Several factors are considered when specialists estimate the value of a domain name. Some of these factors include traffic, advertising costs, the age of the domain name, the length (i.e. brevity) of the name, comparable sales, advertiser competition in the category, industry growth and overall marketability.
There are many reasons to consider acquiring a top-tier domain name, both from a business and investment standpoint.
For businesses, a premium domain name offers numerous advantages:
- For a business, your domain name is your identity on the Internet. It is the foundation of your online operations. A strong domain name is like having the wind at your back and it can help you acquire and retain customers more easily than if you placed your company on a non-premium name.
- Secondly, a premium domain name offers instant credibility in the marketplace. Instant trust is established when a company operates their business using a name like Cars.com or Hotels.com. A premium domain name will give you a competitive advantage from the start. In addition, prospects will perceive your business as having authority status, which leads to credibility and lower customer acquisition costs.
- Next, many premium domain names have existing type-in traffic that can be converted into customers. Type-in traffic has been proven to convert at a higher rate than all other forms of online leads (search engines, direct links, banner advertisements).
- Additionally, premium domain names will help you more quickly rank higher in search engines. Search engines give added “weight” to exact match domain names. Your development on a premium domain name will rank better on Google, Yahoo and Bing faster than if you placed your business on a newly registered name. Along these same lines, the search engines respect names that are “aged”. Your ranking will improve more quickly if you own a 15 year old premium domain name than if you register a new one today. When matched with quality content and a strong SEO foundation, the exact match and premium domain names will give you a stronger presence on search engine results.
- Finally, a premium domain name is one of the most important assets your business can acquire. Domain values have steadily increased over time. Even if your business ends up failing you will still own a solid, valuable asset.
For investors, domain names offer many unique opportunities:
We like to compare our “digital real estate” to something we are all familiar with; physical real estate. Both are highly dependent on “location”. An oceanfront lot is similar to a premium domain name. The oceanfront lot has value because of its scarcity as a high-demand location. Regardless of what you build on that lot, much if not most of the value accrues to the raw land itself.
- Domain names are the raw land of the Internet. Similar to physical real estate locations, no matter what you build on your website, its value is in large part dependent upon the domain name.However, owners of domain names have significantly less maintenance and expense than real estate owners. A domain name has no property tax, no insurance and virtually no carrying costs. Your only expense is a $10 annual renewal fee. While physical real estate may have a leaky roof, faulty wiring, lawn maintenance, a cleaning staff and tenant complaints, premium domain names are virtually worry free. A premium domain can be bought and held indefinitely, with no day to day maintenance required.
- Domains can be used to generate passive revenue while you are waiting to develop or resell them. Many premium domain owners have their names “parked” with paid advertisements, which generate revenue and require no daily upkeep. As mentioned earlier, if your domain name has type-in traffic, you have the potential to create a revenue stream from your digital asset.
- Domain names are portable and incur no storage or security fees. We need to keep our art in a secure location. We need to protect our currency in a bank or a safe. Investors insure and protect their precious metals, which are also expensive to transport and ship. Meanwhile, domain names can be owned and held without the difficulties of transportation or security.
- Domains offer global opportunities. When you acquire a premium domain name, customers and potential acquirers can come from all locations across the globe. With physical real estate, a commercial property may have interest only from local buyers whereas a premium domain name will often generate traffic and buyers from other continents. We have sold domains to buyers in Asia, Europe, Africa, Australia, North America and South America.
Over 250,000,000 domain names have been registered on the Internet, yet only a minuscule percentage are truly premium domains. The availability is scarce, and they are very much in demand from investors and businesses. This supply-demand dynamic keeps values solid. It is our job to locate and offer to our clients domain names that our specialists can confidently certify as premium. Check our premium domain names or contact us.
The phenomenon is called “domain bias in web search” and has been highly studied and proved by Microsoft and others.Please see, http://research.microsoft.com/apps/pubs/default.aspx?id=155941, http://www.businessinsider.com.au/why-10000-for-a-domain-name-is-still-cheap-2011-4,http://www.searchenginejournal.com/how-your-domain-name-will-impact-seo-social-media-marketing
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