Numbers and figures : The psychology of domain bidding

Bidding on domain names in public – or private – auctions, is a process that requires certain elements to be present, as part of a successful strategy.

To begin with, domains that are promoted extensively or prominently, most often don’t fall in the “great deal” category. They are simply chosen per the interest of their promoters, and quote often, with an ulterior agenda.

Joining an auction of a particular domain requires first of all extensive research.

Just because an auction is for a dictionary domain, or for a domain with traffic or one that falls into the “coinage” category such as LLL .com’s, does not mean that investing one’s money guarantees a return on investment.

With that in mind, domain investors must first choose a niche or category based on real world applications. Technological innovations, pharmaceuticals, health and nutrition, automotive, etc. – these are categories to select from, along with the generic “brandables.”

The second stage of research involves parameters such as domain age, brevity, TLD extension, popularity of the terms in search engines (Google) and the most obvious but often forgotten: lack of any trademark issues.

Domains that appear great often infringe on obvious or less obvious trademarks, despite their generic nature and often carry a history of legal issues, or can inherit such issues from similar domains that were challenged in the past.

For the latter, one research place to start is UDRPSearch.com; along with searching the USPTO for domestic (US) marks, these two resources form the bare minimum research for any problematic domains.

Once you’ve determined that the particular domain is “good to go”, you must define a budget for the auction, a bidding strategy, and a follow-up plan.

• The budget, or the maximum bid you will place, is a safeguard for your spending, which should be void of any emotion. During the bidding process, it’s very easy to follow the bids of others, and end up spending thousands of dollars due to the increased excitement of the moment. Keep in mind, that the numbers you punch in the auction’s form, can punch an equally sized hole in your wallet, if you aren’t prepared for the expense.
• The bidding strategy is required in order to be part of the auction’s flow, and must define the rate of your bids and the amount that should differ from current high bidders, in order to place you in a position to succeed. A lot of inexperienced bidders punch numbers that indicate their perception of the auction as a game, versus a strategic investment. Avoid values such as $666, $777 and the like, that are easily guessable among the other bids.
• Lastly, the follow-up plan involves what happens to the domain you win, after the auction. Don’t bid on auctions without a plan to either develop, or resell the domain to particular buyers. In other words, your research prior to the auction should include both a development plan, and a client list of potential buyers.

With all that in mind, you will be able to improve your success rate in bidding, winning, and reselling domain names acquired through auctions.