Chat-up Lines, “Hard
to Get,” & Domain Name Markets
September 21, 2007
A popular way to buy and sell domain names is through
personal interactions instead of arm’s-length
relationships such as auctions. When taking the personal route,
the process initiator needs to go through six stages: determination
of the target audience, signal, follow-up, screening, negotiation,
and the exchange of funds and title. We assume e-mail to be the
vehicle for sending the initial signal, to which the receiver needs to decide on his or her response strategy and tactics. The
essay focuses on selecting the target audience and crafting the
signal, and on the merits of a “hard to get” response strategy.
2. Target Audience
One of the most important decisions is whether to
make the target audience broad or narrow. A broad message allows more responses from qualified buyers.
Moreover, during the negotiation stage factors other than price
can be on the table, so you don’t want to eliminate such opportunities.
Thus, the advertiser needs to attract a lot of responses, encourage
informational inquiries, and then sort through them. Use of a narrow
signal can result in a very limited number of responders, which
limits subsequent choices and suitors. By limiting inquiries and
interaction, you may also forgo valuable information. Moreover,
the initiator cannot assume that the signal will come across loud
and clear; if the signal is also narrow, a thin audience of responders
becomes even thinner. On the other hand, of course, a narrow target
audience reduces the cost of screening and follow-up.
Whether buyer or seller, whoever initiates a domain
name transaction will do so by sending an e-mail to the prospective
transaction’s other party. The signal is the content of this initial
In general, signaling refers to sending a short
informative message to the receiver. The two sides are typically
strangers and the receiver has scarce time and attention. The initiator
needs to work hard in crafting the signal to get the attention of
the receivers and has to be convincing. Thus, effective signaling
The initiator needs to determine the tone and the
relevant information to convey, so that receivers who benefit from
the use of the domain name will not exclude themselves.
(a) What should the signal emphasize?
The initiator should emphasize what’s in it for
the receiver (WIIFR) and should eliminate any potential hurdles
that can prevent the receiver from responding. The WIIFR can, for
example, include an asking price below fair value and/or underscore
the true benefits of direct navigation when applicable. Nevertheless, simultaneously pointing out the domain
name’s tremendous return potential and asking for a fair price is
contradictory, as return potential would already be reflected in
a fair price. One of the commonly encountered hurdles facing sellers
is that some buyers might not respond because they are afraid that
they might not qualify financially. Thus, a seller needs to show
flexibility in payment arrangements and consider leasing the name.
Another potential hurdle is the need to convey trust and credibility.
Thus, a signaling buyer needs to convey the ability
to do the job right, namely that the initiator is serious about doing business
and is able to transact fairly. On the other hand, a seller needs
to signal that the domain name being offered is worth buying. Some
practitioners advocate low-balling the owner. Such a tactic might
have worked in the past, but with domainers becoming value savvy
it can only irritate such sellers and, possibly, induce them not
to sell even at what they might have considered a fair price.
From experimental studies on chat-up lines, we know
that jokes and compliments do not impress women. On the other hand,
those revealing helpfulness and wealth are highly effective. There is no reason to believe that this information is not applicable
to domain names.
(b) Response motivation
There is no easy way to create incentives to motivate
receivers to respond. For example, including as a hook in the signal
the name of an entity with a deep pocket can backfire, as the name
can make other receivers conclude that they cannot compete with
the deep pockets. Moreover, such an entity can use the information
regarding the lack of other serious suitors against you. To encourage
competition, you can refrain from making name information public
until a few names have become available, though further prospects
may still be scared off if the list has deep-pocketed contenders.
Hence, motivating receivers to respond is a hard problem to solve
when you don’t have prior history, which is why established brokers
and auctioneers have an advantage over inexperienced individual
buyers and sellers. They can reward clients who sign up early, especially
when there is a limit to the number of domain names to be listed
for sale. Conversely, the threat of being excluded from an auction
is a means to motivate those who procrastinate in listing their
(c) Asking price
We humans have a tendency to overestimate
the quality of things that we have (or think we have) control over.
For example, 84 percent of Frenchmen feel that their lovemaking
abilities put them in the top half of French lovers. This phenomenon
applies to experts as well. For example, 94 percent of polled university
professors regard themselves as better than average at their job
when compared to colleagues. Hence, on average, one tends to unjustifiably
perceive a higher value for one’s own domain names.
Nevertheless, there is experimental evidence that
people are more “rational” about making judgments that do not concern
them. This suggests that one should seek an unbiased third-party
valuation instead of relying on the owner’s value estimate.
4. Should You Play “Hard to Get”?
Say you receive a signal that someone is interested
in purchasing your domain name. Should you play “hard to get,” i.e.,
should you ignore the e-mail in the hopes that the sender responds
to your silence with a higher offer?
The “hard to get” strategy is flawed,
as it does not contain enough information for the signal initiator
to understand your position. For example, the potential
buyer might interpret your action to mean that you are not interested
in selling, and thus he or she may move to acquire another domain
name. If the signal being ignored is interesting, you might easily
lose a great opportunity.
5. Summary Recommendations
a. Unless you have a good reason, avoid sending a signal to a narrow
b. Effective signaling is costly.
c. Convey WIIFR and address potential hurdles.
d. Obtaining domain name valuation from a third party can add value.
e. Playing “hard to get” and low-balling are flawed strategies.
 Although bazaars also involve personal interaction, in
such markets the buyer is typically ill informed and there is
no mechanism for the buyer to get access to unbiased price information.
Thus, they are not analyzed here, as those factors do not come
into play with domain names.
 As in personal relationships—although it is “the thought
that counts,” diamonds go further than a box of chocolates.
 When the signal is presented through a broader vehicle,
such as a forum announcement or through an ad, audience targeting
becomes imbedded in the signal.
 This is no different than when looking for employment.
Simply sending mass resumes does not work. The candidate has
to go the extra step beyond displaying impressive but far from
unique credentials and tailor his or her approach to the target
company. It is the extra
mile that makes all the difference.
 See Matthew Rabin, “Incorporating Fairness into Game Theory
and Economics,” American Economic Review, 83, December
 Women responded well to pick-up lines revealing helpfulness,
generosity, athleticism, “culture,” and wealth. See Bale, et
al., “Chat-up lines as male sexual displays,” Personality and Individual Differences, Volume
40, Issue 4, March 2006, 655–664.
 Thomas Gilovich, How We Know What Isn’t So, New
York: Free Press, 1991.
 This does not suggest that it is a bad strategy for
women to play hard to get.
 Technically, it is not a separating equilibrium.
 I will definitely not play hard to get when Salma Hayek
asks me to recover her domain name SalmaHayek.com.
Topic tags: marketplace
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