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T.R.A.F.F.I.C. East 2006: How Domain History was Made at the Westin Diplomat  - Page 2

Thanks to DomainSponsor keeping everyone up late, there was plenty of elbow room at breakfast Thursday morning, but by the time the first seminar on click fraud began at 10am attendees were back out in force. This two-hour session featured attorney John Berryhill, Dan Warner and the head of Google’s Domain Channel, Eytan Elbaz. Elbaz said that Google has a much better handle on eliminating click fraud than mainstream print outlets let on. You have to remember that print media is losing readers and advertisers to the Internet in droves, so they have a vested interest in trying to scare advertisers away from the new medium. 

John Berryhill - How come no one talks about dumpster fraud 
(newspaper ads that go straight into the trash)?

Berryhill made a point of showing how much paid advertising in print media is wasted, probably much more than is wasted online. For example, he held up a copy of USA Today which is distributed at most hotels free of charge. This is counted as “circulation” - sets of eyeballs reading the ads, even though a huge percentage of the distributed papers are thrown away and never read, yet advertisers pay as if their ads had been seen by the number of people cited in the circulation figures. 

Exhibit area

Warner said that the click fraud problem was much more one of perception than reality. He estimated that the percentage of ad spending lost to successful click fraud is less than 1%. 

Thursday’s luncheon was sponsored by Directi. The lunch break also gave attendees a good opportunity to explore the exhibit area which featured a record number of companies at this show. Domain owners could meet face to face with representatives from many well-known companies and get personal demonstrations of the services they offer. Many also gave out promotional items ranging from T-Shirts and beach shoes to umbrellas and tote bags. 

The afternoon session opened with a 1:30 seminar on valuing individual domain names and tips on selling to end users. Warner and Rohan returned for that panel where they were joined by Afternic.com President Roger Collins,  Sedo’s Chief Strategy Officer Matt Bentley and Robert Hoult, Executive VP at the Intersearch Group. Bentley and Hoult explained what factors end users look at in valuing a domain. If sellers look at it from their perspective and can make a persuasive case for how the domain can provide them with a real return on investment they can greatly increase their chances of making the sale. 

Left to right: Jordan Rohan (RBC Capital Markets), 
Robert Hoult (Intersearch Group) and Matt Bentley (Sedo.com)

I was on the panel for the next session that posed an interesting question, “If you had $100,000 to invest in domains, would you be better off buying a single premium .com domain or spreading the money out over 100 domains at $1,000 each in non .com extensions?”.  Joining me in tackling that topic were iREIT CEO Bob Martin, Sedo CEO and Co-founder Tim Schumacher, NameMedia VP Brian Taff (one of the original co-founders of BuyDomains) and noted attorney Ari Goldberger

iREIT CEO Bob Martin

Martin, Taff and Goldberger all like the tried and true .com approach, with Goldberger comparing having a great .com domain to owning a Picasso. Schumacher and I leaned toward more diversification. I believe the answer to the question depends in large part on what you intend to do with domains. If you plan to build a full time business on one and sell goods or services, I would take a great .com too. If you were buying for a PPC revenue stream, the .com will usually be the right choice as well. But if you are spending $100,000 with the intention of having inventory for a business devoted to buying and selling domains, I like having more than one egg in the basket, especially when we know that domains are currently an illiquid investment. Dan Warner estimates that only 1-2% of a typical portfolio is sold in a given year.  

Having a wide variety of carefully chosen non .coms (primarily .us and .info in my case) has been profitable for me for some time now and becomes more so each month as these extensions slowly but steadily gain recognition, especially in the small business sector that has been priced out of the market for quality generic .coms. 

It’s not surprising that Schumacher also likes the idea of spreading the money among multiple domains because Sedo has proven it works while building a dominant position in country code sales with major ccTLD extensions like .de, .co.uk, .eu and .us.  Schumacher showed an interesting slide that used stock terminology, Buy, Hold or Sell, to express his outlook for various extensions. His Buy column included .us and other major ccTLDs, .info, .mobi and IDN’s (International Domain Names). His Hold column listed .eu, .com and .net and his Sell column contained .biz, .cc, .ws and .tv

This topic provides fodder for a debate that could go on for months, but I think the bottom line is that you can succeed with either approach if you are careful in your selection of names. It’s hard to go wrong with highly searched keywords and good 3-letter combinations in major extensions for example. As millions of businesses pour online, .com continues to strengthen as the gold standard, but the overall pie is getting bigger, creating a steadily increasing market for some of the better non .com extensions as well. 

Tim Schumacher
CEO & Co-Founder
Sedo.com

The final session Thursday was one that T.R.A.F.F.I.C. co-founder Rick Schwartz called the “best seminar in the history of T.R.A.F.F.I.C.!”  It featured a Madison Avenue panel of ad agency and marketing executives who tried to explain why major corporations had failed to snap up the generic keyword domains that define their industries. The corporations are the entities that have the deep pockets needed to pony up the kind of money many owners of premium domains think their assets are worth. Bringing the two sides together could change the face of the industry and Schwartz believes this session was the first step in getting that done. 

Madison Avenue panel - Left to Right: Bill Lickson, 
Laura Sturtz, Lance Podell and Will Marigiloff

The panel included Bill Lickson, Director of Interactive for the Zimmerman Agency (one of the 20 largest ad agencies in the U.S.), Laura Sturtz from PR and marketing firm Euro RSCH Magnet, Seevast (formerly Kanoodle) CEO Lance Podell and Will Margiloff, CEO of Innovation Interactive. All four indicated that domains represented a new opportunity that the corporate giants have not yet recognized. They pointed out that corporate cultures move very slowly and that it could take a couple of more years before they start figuring it out. 

Schwartz frustrated by Madison Ave.

They suggested domain owners need to do everything they can to educate corporate leaders, including taking advertisements in trade journals they will see in their world. The fireworks didn’t really begin until after the panelists opened up the session to questions from the floor. As is often the case, Schwartz was the guy who lit the match. Using hotels as just one example, Schwartz asked the panel “How is it that Hilton and Marriott and Westin and all of the rest couldn’t figure out how many leads they would get from a domain like hotels.com? Instead of paying a million or two for a domain they now have to pay tens of millions (for leads) for the rest of their lives. So they flunked – they failed – and their advertising agencies failed them too!” 

This drew a round of applause and, as you might imagine, set off a spirited debate. The panel explained that corporations have been trained to think in terms of “brands” for 200 years now. They view their brand as something with qualities that set it apart from generics, in fact they view brands as the exact opposite of a generic term.

What we think they fail to understand is that a generic domain name reaches the consumer when they are thinking about buying something in a category, like an automobile, before they zero in on brands. Owning the generic domains, like cars.com, could effectively make them the gatekeeper for the entire industry, allowing them to intercept the customer and send them to the brand  they want before they go to a competitor. 

Schwartz is planning to bring the two sides together again at the next show in Las Vegas and Madison Avenue will be a centerpiece of the first New York show next June. In the end, the payoff could be greater than any other single effort domain owners could make. 

SmartName.com sponsored the Thursday dinner and partners Ari Goldberger and Larry Fischer brought an entirely new twist to the usual evening meal by running a game show featuring 5 contestants chosen from the audience.

They presented a list of domain names, such as MadonnasBaby.com, iREITDomains.com and CheapVasectomy.com and the contestants had to guess if the domains were registered or not registered. 

The first two names were unregistered and stumped the contestants who thought they would have been taken (of course someone did take them as soon as they got back to their hotel room!). To add to the fun SmartName put up a $2,000 first prize that was won by Name Intelligence CEO Jay Westerdal. It went over so well that Fischer said that he would start running similar contests online next week at DirectNavigation.com. 

Ari Goldberger (left) and Larry Fischer
SmartName.com

After dinner, many attendees had to choose between two great parties. iREIT.com loaded their guests on buses and took them out for a night at the Hard Rock Casino. At the same time, TraffficZ.com took a group on a cruise on the Intracoastal Waterway. They chartered the 100-foot double decked Miami Magic yacht for that event. I went along for the ride and wound up meeting brothers Michael and David Castello for the first time. They own a remarkable portfolio of one-word and geo domains including gems like PalmSprings.com and 117 other city names.  

Michael Castello (left) and David Castello
Castello Cities Internet Network, Inc.

The personable siblings also have a fascinating life story as a pair of musicians struggling to make ends meet who struck it rich in the world of domains. I found talking with them so engrossing I decided they had to be the subject of our next cover story and that is coming in December. 

The Castellos are a perfect example of a “problem” I run into at every T.R.A.F.F.I.C. conference, especially now that the shows have gotten bigger. There are always a lot of people you want to talk to but you inevitably run into someone with such a great story that you stop and go no further for the next hour or two! In the blink of an eye the week is over before you’ve made all of the contacts you wanted to make, but it’s a great problem to have because these special encounters frequently lead to great things. 

Continue to Page 3

  • Get Up Close and Person with T.R.A.F.F.I.C. Speed Networking 

  • The Record Breaking Moniker LIVE Domain Auction

  • See Who Won the 2006 T.R.A.F.F.I.C. Awards

  • The T.R.A.F.F.I.C. East Photo Gallery


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