For a fee: Afternic adds more promotion

All sellers will be opted into a program that increases marketing but charges an additional 5% commission.

Afternic disclosed a fresh program today called Afternic Boost, which it states can increase domain sales by up to 10%.

Afternic Boost includes features designed to sell more aftermarket domains:

• Domains appear in suggested search results on GoDaddy, not just if they’re an exact match result like now. It will also put a “premium” badge next to the domains.
• “Verified” badge will appear next to exact match domains in GoDaddy search. GoDaddy has by now been doing this, but will remove the badge from domains that aren’t opted into Boost. It will also include these badges on buy now and client landers.
• Slow transfer domains will be added to search results.
• GoDaddy will include domains in periodic email marketing campaigns. These will be sent to buyers who have searched for the domain or own similar domains. (Network Solutions has done this ahead of to promote aftermarket domains, and I’ve previously been told it’s effective.)

Sellers using Afternic Boost will pay an additional 5% sales commission. This means domains that point to an Afternic lander will incur a 20% commission, and domains pointed elsewhere will pay 30%.

The fresh program goes starts September 4. Afternic is opting all sellers into the program, and they must opt out if they don’t want to participate.

My take: I’m going to read into this move a bit.

GoDaddy is under immense pressure to maintain growth in its “Core” business segment, which includes the domain aftermarket. By auto-opting all clients into a 5% commission increase, it will be able to add significant revenue that falls directly to the bottom line.

The aftermarket is facing some headwinds, as evidenced by GoDaddy’s decision to sell some of its NameFind inventory in auctions/bulk sales in Q4 last year and Q2 this year.

Huge Domains pulled its inventory from the platform earlier this year. The firm likely had 4-5 million domains listed on Afternic, and Afternic claims to have 23 million+ domains listed. That’s a big chunk of inventory.

GoDaddy knew it would be unpopular to raise commissions following its “commission alignment” last year.

So, it’s effectively increasing commissions but offering some additional promotion as justification. Sellers have to take action if they are willing to forgo the additional optimization to keep paying current commission rates.

To be sure, some of the added promotion “costs” GoDaddy something. For example, counting aftermarket domains in suggested search results could take away from other promoted spots where registries pay to place their domains.

But much of this is just conversion rate optimization, such as counting a “verified” badge next to exact match search results and on landing pages.

This is a reminder of Afternic’s market power in the domain aftermarket, primarily since it’s the only aftermarket provider with access to GoDaddy clients. If the firm raises commissions, sellers have little choice but to accept the higher cost if they want access to the largest client base in the domain business.

This time, at least, sellers can remain on Afternic at existing commissions — if they take action by opting out.