September 9, 2009
Value of a Domain Name.
A domain name is much more than just a
group of letters attached to
an extension. A domain name reflects who you are and what you do
online. From a generic name which defines the product you offer
(such as LondonVacations.com) to a domain which represents the
targeted information your provide (SanDiego.com) or a brandable name
that evokes the spirit and power of the brand you have created (Facebook.com)
each domain is an individual unique asset where value can not be
compared by similar sales in the marketplace.
We understand many of the most vocal members of the domain
investment community value domains using common elements such as
automated systems, ppc traffic and age however these elements are
mostly irrelevant to developers, end users and long term investors.
In fact, the entire theory which seems to exist within domain
investors provides nothing more than a chase for valuation to
provide liquidity in the aftermarket industry.
traditional domain investors will disagree with our opinion however
our market is to end users, corporate buyers, developers, long term
investors and the next generation of domain investors not the
domain flippers who chase trends and sell or buy based on what
others are doing. Until recently the majority of domain investors
have invested in domains for resale and not development thus the
true value of a good domain is often never met due to the vicious
cycle of resale throughout the investment community. Only when a
domain is purchased by a long term investor, developer or end user
will the value of the name begin to mature.
For new investors you must understand that the conversation of
domain values online is the loudest single voice you will read about
however these words should play no factor In determining how much a
name is worth to you. The value of a great domain has not changed
much over the years believe it or not it is the crazy, ridiculous
ones which continue to be sold from one domainer to another which
attract most of the money in this industry and define sales trends.
Ironically, most of these names have no real value in the outside
world. We are in touch with many large buyers, long term investors
and developers and most ignore sales reports and value domains
according only to their own business plan without even a glimpse of
what other names have sold for.
Some of the biggest buyers over the last decade are now on the
sidelines trying to figure out what to do. A challenge we believe
many will fail at since the motivation to develop, the desire to
make something great can only be truly achieved by those who have a
hunger for money, a passion for building and a targeted,
well-defined plan for growth. Owning 100,000 names and hoping
to develop even a small percentage of them with more than just what
is known as a mini-site in this lifetime is simply an unachievable
goal without superhuman strength. Earning 2 or 200 million a year in
parking revenue provides a comfort zone where development is nothing
more than an obstacle in the way of enjoying privileges life has
We respect industry leaders for promoting the industry, providing
candid conversations and even helping other domainers out however
the industry leaders of today will most likely never be industry
leaders of tomorrow. Most of the original crew - of course there are
some who will shine - will be lost in time and become known as
visionaries who were able to acquire domains at a time when the
value was unknown. They were gamblers, addicts, smart investors
any moniker you want to use but ultimately they were truly great
gamblers whose bet paid off.
Today however small business owners, small business dreamers and
most of the domain community who actively participate online should
be looking for inspiration from those who are developing. Are there
examples of domainers earning high six and seven figure annual
incomes from developing? Certainly but more are searching for
answers on where to start.
So what makes a good name?
The elements we consider a good domain to have
.com .net or .org -- It is as simple as that.
We do not believe in other extensions with the exception of a
handful of country codes such as .co.uk (note that we do not offer
assistance with country codes)
(a) Lead Generation
Elliot Silver was kind enough to write an article about us on his
blog (ElliotsBlog.com) and
reference the type of names we seem to like. He was right lead
generation domains have the most value. To understand why this
element will override any other element (including existing traffic)
is to understand that almost anyone who is spending money to buy a
domain name, any domain owner looking to monetize their domains and
most companies looking to add or create an online presence will ask
How can I generate leads from the purchase of this domain?
It could be mortgage leads, education leads, apartment rental leads,
insurance leads, newsletter subscribers does not matter what kind
of lead however the domain itself needs to represent a quality or
keyword value of a product or nature which can lend itself to lead
generation online. These domains can range from three word combos to
single category defining names such as DallasApartments.com to
potential brand power of a domain name is the single element on par
with lead generation in terms of quality for a domain in our
It is noteworthy to mention that many times only one (1) of these
elements will exist in a domain and value for a brandable name is
much harder to define since the number of buyers will certainly be
less. A brandable name only really has value to people who want to
brand the name whereas lead generation names have value to 1,000s
of people wanting or already working online.
We often see buyers who simply want a name they can brand and
market. Think of Facebook or iTunes before they existed. These
domains have no or little value by themselves the value was
created by the people who marketed the name however these companies
also understand how 5,6 or seven figures for such a powerful name is
well worth the cost so even though buyers may be limited prices can
be much higher than lead generating domains.
GEO domains are great examples of brand names. The power of holding
a true Geo like SanDiego.com is unmatched in the marketplace for
that specific sector. We try to simplify domains and Geo domains are
brandable names in our opinion.
Search engines like Google, Bing and Yahoo pay great attention to
exact match keyword domains and the higher the exact search of the
exact keywords of your domain a greater advantage you will
have (from the start) from another domain. Of course, relevant
content will always eventually trump keywords but as a starting
point - assuming two domains are of equal price with equal traffic
and equal extension but no content .. the exact match domain will be
of much more value (to both domainers and investors) almost every
is a factor which ONLY helps the lead generation element and even
that is temporary and can be overcome. People and companies who buy
a name to brand do not care if the name was registered yesterday.
As far as age goes for lead generation domains believe it or not
age is much less of a factor today than most domainers believe.
Many argue about AGE since another domain investor told them it was a factor
but wait, another domainer who doesnt develop told them that. Hmmm
The fact is if you ask anyone worth a dime in SEO and they will tell
you that age IS a huge factor in helping a websites SEO
however by renewing the domain for a longer term than 1 year many
will renew from 5 years and up search engines will decrease any
penalty for even a name registered yesterday much more than you
think. Sure, for the first 12 -18 months you may have some negative
ranking calculation going towards you but original content can
overcome anything even age.
We must be mad?
- Fact. There
are 1000s of names registered every day.
- Fact. New
sites for information are found every day by all of us.
- Fact. Many of
these new sites have names created in the last 12 months.
- Fact. While
you were arguing about age someone else was registering a new
name and developing content, optimizing the domain and kicking
your age theory out the door
The AGE argument is between domainers - NOT developers.
We can also look at other dynamics going on.
1000s of good names are dropping every day quality of domains
which seem to be getting better day after day. Many times these
domains are re-aged when the auction company grabs the name.
this make the name worth less?
A great domain is a great domain.
Age makes it a little better but no matter how old a great domain
is a great domain.
will revert to the above Fair value by definition is a price point
where the seller and buyer are both happy nothing else to say.
Traffic is last - Of course we are excluding domains with
substantial traffic since these have a value outside of any of these
factors but the domains with $10 a month PPC revenue, the ones
with 10 visitors a month. PPC revenue is not an element almost any
end user will ever ask about. If a domain has substantial traffic it
very well could be a selling element however this can vary from
buyer to buyer. Traffic to a brandable name may have value but only
if the potential buyer is going to brand the name in the same
industry as existing traffic assumes the name to provide. Traffic
can play a role but it is not the largest factor in determining a
good domain name by any means only for domainers who park.
Developers will create their traffic by building unique content,
applying SEO strategies and marketing the site using internal
3 Letter and 3
3 letter and 3 character domain names are quite rare however unless
an end user can use the acronym or initials defined by the domain
name the only value of these names besides traffic is to domain
investors. Premium three (3) letter domains such as fly.com
obviously do not fit in this generalization as they are much more
than just three random letters. Our opinion is 80% of all 3
letter domains will continue to cycle within the domain investment
community for eternity with values changing only according to how
much an investor believes another investor will pay. In short, they
are worthless outside of the domain community. The other 20%
have a value potential only limited to the budget of the end user.
Many may disagree with this analysis but its ok - as very few have a
defined theory as it is. This is ours.