September 23, 2019

Domain Name Investing: Invest in Premium Domain Names

written by

Joe Uddeme

Joe Uddeme

Domain Name Investing: Invest in Premium Domain Names

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There’s more to a premium domain name than a high price tag – a great one can accelerate business growth and promote long-term financial stability. NameExperts.com Director Joe Uddeme explains why landing a beauty could be essential for your company.

 

Here’s a question for every company to tackle. Small businesses and startups in particular need to consider if it is worth investing a quarter of their funding, say, on a premium domain name rather than better office facilities or company cars.

The answer to that question is seldom simple. That’s because it is dependent on the kind of business the domain name will be used by, together with a number of other aspects.

A domain name is critical because, quite simply, you can’t run a website without one. It will be the title of your site and email – and will play a crucial role in your marketing strategy once you’ve purchased it.

In this guide, we’ll study everything there is to know about premium domain names so you can decide whether you should buy one for your business.

Even if the name you want ends up costing $10,000 or more (LOTS more, in some cases), it might prove to be one of the best investments you make for your company.

Two rolls of dollar bills on white table to denote high cost of premium domain names

 

When is a Domain Name Considered a Premium Domain?

The process of buying domain names usually involves several disappointing moments. Such as when you first think of an especially excellent name… only to search for it and discover it was bought in 1999 and is currently up for sale for $100k.

The crazy thing is, these domains do nothing special. There’s no rocket science involved with coming up with them – which is kind of the point. Premium domain names with a high price tag are familiar-sounding and catchy. Everyday words. It’s why cars.com sold for almost a billion dollars.

A great domain name will help your site gain more traction much faster – and will prove to be one of your greatest investments if you have chosen wisely. This is the reason why a domain becomes a premium one.

 

The Precise Definition of a Domain Name

The cost of a domain name will give away that it’s a premium one. Usually, a regular premium domain name is a domain name that is already owned by a registry or a person. If you want it, it’ll cost you.

The name’s costs are exponentially higher than a typical domain and can vary from a few hundred dollars to millions. This is because of the perceived value which it might have for a company within a particular industry.

In order for a name to achieve a high sale price, there has to be somebody who believes it is worth it. Until a domain name is sold, technically speaking it is worth virtually nothing. Try getting a million bucks for a domain name if the internet permanently goes down!

A domain name is considered premium due to its brandability, keywords and overall desirability. All these are highly valuable for a business that wishes to branch out on the internet.

Not every premium domain price is set by a person. On occasion, the relevant registry (such as .info or .design) sets the cost for this.

 

The Potential Problems With Choosing a Not-So-Premium Domain

There are a few issues a company might run into if they don’t choose the best domain name they can. Here are the main difficulties:

  • Trust and Branding Issues. Often, having a .com domain is the best way to show that a company is serious and trustworthy. A good deal of experts say to always go with .com, but there are lots of other options too, including .org, .co and .io. A trusted domain name consultant can guide you on the best choices here.
  • Little Potential to Grow. When you’re stuck with a lemon, you can limit your business opportunities. Numerous businesses end up thriving after purchasing a premium domain name for around $500,000, particularly if it matches with their institution’s name.
  • It Might Confuse the Client. If a business opts for an inferior domain extension, they may lose lots of customers. Some of these would-be visitors might believe the support is down or that the site doesn’t even exist because what they have actually done is visit domain.com rather than your site – domain.co.

Cute puppy dog looking confused

How a Premium Domain Name Can Help Your Website

The fantastic thing about ultra-premium domain names is the fact that they are pretty much household names – so you don’t have to make additional investments in making them known. As a result:

  • You’ll have to spend less money on internet PPC advertisements. Why? Because you are going to get organic visitors to your website as soon as you’ve launched it.
  • You’ll enjoy better SEO and site rank – resulting in more traffic. Individuals are already searching for your website and will be glad to find it.
  • There are more trust and authority involved using a premium domain name, which will make reliable companies link to your site. This can further boost SEO.
  • A short, catchy name functions really well on social media and people will remember it.
  • The domain will provide prospective clients with a strong indication about what they will find on your website, so you don’t have to invest money and time describing it to them.
  • Simply speaking, it is much simpler to make a premium domain popular. You’ll have to devote a good deal less money on advertising it.

Summing up

If you’re doing business in a market where word of mouth is essential, than premium domains are definitely something to consider – whatever the cost.

Not all small business owners and startups, however, should start with a premium domain name. A business can definitely be effective with a less-than-perfect domain name if it is catchy enough.

If the domain name you’re considering matches your branding, sometimes that is all you’ll need. It can work well even if it doesn’t match your business’s name.

If you can’t get the .com extension you want, it is possible to go with .co, .ai or many other top-level domains (TLDs).

But when you start to hit it big, securing a premium domain name could be a very wise move – because there’s a high possibility it will pay off handsomely within the next few years.

 

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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AI searches can analyze vast amounts of data, including market trends, search volume, and similar domains, to provide an estimated value request. They are vast resources for information. These automated tools can quickly process information and identify patterns that might not be immediately apparent. However, human expertise is necessary to interpret the data, consider the nuances of the domain name, and provide a more accurate appraisal. Experienced domainers and brokers can offer insights that go beyond raw data, such as understanding the potential for future trends and the strategic value of a domain within a specific industry. How To Increase Your Domain’s Value There are several ways to boost the value of a domain, including: Search Engine Optimization (SEO) This refers to optimizing a web page such that it ranks high on search engines. You can do this by including relevant keywords in your niche and getting backlinks from other websites. If people can find your website on Google algorithms, they will click on it more often and give you higher conversions, which translates into a higher domain value when you analyze the data. Market Your Site You can advertise your website on appropriate venues like social media services, search engines, or even use free word of mouth for your Company. This lets people know you exist and will likely drive higher eyeballs to your domain, giving it a greater value. Availability of Other Domains People are less willing to pay a high price for a domain if they can get something similar for cheaper elsewhere, e.g., Cars.com > Cars.co. One way to avert this is to buy the keyword across multiple TLDs, e.g., Box.com, Box.org, Box.net, etc. This way, the intending buyer will have less leverage. Build An Online Presence You can create profiles on social media platforms to build an online presence. This gives your domain more brand power and, in turn, a higher evaluation figure. Types Of Domain Name Valuations There are three main types of domain name valuation: Retail Pricing These are domain names directly offered by the owners to end users with a clear use case. The end users already have something in mind to do with the domain, usually for a website, so are more willing to pay a higher sum than the estimates. Liquid Pricing This comes into play when domain names are being offloaded by an owner, court order, or a bankruptcy proceeding sales. The domains are typically sold as a group and are cheaper to buy because it is a fire sale. However, the chances of finding domains with liquid pricing estimates are slim compared to the others. Liquid pricing is usually between 20% to 30% of retail pricing. Investor Pricing This is when domain names are offered for sale by professional domain brokers or flippers. You can find these types in an auction where you will likely bid against other people to acquire a domain. Some people may exchange domains with other Internet portfolio investors or team up to acquire a single valuable name for their domain portfolio. Investor estimates pricing between 40% to 60% of retail pricing. Working with Domain Investors and Brokers Domain investors and brokers play a crucial role in the domain name market. They help individuals and businesses buy, sell, and appraise their names, leveraging their expertise to ensure fair and profitable transactions. Brokers, meanwhile, act as an expert go-between the buyer and seller of a domain name. Role of Domain Investors Domain investors are individuals or companies that buy and hold domain names with the intention of selling them at a profit. They often have a deep understanding of the domain name market and can provide valuable insights into the value of a domain name. Investors typically maintain a domain portfolio as part of their business, which includes a variety of domain names that they believe will appreciate in value over time. By analyzing market trends and leveraging their experience, domain investors can identify undervalued domains and acquire them at a lower cost, with the aim of selling them at a higher price in the future.   About the author Joe Uddeme is Director and Principal of NameExperts.com, 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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Domain Names and Covid-19

Over the past few weeks, there have been many readers asking about the effects of Domai Names and Covid-19 on domain names. Should we hold our names, or sell them now? How has the impact of the global pandemic affected domain name investors and owners of valuable digital assets?  Will we be heading for a deeper depression, and how would all of that translate into the current value of your domain name portfolio. In the short term, if you can sit on your names, you would probably be better off in the long run. The market uncertainty has thrown domain name values for a loop. Financial market volatility has a direct correlation with domain name investment values. As a result, now is not the time to sell your domain name to the end-user. Its also not the time to expect top dollar values on your domain name inventory. The market is different and is reactive to today’s landscape. Folks are still trying to figure things out—and most importantly—stay healthy. We are faced with a new way of life now with remote workplaces, and limited exposure to the people we care most about. When the dust settles, domain name portfolios will evolve and some additional GTLD’s will continue to go by the wayside. Domain name starts will continue to suffer (a start is defined as a new potential domain name acquisition or valuation). Brands push Pause Just three weeks ago, domain starts were up. The market was robust and many startups, and emerging brands had major growth. 2020 was off to a great start and then boom. In a matter of weeks, things have dried up. Most acquisitions that were on the target board have been placed on hold, with buyers deciding to wait for the dust to settle from the outbreak. Things are rough and will continue to deteriorate. Growth has turned into retraction with global markets reacting to their municipalities ability to control the spread. Simply put: things have frozen. People aren’t spending and have decided to stand pat. Hundreds of thousands of employees are losing, or have already lost their jobs around the World. Companies are scrambling for a plan to deal with the circumstances. What should we do? As with any alternative or digital investment, it’s wise to have a long-term plan. Domain names, are very similar to real estate and will ultimately retain value and upside. More specifically, .com digital real estate will continue to hold value. Additional TLDS will continue to fade out—at a fast clip than over the past two years. Only sell if you need the capital—understand that the market is different so selling now, will probably not deliver top dollar for your asset. Hold if you Can—now, more than ever, you should hold your inventory. You might be in it for a while at this point. Can you afford to wait for the proper rebound? Don’t panic—there is always liquidity in domain names Diversify your portfolio—now is the time to clean out the junk and trim the fat so-to-speak We always encourage you to like our articles and share with your network. Keep a look out for additional pieces related to the current climate for domain names as an investment tool and provide your feedback if there are topics you would like for us to cover. Learn more by visiting our website. NameExperts.com

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