Hi, Deven
First, let me compliment you on your outstanding customer service here. Your responses are patient and detailed.
Now, on the subject...
I'd suggest that Alter puts itself in investor shoes, not the other way around. Most investors have 10-200 names on a given platform. It would take them years of commitment to figure out if the platform is giving them an edge or not due to the rules of statistics. 100 names are normally expected to produce 1 sale, but it could be 0 it could be 2-3 in any given year. So they won't know if it was due to the efficiency of the platform or pure random luck.
Now, 5000 names, on the other hand, your data would be more representative and useful for those that haven't joined, like me.
I have refused to grow my portfolio with BB, BP and SH since they stopped publishing this data and won't join any new platform without this. I am getting around 1.5% STR with Afternic landers and my own and I need to be certain that a platform gives an investor considerably above that for me to be worth the trouble. And that is without factoring in the investor risk that a platform will start big and then decline like BB and SH with some investors reporting having 300-500 names and not having a single sale in months. I am in similar position as well, btw, with around 650 names on BB, BP, SH and just 2 small sales in about 7 months combined from those three. For comparison, Afternic has provided around 5 sales in that span on similar size sample (I have 9000+ with Afternic) with considerably less commission on each.
Thanks for the compliment! I completely agree with you and actually take pride in putting myself in others' shoes. This is exactly why I was transparent with our numbers (at least the ones I thought were useful).
I do understand your concern and am trying my best to help address it if you're willing to listen. Please realize that there's no simple answer that's going to help you determine which marketplace works best for you.
Let me explain. And please feel free to add your own thoughts based on our own experiences.
A/B Testing STR
My last company offered analytics software to 300,000+ marketers so I understand how valuable data can be. However, most of the metrics people look at are typically
vanity metrics that make us feel good but don't actually help us make any useful decisions. Marketplace STR is a vanity metric.
A marketplace is essentially the sum of all seller portfolios listed on it. So if the quality of the names on marketplace A is higher than marketplace B, marketplace A will naturally have a higher STR compared to marketplace B. And that tells you absolutely nothing about how well your personal STR will be on either because the quality of your portfolio may be better or worse than the average quality of the names listed on that marketplace.
For instance, on Alter we have sellers who have STRs up to 20%. Does that mean every seller on our marketplace will have the same STR? Heck no! Most sellers will be nowhere near that range because sellers with super high STR typically own ultra premium names that cost thousands to acquire in the aftermarket.
The problem is that the rules of statistics aren't as applicable to domains as most people seem to think. There's no way to A/B test anything properly because there are way too many variables at play. Some of the those variables that impact STR include:
- Name Uniqueness: Each name is unique in that a single change of letter could result in a completely different name with a whole different meaning and quality (e.g. "visa" is 100X better than "iisa").
- Domain Price: Since there's no single formula that you can use to value domains they're priced all over the place. Naturally, a lower priced domain will sell quicker.
- Listing Window: Trends are constantly changing in business every few months so what sells today may not sell tomorrow (i.e. you have yearly trends like holiday/tax/school/voting seasons, mixed with larger trends like pandemics/stock markets/healthcare/inflation, mixed with consumer trends like clean energy/healthy eating/remote work, mixed with increase in mobile usage/decrease in domain usage, etc, etc). All of these trends affect STR.
- Portfolio Quality: As more and more names are sold, the quality of a portfolio naturally drops because again each domain is unique and over time all good domains are going to be sold out. This means the overall industry STR is always decreasing.
- Marketing Budget: Every marketplace has a different marketing budget which isn't always consistent over time so your domains may get more exposure in January and less in February.
And these are just a few variables I thought of off the top of my head. There are plenty more. So unless you have a way to list the
same name at the
same price across different marketplaces at the
same time, you will never be able to produce any conclusive results.
A/B testing by definition is a way to compare two versions of a
single variable. Like if you were trying to determine the STR of the same model of headphones on Amazon vs Walmart. A/B testing doesn't work if you're trying to sell a headphone on Amazon and a heater on Walmart during the winter. Those are two different products, two different prices, two different time frames, that appeal to two different audiences.
The only way I can think of where an A/B test could theoretically work for domains is if you take a good sample size of names (at least a few thousand), list them for a year on different marketplaces at the same time using TXT record verification, not use any landing pages to prevent traffic leakage (i.e. the domains would forward nowhere when typed into the browser), and refund any sales that occur during that period to prevent portfolio quality from changing. That would get you very close but still won't be accurate because the experiment won't account for the varying marketing budget of each marketplace during that specific time frame.
My point being.. A/B testing domain STR across different marketplaces is an impossible task. Most marketplaces understand this which is why they don't try to compete on it. They focus on the features and benefits instead. But as humans, we want a simple answer to everything so we latch onto the easiest formula we can find (marketplace STR) even though it's wildly inaccurate (vanity metric).
Transparency
I'm not asking you to choose Alter blindly. We have been very transparent about how much traffic we're generating to your portfolio through our traffic breakdown chart that looks something like this (you can view the data at the portfolio level or at the individual domain level):
Marketplace: Visitors learned about the domains from our marketplace.
Partners: Visitors learned about the domains via our partners (estimated).
Direct: Visitors learned about the domains by typing them in their browser.
Again, every seller's numbers will vary based on their own unique portfolio so I can't just give you an exact number in terms of how much you will benefit from our marketplace. But we do provide this tool to make that decision super easy.
I haven't seen any other marketplace offer this data.
New Direction
I think a lot of sellers are looking at this all wrong so let me provide some more insight.
The whole point of the change was that running a brandable marketplace at 10% commission is very unprofitable especially with a small inventory. You can go back and check our numbers to see what I mean (we were operating at a major loss). And even at 30% commission it seems like our competitors aren't able to make it work which is probably why they keep increasing their own inventories to 100K+ names. It seems like every brandable marketplace eventually ends up at the same spot as we've seen countless times in the past (increase inventory to be profitable).
And I don't think these other brandable maketplaces are cash cows like a lot of people suspect. Why? Because during the last couple months we spent a considerable amount of money marketing on Google/Facebook/LinkedIn/Twitter/etc and noticed that the customer acquisition cost was wayy beyond $1,000+. That means it would cost way more than $1,000 to acquire a single customer who ends up buying a $2-3k domain. Of course, we don't know the exact CAC because of our very small sample size but my point is that it's super expensive to acquire customers through ads (it could cost $1k or even $10k to acquire a single customer). This is probably why they charge 30%
and increase their inventories to 100K+ names (bigger inventory = more direct traffic = free advertising).
So rather than raising our commission to 30% and still having to increase our inventory like our competitors, we decided to take a different innovative approach that allows us to sell more at the same low commission as before.
Moving forward, think of Alter as a
hybrid marketplace where you can list both brandable and non-brandable names at one low commission of 10% which is on par with what you would pay at other non-brandable marketplaces anyway. But with Alter you would be able to take advantage of all our additional benefits (i.e. our marketing, customer service, installment plans, logos, partner syndication, etc).
These benefits apply to standard listings as well.
Let me repeat, both premium and standard domains receive the
same benefits except that premium names appear higher in search results. Think of premium as the "Amazon's Choice" inventory on Amazon with a couple other minor benefits like professional logos and appraisals.
We've also seen sellers intentionally
downgrade to standard because they didn't agree with our appraisal. And there's nothing wrong with that, it's just a different strategy that works for them. Our new approach works with that strategy while the old one wouldn't have.
Another reason we decided to do this is because we realized that quality is often subjective and there were plenty of instances where a name that we had declined sold elsewhere. On the other hand, there are names that we accepted that haven't sold yet. This new approach fixes that problem because sellers can list their names regardless of what we think of them based on
what works for them. We simply surface the best of the best for a little extra exposure through premium.
With Alter, our goal has always been to be super efficient at everything and reinvest majority of the profit we generate back into marketing. In fact, while we were marketing our inventory on AdWords we noticed that there were only two other brandable marketplaces competing for the same ads (based on impression share). One spent a little more than us while another spent less. And surprisingly, we didn't see any non-brandable marketplace on that list.
We might be the only marketplace that actually markets non-brandables.
Since we launched the marketplace last year I have invested thousands of dollars into the company and haven't taken a single dime out because I truly believe that this new direction we're taking is the future (i.e. pool everything together and let
quality win with a little extra manual push via premiums).
Optimal Strategy
I'm sure everyone here would agree on one thing. That more quality exposure is always better regardless of how much it is. You never know if that one dude or dudette on marketplace X ends up falling in love with your domain even though that marketplace only brought in 1% of the overall traffic. In fact, we didn't receive a single inquiry from any of our partners over the last 3 months BUT just recently got a $20k lead from one of them. And keep in mind that our partners only generate about 3% of the traffic.
My point is, even an additional 1% of exposure could lead to a big sale. So instead of comparing different marketplaces against each other, why not optimize your strategy around
maximum exposure instead by listing your names on all of them?
As I mentioned before, after spending thousands on marketing we noticed that 80-90% of buyers came directly through the landing page. These are also decided buyers that are already attached to the name so it doesn't matter which marketplace you use for the landing page as long as it's
trustworthy (i.e. offers multiple support options, has decent reviews, and some social proof like media logos). For the rest of the 10-20% of buyers who don't come directly and are undecided about the name they want, it's just the matter of listing at as many other marketplaces as possible.
Our goal at Alter is to (1) provide a super trustworthy landing page and (2) drive as much quality traffic to it as we can at the lowest commission possible. So why not point your domains to Alter and list them everywhere else too? That way you pay the least amount possible for the most probably sales channels (direct + extra exposure through our marketing) and you still won't miss out on a potential sale elsewhere.
