The Anatomy of a Billion Dollar Domain Portfolio

A hyperbolic title you might think but think again.

I studied in depth the DomainMarket.com portfolio 335,751 domains strong with beauties such as HappyBirthday.com and Tasty.com – they even own countries with Mail.com, Rwanda.com and Angola.com all on the books and perhaps the new pope will be eyeing up VaticanCity.com.

DomainMarket is the brainchild of domaining legend Mike Mann, founder of BuyDomains.com which he sold in 2005 and I was provided with their complete private portfolio.

They have publicly listed buy it now prices for about half of their portfolio, the other half being make offer domains.

Buy it now domains had an average asking price of $4,405.25. The cumulative buy it now prices for the priced domains is $740,575,561.

If the make offer domains had a similar mean price then the whole portfolio would be worth $1,479,067,438 – a billion and a half dollar portfolio.

Sure wholesale it would be worth way less and there’s some movement on the buy it now prices behind the scenes but nonetheless it’s one of the industry’s most valuable portfolios.

Learnings

Considering Mann’s substantial experience, the size and value of his portfolio and the fact that they are still acquiring new domains at a rate of about “400” domains a day I thought that studying the composition of the portfolio would be a great way to learn what the experts say through their actions about the right domains to buy.

TLDs

333,992 of their domains are .com making up 99.47% of the entire portfolio.

The own 942 .orgs and 684 .nets.

They also own a have tiny holdings in a number of other TLDs such as 8 .bizs and 3 .mes.

Interestingly they got in quite early and went for the premium .cos. They currently own 100 .cos

Their top 5 priced .cos are below:

DomainMarket.co $500,000
Advertising.co $300,000
Drugstore.co $200,000
Money.co $200,000
Movies.co $200,000

They buy almost exclusively .coms although when they did commit to .co they committed big going solely for premium domains. This learning is well established in the industry although it is interesting to see such an end-user sale focussed company veer so violently away from other TLDs, clearly this is what the market is telling them.

After all everyone answers to the end-user market regardless of whether you sell retail or wholesale as at some point a domain will have to be sold to someone who is going to use it to built a website.

Pricing breakdown

65.17% of their buy it now domains are priced in the $1 – 1,000 range.

27.01% are in the $1,001 – 10,000 range.

6.64% are in the $10,001 – 50,000 range.

1.18% are priced > $50,000.

Clearly this is a nice mix making quite a nice logarithmic curve if you graph the prices.

They are happy to buy and hold domains for relatively low prices. Their significant holdings of domains in the $1-1,000 range is interesting as many domainers avoid buying domains they feel they will be unable to sell for more than $2k or $3k.

It works for them and Mike so perhaps we should try and make it work for us.

Length & keywords

The average length of a DomainMarket domain is 13.85 characters.

The average # of keywords was 2.17

0.04% – 5 word domains
0.46% – 4 word domains
29.06% – 3 word domains
45.58% – 2 word domains
20.89% – 1 word domains

The disproportionate focus on 1, 2 and 3 word domains is interesting and highly useful information as such an analysis would lead one to believe there is a steep drop off in domain value above three words.

It also noteworthy as it skews the dataset such that a regression analysis would most likely not reveal this drop off.

Metric anatomy

Average* PageRank = .07

Average number of other extensions registered for domain = .6629

Average search volume = 1,103

But when you remove the top 7 search volume getters that average drops to 349 which then when you remove domains with no search volume (presumably bought for other reasons – possibly brandability) jumps back up to 493

Average CPC = $0.58

I thought the most interesting statistic here was the relatively low average search volume of a domain, clearly the focus isn’t solely on massively high search volume domains just moderate ones with other metrics determining it’s value after fulfilling that condition.

*All averages based on a 10,000 domain random sample.

Quick-fire round

30 of the 335,751 domains they own contain hyphens – don’t buy them.

They utilise internally developed valuation models – data is the key to success.

They are happy to buy unregistered domains, Mann famously registering 14,962 unregistered domains in 24 hours – there’s still plenty of untapped opportunities out there.

 

I hope you enjoyed this analysis of the anatomy of the DomainMarket.com portfolio – I have also reverse engineered their automatic valuation algorithm to figure out what way the experts value their domains and will be posting my model in the coming days.