February 13, 2019

A Premium Domain Name Makes All the Difference

written by

Joe Uddeme

Joe Uddeme

A Premium Domain Name Makes All the Difference

It’s impossible to overstate the power of a great domain name for a business. Get it right, and an endless flow of online traffic could be yours, as domain name expert Joe Uddeme explains.

 

The Internet evolves and is shaped by countless businesses, people, non-profits and an array of other entities looking for eyeballs in an ever-changing world.

Buying a premium domain name is crucial in today’s clutter. Brands work hard to engrain their product or service in the public psyche and establish market positioning and relevance. Your domain name is part of the deal.

Savvy brands understand the importance of creating something catchy and memorable. They need to separate themselves from their competition in ways that remain top-of-mind for their targeted audience.

In this post, we’ll look at some of the reasons why companies large and small spend so much time and money acquiring a valuable premium name. And why you should, too.

Key takeaways

  • Proof that top brands have instantly recognizable domain names
  • How a great domain name helps leverage your position in any marketplace
  • Questions to ask when searching for a valuable premium domain name

 

What’s in a name?

Let’s start by looking at the top ten brands, according to Wikipedia:

Rnk Company Rev($B) FY Employees Mkt. Cap Location Founded
1 Amazon $232.9 2018 647,500 $802.3 Seattle 1994 [1][2]
2 Alphabet Inc. $136.8 2018 98,771 $791.01 Mountain ViewCA 1998 [3][4]
3 JD.com $55.7 2017 137,975 $34.84 Beijing 1998 [5][6]
4 Facebook $55.01 2018 25,105 $486.39 Menlo ParkCA 2004 [7][8]
5 Alibaba $39.90 2018 66,421 $432.12 Hangzhou 1999 [9][10]
6 Tencent $36.39 2017 44,796 $434.66 Shenzhen 1998 [11][12]
7 Netflix $15.8 2018 5,400 $153.39 Los GatosCA 1997 [13][14]
8 Booking $12.7 2017 22,900 $92.94 NorwalkCT 1996 [15]
9 Baidu $12.40 2016 45,887 $88.11 Beijing 2000 [16][17]
10 eBay $10.75 2018 14,000 $32.07 San Jose 1995 [18][19]

 

Each of these companies went out and acquired their core premium domain name – no matter what the cost. They also understood the value of having .com as their global brand. Let’s dig a bit deeper into the strategy of one of the major power-houses listed above.

Facebook.com also owns many other valuable pieces of digital, beach-front real estate. Take for example, FB.com which complements the existing digital strategy that was already in place. Facebook has parlayed their web presence by building another piece of digital real estate alongside their own majestic piece of real estate.

Another example is Booking.com, with more than $12 billion in revenues. They do a phenomenal job of attracting users with constant ad-driven messaging. They have partnerships with more than 660,000 hotels and provide a valuable service to their clientele.

Screengrab of booking.com website, a company with an attractive premium domain name

 

Why Premium Domains?

Let’s continue with the beach-front real estate analogy. For the past thirty years, brands have been swallowing up the short, brandable .com domains. These are the assets that provide the most upside, equity and long-term value to the brands. These assets can hold generic value, such as Booking.com, or be more brandable, such as ebay.com or Baidu – to name a few.

Premium domain names have commercial appeal and are typically very memorable. Brands spend huge amounts of money attracting new users and creating brand credibility. Digital strategists – including speculators who buy and sell domains for profit – are competing for a smaller piece of the available premium domain name inventory.

Having a great domain name is only half the battle. Success lies in how you develop the brand and create long-term equity for your company. For this reason, companies should always acquire the shortest variation for their brand (Tesla, for example, spent an undisclosed amount on tesla.com so they no longer had to be teslamotors.com).

This doesn’t have to be the only strategy. Companies should outline a comprehensive domain name strategy that not only covers their brand but any additional reputation management/brand defense needed to protect their corporate brand positioning.

Simply put, premium domain names come with the following instant upside:

  • Brand-dominance and positioning
  • Equity toward a long-term exit strategy
  • Inability to build against – a defensive strategy against your competition

Own the real estate before your competitors do!

Most successful brands have identified the importance of the premium domain name. They have dedicated digital strategists or digital departments to handle the larger need for digital integration and social media components.

Brands should spend wisely and methodically when securing a new brand or piece of beach-front digital real estate.

 

Get it right the first time with help from a broker

Domain name brokerage services like NameExperts help businesses with their domain strategy and are in high demand. Whether or not they work with us, we always advise companies to use the following checklist to make sure they are not leaving money on the table:

  • Conduct Research—who owns the asset and for how long have they had it? Is it being used? Are there active trademarks? What’s the history of the link profile?
  • Variations and Alternatives—brands need to nail it. To do this, sometimes, they need to think outside the box. Find viable alternative assets that define your image and brand.
  • Negotiation is key—do you negotiate for a living? We do. We remove the emotional attachment and red tape to manage both buyers’ and sellers’ expectations.
  • Be Flexible—sometimes you have to give a little to get a little. Don’t be afraid to be flexible and offer ways to benefit the other party in your transaction.
  • Be Honest—honesty and integrity go a long way. Be true to your word and don’t go back on what you say. This is critical for deals to succeed.
  • Ask Questions—hold your broker or expert accountable and ask appropriate questions. Some domain transactions move quickly. A clear line of communication is necessary to save valuable money and time.
  • Due Diligence—dig for more information and market comparisons: it’s all firepower necessary to make the case.
  • Timing—don’t hunt for a CBD-themed/Marijuana-type name when there is mass decriminalization and legalization occurring. The market is just too hot, and pricing will be inflated. Instead, names should be selected “ahead-of-the-curve”.

An arm with a watch on the wrist; person is stood on a boardwalk next to a river

Don’t fall at the first hurdle

When buying a premium domain name, it’s important to ask the right questions – it can save the buyer tons of money in the long-run. A common issue relates to trademarks tied to a name/brand. Many companies secure a domain name for commercial use but never take the time to search the trademark database. This quick search can save clients thousands of dollars.

Premium domain names make total sense for any emerging brand looking to scale their brand – and shortening the global domain name is still the foundation for successful growth. The top companies around the world continue to focus on the universally popular .com for brand growth.

This validates the need for a superb, premium domain name for your company and brand. Get it right the first time and save money in the long run – while adding credibility and equity value while you’re doing it.

 

About the author

Joe Uddeme is Director and Principal of Name Experts, one of the world’s leading domain name brokerage services. He has overseen domain name sales and acquisitions totaling more than $150 million and is renowned worldwide as a go-to expert in buying and selling premium domains. Contact us at: [email protected]

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Alarming image of a piece of paper stamped with 'scam' for an article about domain name scams
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Ownership percentage: You can request a percentage of shares in the domain lessee’s company. This method is risky but can earn you significant income if the website becomes a viable business that another corporation eventually acquires.   Benefits Of Leasing For Domain Owners Provides Another Way To Monetize A Domain Monetizing a domain is better than having it sit idle. If you have a valuable premium domain you’re not using, leasing it out can earn you passive income. You can always reclaim your domain once the lease expires. Opportunity For Investors With Domains In Their Portfolio Many investors specialize in acquiring domain names for profit. Investors with a portfolio of valuable domain names can lease them for a long time and get stable income. Consistent Revenue Stream Renting out a domain for periodical payments generates consistent income for the owner. The owner is sure of getting a specific return on the capital they spent acquiring the domain as long as the lease lasts. The Domain Value Increases Due To Usage Active domains are more valuable than inactive ones because of online traffic. The higher the traffic to a domain, the more valuable it is. Leasing out a domain increases its value in the long term, which the owner can realize by selling it later. Long Term Financial Advantage Receiving periodic lease payments can generate more revenue in the long term compared to selling your domain for a lump sum. It’s why many owners lease domain names out despite getting lucrative purchase offers.   Benefits Of Domain Leasing For End Users Spend Less Money Upfront Valuable domain names can run into tens or hundreds of thousands of dollars, which is risky to spend upfront. Leasing allows you to build a business with the domain and make periodic payments from the revenue you generate, which is cost-effective. Lesser Burden If the website for whcih you use the leased domain fails, you can terminate the lease and return the domain to the owner. If you owned the domain outright, that means having another asset you must keep renewing or find a potential buyer for. Opportunity To Buy the Domain In the Future Some lease terms include an option to acquire the domain outright later. This way, you can start the website to see if it succeeds. If it does, you can acquire full domain ownership and gain more control over your website’s fate. Access To Premium Domain Names At A Lower Cost Domain leasing lets you use very valuable domain names for lower costs. These valuable domain names can draw more organic traffic to your website. Avoid Legal Liability Issues Leasing a domain name means avoiding any legal liabilities concerning the domain’s ownership. Any legal dispute is the concern of the owner and not the lessee.     Downsides Of Leasing A Domain No ownership Not having full ownership of your domain is a risk. The owner can terminate the lease anytime and pay any agreed monetary penalties for early termination. It could be at a crucial time when your website is booming, and losing the domain would affect it negatively. Less Control You have less control over your website than the domain owner. Let’s say your website grows big and becomes valuable; its fate lies more in the hands of the domain owner than yours. They could use that leverage to extract concessions from you. The Domain Value You Build Is Never Yours Drawing traffic to your website increases the value of its domain name. Yet, the owner will capture that value instead of you working hard to maintain the website.   Where Can You Lease A Domain Domain Marketplaces Many domain name marketplaces allow owners to list and lease their domain names. This method is beneficial because owners can easily find customers to lease domain names to. The domain leasing services generate a lot of traffic, giving you higher chances of finding an interested lessee. Domain Brokers You can approach a domain broker to lease your domain for you. Domain brokers are experts in negotiating domain deals and can fetch you the best possible price. They’ll collect a fee for their service, either a flat rate or a percentage of the lease value. Word Of Mouth You can spread the word to your social and business circles about a domain name you want to lease out. You may find a trusted lessee this way and negotiate a good deal to earn a stable income. Forums You can join webmaster forums and post about the domain name you want to lease. You may find a buyer this way, but ensure you use a transaction escrow service because you’re dealing with a stranger.   Leasing versus Buying a Domain While leasing a domain might be a good option for some businesses, buying your domain outright continues to be the safest and most secure option for guaranteed success.   About the author Joe Uddeme is Director and Principal of Name Experts, one of the world’s leading domain name brokerage services. He has overseen domain name sales and acquisitions totaling more than $150 million and is renowned worldwide as a go-to expert in buying and selling premium domains. He also advises on leasing strategy and portfolio management. Contact us at: [email protected]  

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