA will work on implementing the new policy, which will mean owners of .com.au domain names will be able to sell their domains for the very first time.

Previously, selling a .com.au name (transferring registrant) was a complicated process and according to the auDA publication, only those “in the know” were taking advantage of a supposed loop-hole in the policy.

Overall, I believe this will be a good change for the Australian domain name industry. For once we will be able to trade names like all other TLDs (Top Level Domains) .com, .co.uk, etc. Well, kind of. The new .au registrant still has to be eligible for the domain name and comply with the regular auDA policy, such as having an ABN.

It will be very interesting once this policy is active to see how people decide to sell, trade and ultimately transfer their Australian domain names.

I got through to the ATO today, regarding the letter I received about my ABN being cancelled. As I mentioned earlier, having an ABN (or any registered business entity) is required in order to purchase .com.au domain names.

Anyhow, the ATO girl (who sounded about 12 years old) simply ran me through a bunch of questions:

• What is your main business activity?
• Have you set up a trading name yet?
• Have you advertised you business?
• Have you purchased any business equipment / property?
• What else have you done to do with the business?
• When did you start trading?
• Is there other information you think is relevant?

After I answered all of the questions, she basically said I would receive a yay or nay letter within 28 days. I will follow up again when I get word.

I received a letter in the mail from the Australian Tax Office (ATO) recently. It looks like they are “cleaning up” the Australian Business Register (ABR). The letter says that because I haven’t reported any income against my ABN on my tax returns, I must not need it (my ABN, not income). Anyway, I originally applied for an ABN just so I could register .com.au domain names, as per Australian Domain Name Administration regulations.

This is the first financial year I could earn an income from my .au domains, and subsequently income on my ABN. Anyway, I have to call them and tell them why I need it. I will see if the “to register .au domains” is a good enough reason, and whether or not I can keep it on that merit only. Otherwise I’ll tell them that I am “just about to ramp it up”.

The other day I tried to call, I got put on hold but then something else came up so I had to hang up. I called back later and the message said something along the lines of “we are experiencing a high volume of calls and can not take your call right now”. I couldn’t even join the queue! I will let you know as soon as I can get through to them.