I feel that update was very damaging to the domain world, that been said people need to start pushing a positive domain message imo, because in the end of the day it is going to effect every ones profit's if you have interest in domains,example:
PR and spin doesn't change the long term value of any underlying asset.
If people wrongly assume EMD don't hold value the market will recognise this over time and correct itself.
Most importantly, those that are willing to pay good money for domains, ie 4figures+ aren't building MFA sites. So those buyers aren't going anywhere.
What's really needed is more public awareness of the value of quality domains in general, which is more than just the EMD bonus (though that is a perk).
Traditional business needs to be more aware that online is the future, and that companies that already get this, like Car Sales, are very quietly buying up everything right under their noses...
If 5% of traditional business understood this trend and were thinking about how to get in front of it and were willing to allocate a tiny fraction of their marketing budgets to acquiring these assets for the future's sake, domain valuations would go dramatically higher.
I think pushing a positive message around them is the way to go, its better then sitting back and thinking lets do nothing, if more people push out the positives and do not focus on the negatives it will be better for all.
Ahhh confidence... the life blood of the economy.
That said, nothing builds confidence like seeing someone else's success.
So if you think the latest EMD headlines are going to cause prices to go down despite being still being severely undervalued then the price drop is a buying opportunity not a crisis, so buy up while they are discounted, and when rationality comes back to the market you will make a tidy profit which others will see and which will build their confidence.
That said, I'm not expecting much of a price drop, if any.
Only a few years ago, an EMD could rank highly regardless of what was on it
Ahh... the good old days.
Yes, they hate poor quality sites full stop.
Bingo!
Nothing new. They've been refining their algorithm for a decade now.
Show me an MFA site whose rankings have improved over that time... arbitrage always comes to an end.
When it comes to relying on Google, I say make hay while the sun shines, but always be planting new crops to harvest.
A nice short brandable domain name is an important factor for any online business and there are still plenty of other benefits to good EMD's
Exactly.
Another point is that not all EMD's are created equal, take the example of Widgets.com.au and BuyWidgetsOnline.com.au. They're technically both EMD's but vary greatly in value.
Spot on again.
So if EMDs are becoming less appealing, does that make short brandable names more desirable and easier to market?
Maybe, but probably not.
That said, the short, brandable EMDs will continue to become naturally more desirable over time as they have in the past.
The gimmicky longtail EMDs will become marginal, but I'd be surprised if these domains still didn't offer some value as developed sites, it's just that they will be next to worthless as MFAs and it will be hard to sell them if there are better alternatives available
Of course they are less appealing. You can't simply throw together a MFA site an expect it to rank.
But they are only less appealing to those whose business model was to throw an MFA together to rank. Most of the domains I've sold haven't been to those sorts of users.
So from my perspective I think this change has really just increased "risk" of domaining has it's now harder to mitigate holding costs, given that domainers used to be able to generate revenues from MFAs while waiting to make a sale.
So it might affect prices a little bit, but it probably hasn't affected quality domains values to retail buyers much, but it might encourage domainers to be a bit more "willing to sell" given that their opportunity cost equation has changed.
Ie if they think their domain is worth $3000 and growing in value, and their MFA made $500/year and someone offered them $1500, in the past their might have opted to turn down the offer because they had a income producing asset that was also appreciating in value and they could afford to wait.
If they don't have their MFA source of income, the $1500 which is a decent offer when you think a domain is worth $3000, might be more seriously considered.
So ultimately, we might see MORE deals being done than in the past… which could also be a good thing for the industry.
But, in Australia at least, it's only a very small subsection of domainers who have been employing this strategy and consequently pushing up the demand (and prices) for these types of domains.
But have they really been pushing up prices?
I haven't built a MFA site in nearly 12 months, because for me the ROI was becoming marginal, (because Google is always pushing MFAs down in the rankings and users are clickign ads less) and given that the price of domains was trending up this increases "risk", which meant that I slowed down my purchases of domains on Snapper and AMA quite awhile ago when I was regularly being out competed.
I don't know everyone else's business models, but I reckon domain prices on Snapper and AMA in the last 12 months were starting to get to levels that made building low quality MFAs on them unviable.
This suggests that buyers winning the auctions have higher margin business models than building MFAs, which meant they were obviously able to pay more for the domains.
I guess what I'm saying is that, I think MFA developers might have left the market awhile ago, as higher quality developers and end users entered the market (who won't be affected by the recent Google change) so we might not see much change in prices if this is the case.
I mean how many of you guys, the domaining community have been hurt with this change?
My EMD MFAs got hit... roughly about 60% earnings drop, which to be honest isn't a bad result given that 100% of them are "crappy".
I have about 100. Some of them have been running since 2009.
Quite ironically they have bounced back a little in the last week or two (obviously not to their past levels mind you),
But as mentioned above I stopped making MFAs about 12 months ago, because I didn't think I could get a ROI within 12 months (which is the timeframe I base my online investments over)...
So my MFAs were already in the "cash cow" phase when the latest hit happened (ie they had paid for themselves and were just sitting there earning income)...
And out of those domains how many were bought for the primary purpose of benefiting from the EMD ranking benefit which has now been watered down?
Coming from an SEO background 100% of my domains were bought because they were exact matches of popular search terms.
That said, of that 100% I'd say the majority of them are also "very brandable" because they go hand in hand, ie the terms people search for are also the most brandable domains that will get businesses the best results.
eg, I hand regged homesecuritycameras.com.au in 2010 BECAUSE of the search volumes and CPC... but that doesn't mean it isn't also a brandable domain (note I didn't build this one into an MFA site).
The question is, is this domains worth significantly less to a retail business now that Google has dialled down their EMD bonus?
If it is worth less, I'd say the difference is marginal and will be more than made up for by the increasing scarcity of decent domains over time.
There would be over 1000 retail businesses around Australia selling home security cameras/systems. And I was willing to bet that like every other industry more and more of this industry's customers are at least initiating if not concluding their security camera related business online...
Regardless of Google EMD change, businesses will be forced to move larger portions of their business online and that will likely means a few of these of these 1000 businesses will consider a domain like this...
As I previously mentioned, you only need 5% of these traditional businesses to work out that these are not only great assets today, but also valuable strategic assets for the future and the price will go a lot higher.
People won't necessarily buy to run an MFA site, it is monetization strategy like parking for example, so if that strategy is gone it is going to have an effect on prices.
I'm not an expert at domain parking, (I tended to develop minisites - ie better returns) but haven't parking revenues been taking hits for years?
That hasn't seemed to have halted increasing domain name prices...
At the end of the day, domainers don't determine retail domain prices, end users do. Domainers make up 10% of the AU market, at best we are the clearinghouse for domains and we set SOME of the prices on the expiry and after market auctions, but this would be a shrinking percentage.
So in the short run, this might affect prices at clearinghouse auctions like Snapper and AMA for long tail keyword domains that were being purchased purely for their EMD bonus, but I suspect over time more and more retail businesses will come looking for better domains in the coming years as more and more customers move online.
So there is no need to fear that Google's changing of the EMD bonus will affect anything substantially…
...but then again I have a vest interest in believe the above some my opinion may be biased at best, wishful at worst. Let's hope I'm right.
