Domain Name Auction Bidding Strategies
Bid Soon, or Wait Til Last Minute?
Show Strength, or Be the Water Torture than Frustrates the Proxy Bidder?
On Extended Auctions, Overbid Fast, or Wait til Last Minute.
These are some of the questions I ask myself and I thought I’d share my journey, some thoughts and then some tips to help you be a better bidder. For an overview of some basic strategies, these articles set the stage nicely.
Read it if you can spare the 3 minutes. A couple of ideas I use quite often, Here is one.
Avoid Round Numbers
“If you set your maximum bid at an even dollar amount, you stand less of a chance of winning an item. People tend to think in round numbers, so you gain an advantage setting a maximum bid of $101.27 on an item that you expect to go for around $100. Sure, you’re spending a little more money, but that edge is usually worth it. The only issue you may run into is other people doing the same thing. Since you cannot see their maximum bid, you need to find the right price balance between not enough and a little extra.” Source AuctionMasters.com
Marathon Bidding and Auction Squatting
Marathon bidding is the constant slow upping someones proxy bid to extend the auction and wear down other bidders. In this article , from High Plains Auctioneers, we get some terminology to the dreaded often extended auctions. Did you think marathon bidding and auction squatting were just for domain name auctions.? Whether its antiques, million dollar art or ebay people have been engaged in the psychological warfare of auctions for longer than the domain name business has been around.
What to do against the big players?
For those of you who are frustrated about bidding against big players in Godaddy Auctions, read my prior post here.
Scare Them Off
Here is another list of tactics. Young Upstarts has some tips in this blog post. I especially like, (and again this is for a name you want to get, your not looking for a bargain)
“People who are only looking for a bargain are intimidated by high rates and will give up when the initial figure is high. ” Source 7 Strategies To Win An Online Auction YoungUpstarts.com 12/20/17
The Right Strategy
I think the only conclusion you can draw is for every method, there are times it each works and times they could backfire. Be ready to be wrong. You may go higher than you want to show strength, and then still get outbid. You may play the waiting game, get beat and then think you wasted an hour. Sometimes you will get outbid by another owner who wants to pay more, don’t let the emotional investment in the auction cloud your judgement.
You can’t get the money back easily. Avoid thinking, well I’ll just sell to someone else – domain names are illiquid assets. Part of what you are paying for, and I believe in many cases overpaying for, is the chance your buying something for a steal. And no one perceives that same thrill when they buy a name form another domainer.
Now some thoughts from my experience.
Page Howe’s Domain Auction Tips.
I. Know Your Prices
I use the High Low Goldilocks method.
1- This soup is too Hot. Know how much you like the name before the auction starts to end. Pick a number that is too high, tell yourself there is a number where you walk away. Your not losing. If you saw a great car and it was priced $10k above where you thought it was a fair price, you would walk away. Its ok to do this minutes before a regular name, but for anything over $500 I try to do the night before, and revisit your decision the morning of an auction.
2- This soup is too Cool, but who cares I like it. Now pick a price that represents a really good deal. Especially for names that may have competition, get a range where you would really (don’t apply to every name) think you got a good deal. Not where you’d be nervous you may have overpaid, but where you’d have a smile. A pat on the back. At this number you should have some built in loss protection and a margin for error in case your wrong. Even if another bid exist for this type of name, at least go up to your “its a steal” price. You will need to add these names that just may not have other interested bidders to make your portfolio work. Be the one who gets lucky.
3. This soup is Just Right. Now pick your goal price. This IS NOT THE MAXIMUM YOU WOULD PAY. This is the price that makes the investment worth it based on your own personal economics of what you need to pay to make money, and what spot it takes up in your overall budget for domain names. Fill your portfolio with these name. Price these names where you do have some wholesale liquidity at 50-70% of your price. Remember, not winning is not losing. Not taking up space in your portfolio- and leaving money for a good buy is an acceptable outcome. Especially if your on a budget, have bought too much, try to only have big wins at your targeted price for a short period of time, to rebuild your war-chest.
II – Know the rules.
How often do late bids extended the auction. Do extended auctions get added time with any bid, or just an overbid. Is there a limit to the number of extensions (Dynadot does). Do you have to be logged in the system, or app. How often do you get logged out. Do you get a notification or an outbid, or any bid. Do the emails run late or on time. On new platforms test out on smaller value names early on. Don’t only realize you didn’t know the rules only when a great and big names comes along. If you lose a perfect name on a platform for not realizing the rules, you paid a price for your knowledge. But you cant recover that name. No do-overs. We buy and sell unique assets, and there won’t be a second chance to buy some favorite or great domain names
III – Be Nice to others. Do whats best for them.
So no one likes to have to wait for an auction to end, and have an under-bidder keep extending the auction, without actually outbidding the winners proxy. So if I have decided I think a name is worth $400, and I proxy bid $400. The current bid is $25. So on some platforms a new bidder can bid $30, the system will bump my bid to $35 and add 5 minutes. Then another 5 minutes goes by and the new bidder clicks $40, the system raises the auction to $45 and ads another 5 minutes.
As the proxy bidder I don’t receive any emails that another bid has been placed, so I go off and play golf and assume I have won the auction. But later, after 40 minutes the new bidder finally outbids my proxy, has their bid of $405 win the auction and at about the same time the auction closes, I get a notice saying I’ve been outbid.. but i was putting on the green and only saw it when i got back to the golf cart. And $400 was just an arbitrary amount, I would have gone $410 for sure – but the auction is closed. I’ll never get the name off another surly domainer who outbid me and its gone forever.
In this case the platforms should have known i would go higher and stopped the auction and contacted me to tell me I was outsmarted.
So don’t be the person who does this to others. As a respectful domain name investor you should be nice to the other bidders and either outbid us quickly, or don’t bid. Your bid raises the price for me, and then if you don’t win just cost me more money. Actually you should just not bid on names with a prior bid. Someone else staked their claim first, so you should stay away.
And furthermore, why did you wait til the auction was almost over to start bidding. You should either bid early to tell me there were other interested bidders, or not bid at all.
had enough? Yes, I put the opposite of what you should do in writing. Sure this is what YOU want others to do. You think they aren’t being fair when they MAXIMIZE EVERY ADVANTAGE they can. Ok so lets get this straight – whether IN YOUR FACE or passive aggressive behind a computer screen, we don’t want to lose names to others. So whatever ticks you off the most. Whatever strategy was used on you to have you thinking you “lost” a name in an auction for a price you would have paid; and just cant stop thinking about. Whatever these tactics are, put them in your arsenal also.
Most domain name investors don’t have the patience for marathon bidding. They want a BONG BANG BOOM auction to end with them winning cheap in a short period of time. Try to build patience activities. Do something boring and necessary during the intervening 4 minutes between bids – just make sure its not so captivating you lose track of time
Now domain auction bidding is not war. War kills people. But i will says its competitive. It does take some forethought and attitude and action. Try to take the time and picture how you will feel 30 minutes after the auction ends. If your personality leads to a letdown without constant gratification, picture the bill coming do tomorrow and whether you will have the same “high” from the price you are about to pay. You may just be feeling average, or even second guessing. If so, let it go… now during the time you still can “not bid.” Let the clock expire and pat your self on the back for the patience to walk away with some dry powder.
And conversely, if you got all huffy because someone outbid you, so you stopped and walked away. Walkaway soon enough that you can hear the quite smooth wisdom voice tell you its a good name at a good price, and good asset and get back in there and pay for the quality that will profit you in the future.
Good luck all.