By Jay Finnan, Portfolio Sales Manager
Portfolio Management
Perhaps you’ve been managing a domain portfolio for years or maybe you’re just getting started with your plans to build a portfolio. We’ve seen a lot of changes in the domain industry over the last year, some positive, some challenging. Whether you’re an old pro or just beginning, this spring is a great time to take inventory and make sure your domain business is on the right track for success this year and beyond.
Business and personal finance gurus like T. Harv Eker, founder and president of Peak Potentials Training; and Robert Kiyosaki, author of the book Rich Dad, Poor Dad will stress a few pearls of wisdom over and over again. One of them is to always surround yourself with assets and limit your liabilities. Good domain portfolio management is just like that. In execution, of course, it gets more complicated. For those building their first domain portfolio it’s key to treat it like any business and always maintain a positive cash flow.
For those with an established portfolio who are looking to grow or liquidate, it’s important to maintain a portfolio that works with the current market trends.
Investing in undervalued domains
Beyond the .com market are several Country-Code Top-Level Domains (ccTLDs) such as .CO.UK, .CA and .ES, that continue to see growth in popularity, sales and parking revenue. In fact, many web savvy countries have chosen to invest in ccTLDs over .COM domains. As the world continues to get wired up it’d be wise to invest in these “emerging markets” by picking up a few good keyword ccTLDs while they’re still relatively cheap.
Of course great deals on .COMs, .NETs and other popular Top-Level Domains (TLDs) can still be found. However, since the competition for these domains is so high, we suggest that you jump on the chance to invest in them if the opportunity presents itself.
Selling overvalued domains
You never want to hold anything beyond its peak in value. If you know a certain segment of your portfolio is overvalued like your 3 letter .COMs for example then now may be a good time to put them on the market. Even if there isn’t something there to reinvest in immediately you’ll enjoy the flexibility that having cash reserves will give you. You don’t want to be in a position down the road where you NEED to sell in order to generate cash. Think of a mutual fund; even the most aggressive funds keep 3-4% of the value in cash.
You should always be on the look out to rebalance your portfolio by selling off some of the overvalued assets and reinvesting in undervalued assets to allow for future growth. A well balanced portfolio with a global traffic base and reseller appeal to buyers in Europe, Asia, South America and elsewhere will put you in a good position to sustain the challenging market conditions and allow you tp capitalize on your undervalued domains when their market sees growth.
Special projects to add value to your portfolio: Optimization, development
You’ll want to make sure you make the most of your portfolio. Doing so requires a good understanding of where your cash flow comes from and what kind of business model you want to pursue. If your business model is entirely based around monetizing traffic then your key concern will be finding a parking program or mix of programs that make the most out of your traffic.
If, on the other hand, you look for sales as well as parking to add to your cash flow you’ll want to make sure your domains are in the best possible position to receive offers from as many people as possible while pricing them accordingly to make sure you hit your sales quotas throughout the year.
At Sedo we’ve found the relationship between parking and sales to be quite strong. The first thing many buyers do before making an offer on a name is to type it in. When they get to a page that allows them to make an offer right away this dramatically improves the chance of getting a solid offer from the interested party. A stated price also helps.
Planning for an end game sale
If you’re in the game to move your entire portfolio than you’ll want to make sure you have all your ducks in a row before it’s time to actually make the sale. Portfolios are of interest to a relatively small number of investors and businesses that are active in the domain space. A well connected broker can save you lots of time in finding the right buyer with the capital to move on the sale immediately.
A good broker will also help you assess the current value for your portfolio. A broker with years of experience trading domains should have a firm grasp of current market conditions and an idea of industry trends. True value is difficult to assess. However, having a good understanding of the liquidity value before hand will help analyze offers as they come in.
Don’t let your deal die on the vine. If you’re preparing to sell a large portfolio make sure the transfer is easy for the buyer. Nothing is worse than having a large sum of money sit in escrow while pages of auth codes are sorted through and the logistics of moving domains from many different registrars are sorted out. If you can move your portfolio to one registrar account a transfer can be as easy as the exchange of a username and password. It will make your buyer happy and ensures the deal goes through without a hitch.