Apologies for the lack of posts in the last 12 months. We’ve been busy on a range of projects and are now ready to update the blog more frequently.

In the meantime, you can refer to this list of domaining blogs to keep up with news in the domain name industry.

In summary, Jeremy shares an insight into what venture capitalists look for in online media businesses, examining the basic valuation models and citing companies currently in the marketplace to provide an idea of how big startup ventures need to become in order to be attractive to VCs.

The truth of the matter is that most companies which receive funding from venture capital firms have to be able to generate over US$50 million in revenues per year.

If that sounds like a lot, imagine the larger traffic numbers which your site will have to generate to translate into this revenue. Now, that’s a lot of eyeballs!

Just consider his simulation of 3 online media properties that are focused on different content categories and have different advertising rates (to reflect their vertical segments) based on US$ revenue per thousand pageviews.

• US$1 RPM: 50 billion pageviews required a Year or over 4 billion per month
• US$5 RPM: 10 billion pageviews required a Year or over 800 million per month
• US$20 RPM: 2.5 billion pageviews required a Year or over 200 million per month

In reality, it is almost impossible for startups to generate the amount of traffic required to make them viable to VCs and that may be why Jeremy has another article exploring the difficulties in building a media business to $50m in revenues.

Jeremy Liew is a Managing Director at Lightspeed Venture Partners. He invests primarily in the Internet and mobile sectors, with a particular interest in social media, commerce, gaming and methods for increasing monetization.

In this comparison, the value of the hyphenated version is not even 1% of the sale price for AreaRugs.com. In case you’re wondering, it’s only 0.194%. That’s right, 0.00194!

This figure seems particularly low. If we use this same ratio and apply it to the Hotel-Reservation.com US$209,916 sale, it would value HotelReservation.com at US$108,025,388!

The $787 for Area-Rugs.com is a fair price and only appears to be a steal compared to the $405k end-user price for AreaRugs.com.

Maybe it was the same buyer that picked it up - after all, what’s another 700 bucks when you’ve just spent 400 grand.

A lot of people not have heard of QuinStreet but they’ve been around since 1999 and have grown their revenue to over US$250 million a year by being “The Leader in Vertical Media and Marketing Online”.

The highlights from their 2009 Financial Results are impressive:

• Revenue: US$261 million
• EBITDA: US$57 million
• Profitable Since: 2002

Former Senator Bill Bradley is on QuinStreet’s Board of Directors, as is Greg Sands from Sutter Hill Ventures, Jim Simons from Split Rock Partners, Glenn Solomon from GGV Capital, Dana Stalder from Matrix Partners and Doug Valenti, Chairman and CEO.

There’s an article in FoxNews.com titled “Ex-Sen. Bill Bradley Sits on Board of Major Spamming Firm” which suggests that QuinStreet has been “identified as a major spamming firm by anti-spam organizations such as www.stop-spam.org and www.spamsuite.com.”

But the same article dated 24th April 2009 also states that they “posted revenues of nearly $8 million last year” which does not appear to be accurate.

Here’s QuinStreet’s recent press release about their “Record Fiscal Year 2009 Financial Results”:

Foster City, CA (PRWEB) August 17, 2009 — QuinStreet, Inc., the leader in vertical media and marketing online, announced revenues of $261 million and EBITDA of $57 million for its fiscal year ended June 30, 2009. This represents a 36% increase in revenues over 2008 and a 57% increase in EBITDA.

QuinStreet is a privately held company that has grown rapidly since launching its business in late 2000. It has been consistently profitable since reaching breakeven in 2002. The July 2008 to June 2009 period was no exception, despite the economic recession.

“We are more excited than ever about our long-term market opportunity to continue to help clients benefit from targeted, measured marketing on the Internet, and eventually in all digitized media,” QuinStreet CEO, Doug Valenti stated. “Our vertical focus and scale allow us to deliver higher quality results in larger quantities than any other channel or source. Clients are responding by giving us more budget. Achieving record results in fiscal 2009 did not prevent us from making record investments in future capabilities.”

Continued profitability allows QuinStreet to better serve its clients by investing in expanded media reach, and technologies and other capabilities that grow client return-on-investment and yield. QuinStreet’s approach allows the Internet marketing leader to provide its clients with the most cost-effective results and large volumes of new prospects and customers.

“This past year we delivered one of the highest top-line growth rates across the technology sector, the result of our growing depth in existing verticals and our expansion into new ones,” commented Kenneth Hahn, QuinStreet’s CFO.

QuinStreet President, Bronwyn Syiek added, “Our clients report that we consistently provide the lowest cost of customer acquisition at scale for their businesses. Essentially, we have become their cheapest revenue source.”

About QuinStreet, Inc.
QuinStreet, Inc. has been the leader in vertical media and marketing online since 1999, consistently delivering the right leads at the right volume to thousands of industry-leading clients.

This transaction has been reported to be the Highest Domain Sale Recorded but it doesn’t seem to be a domain-only sale as Insure.com is developed and there are “related media assets” included in the deal.

However you look at it, it’s still great news for the domain name industry.

Why Did They Sell?

It is shocking to hear that a public company would sell its corporate brand name especially since it’s such a gem of a name. It really makes you wonder what’s going on behind the scenes to motivate this move.

Surely, this isn’t another case of “they don’t get it” as they demonstrated back in 2001 by buying the domain for US$1.6 million. And they don’t seem to have cash flow problems either as they have no debt and US$24 million of cash and investments. So, what’s going ?

It would be easy to dismiss this as a bad management decision on the basis that the corporate rebranding and brand damage caused by the name change may cost more than the receipts from the sale. However, it is quite likely that they know what they’re doing if they had the foresight to invest in the name back in 2001.

Insure.com might be a beautiful domain and brand name, but in these turbulent times, maybe it’s just better to hold US$16 million of cash in hand and be ready for opportunities that arise from the current financial crisis.

The great thing about this sale is that it’s not just another domainer to domainer flip. The buyer is already in the business of rugs with existing offline operations.

The domain industry loves to see end-users investing large sums of money to buy premium domain names. It reinforces what domainers have been preaching about the value of domain names and gives the industry a little boost everytime a headline is made.

Although it’s a large amount of money for just a domain name, it’s really not much if the domain is material in helping AreaRugs.com Inc to be “the number one shopping destination online for area rugs”. (Update: The total market for woven, tufted and other carpets in the US was US$15.7 billion in 2004)

Their press release contains an interesting point that a lot of brick and motar companies should reflect upon during this recession – “In economic times like this you have to think outside the box for ways to get the most out of money and our investors feel that we should have no problem getting a decent, if not exceptional, return out of this investment.”

Group of Iowa Investors go All-In for $405,000 on Investment in AreaRugs.com

With new owners, AreaRugs.com plans to become the leading online resource for people looking for information on care or maintenance, or looking to buy quality area rugs. The combination of industry expertise and the high quality of the domain makes the site a contender to be the number one shopping destination for area rugs and carpet.

DES MOINES, Iowa, Sept. 22 /PRNewswire/ — AreaRugs.com has new ownership, having been bought by a group of investors for an astounding $405,000 for just the domain. Randy Ward, President and CEO, AreaRugs.com Inc., says, “Our goal is to be the number one shopping destination online for area rugs. We feel we have assembled a great team to accomplish that.”

Even in the desolate economy, Ward and his team are confident that the domain will thrive and will eventually become a big success. The team considers the endeavor less risky than most from the outside would and is very optimistic in regards to is expected return on its investment. “It is very rare to have the opportunity to buy a premium ‘.com’ domain name in a proven online consumer category,” said Lee Weber, Head of Marketing, AreaRugs.com. “In economic times like this you have to think outside the box for ways to get the most out of money and our investors feel that we should have no problem getting a decent, if not exceptional, return out of this investment.”

The Web site currently serves as a domain for consumers to learn more about area rugs, providing expert advice, tips and information on the rug industry. Homeowners and designers alike will find tips and advice to enhance any space, from the hallway to the bedroom.

By leveraging their substantial brick and mortar buying power, they will be able to offer some of the best prices and largest selection of area rugs.

As the proud new owners of AreaRugs.com, Ward and his fellow investors plan on carrying a huge selection of area rugs including all of the top brands including the likes of Shaw, Mohawk and Karastan will continue to provide information and expertise on area rugs. A well-known floor covering expert in the state of Iowa, Ward will be applying his extensive knowledge to the Internet with this investment.

“We have formed a partnership between a group of investors that includes the state of Iowa’s largest carpet/rug dealer and some of the state’s leading online commerce and marketing experts,” said Ward.

A custom built robust e-commerce store will be launched in several months. In the meantime, AreaRugs.com serves as a leading authority in the carpet/rug industry.

Contact:

Lee Weber

Head of Marketing

Lee (at) arearugs (dot) com

319-631-0505

Source: PRNewswire

The buyer seems to be from Denmark (as shown in updated whois records) and the seller is in fact BuyDomains.com, one of Afternic’s related companies owned by NameMedia.

Although the annoucement mentions that “Ticket.com was promoted through the AfternicDLS global distribution network”, it’s difficult to know how big a part Afternic actually played in the sale since it would be in NameMedia’s interest to report the sales from BuyDomains into AfternicDLS where possible.

Regardless of how it was sold, the sale of Ticket.com is another million dollar domain transaction that is much welcomed by the industry. Congrats to both buyer and seller.

This additional feature in Afternic.com is called Domainer’s Advantage and it is located in the MemberCenter at http://membercenter.afternic.com/

According to a post on their blog, these are some of the key offerings:

• Real time domain industry news feed: Stay informed of the latest industry news
• Weekly domain sales reports: Be the first to know what sold – and at what price
• Best Practices: Proven tips on successful selling at maximum value
• Market Trends: What hot? What’s not?
• Poll of the Week: Weigh in on the pressing issues impacting the domain industry
• Discuss Names domain industry forum: Your voice matters – join the discussion
• Domain Industry calendar of events: Webinars, Trade Shows, and Industry Events
• AfternicDLS Blog: Our opinions on the domain industry issues of the day

Some of this may be new but others such as their Discuss Names forum has been around for some time already. Still, it’s useful that they’re putting it all together for easy access.

If you’re investing in high quality domain names which cost thousands or more, it is advisable to use an experienced domain broker to assist in the:

• Purchase negotiations
• Sale and purchase agreement
• Payment for the transaction
• Transfer of the domain(s)
• Management of the domain(s)

Good domain consultants will provide the required research to identify suitable domains for a client’s business and narrow down the ones that are offered for sale. Full-service consultants will also act as brokers to assist buyers in executing and completing domain acquisitions.

The importance of domains for branding and traffic generation makes them highly valuable assets which provide a competitive edge to any sites that are developed on them.

It is essential for companies to secure the right domain names for their businesses and products in order to get a unique advantage over their competitors in the rapidly growing market for Internet-based commerce.

Domain Name Valuation & Prices

Although domain names may be registered for about US$10 each, the majority of valuable ‘premium’ names have already been registered and may only be acquired by buying the name from the current owner/registrant.

Some domains are worth tens of thousands of dollars, a very few have been sold for millions, many are valued from a few hundred to a few thousand but the majority are worthless, especially the one’s that are still unregistered.

Domain Acquisitions

Finding the right domains for your business is critical. Identifying and acquiring the right domains for your business may appear to be quite intuitive at the outset but it has become harder to buy premium domains at affordable prices.

If you’re serious about your company’s online presence, it is worth engaging a specialist domain name consultant or broker to assist in your domain strategy, research, acquisitions and portfolio management.