Search engine optimizers are starting to realize the value of good domain names.
If you viewed the results from Moniker’s auction at Search Engine Strategies, you may have thought that no search engine optimizers (SEOs) understand the value of a good domain (other than ones loaded with keywords). So it’s refreshing to see an article on Search Engine Watch by an SEO who does get it.
One of his clients was switching domain names and found an available domain name. But it was a bad one. The one they really wanted was for sale for $20,000, which they said they couldn’t afford. Mark Jackson of Vizion Interactive explained to the client that perhaps $20,000 was well worth the money:
We knew that this exact keyword phrase generated approximately 180,000 searches per month because this prospect bought PPC ads on this exact phrase for many years. And, based upon some studies, we know that a number one organic search engine ranking could get them up to 56 percent of all of the clicks. Even if we “only” had a number two or number three ranking, we could expect at least 10 percent click-through ratio.
This client was also discussing cutting way back on their Google AdWords campaign because the CPC wasn’t getting them the return it once did. They know they can make money on a $2.50 CPC, but in recent months, the CPC has skyrocketed to $5 (or more) per click.
Let’s do some math: $2.50 CPC times 18,000 clicks (a 10 percent click-through from 180,000 searches) equals $45,000.
That math works. And the prospect is now reconsidering what they can and can’t afford.
The article goes on to discuss type-in traffic benefits of domain names as well, and notes that you can finance large domain purchases like this through Domain Capital.
Of course there are other benefits that are often overlooked. The CPC the company is paying for Adwords may be reduced by using a better domain name. People are more likely to click on the ad, which could result in a lower CPC. Then there are the benefits of name recognition, credibility, ease of spelling, etc.
Kelly lieberman says
This is a great explanation of something that can be very hard to articulate to end users. I am going to bookmark this page, and use it in my communications to end users… I will just change the numbers as I do the research.
Thanks!
KH says
I believe that MOST SEO’s do not, and have incentive to downplay the value of a domain name. I developed a domain name that was based on the searchable keywords for that business. A coverted lead can be worth thousands. My site comes up ahead of those doing business in this space. I know two local owners of those doing business in this space. I live in one of the most populated cities in the country. I have my phone number on the site. My site comes up 1 or #2 on every search engine, ahead of theirs. I spoke to one of the the owners and he said “yes, for $5000, we will take it. Just let me talk to my web guy”. That was a steal price! I know their web guy knows SEO, but not as well as me. Of course, he shot it down. Why would he want it? He could say “we can beat their position, just keep paying me, you don’t need to buy a domain”.
Since then, I got a call from a potential client (and I am not in the business) and I have passed it on to one of the businesses and will get a % on conversion. I have been working at SEO for a decade, and feel understand it as well as any other and that is reflected in my results. But there is something deeply ingrained in many SEO’s and it is a resentment of domainers and the value of domains.
Andrew says
kh – good points about the incentives.
Mark Jackson says
I appreciate the reference to my column, but would appreciate changing my name from “Johnson” (incorrect) to “Jackson (correct).
๐
Thanks for reading!
Andrew says
Mark – sorry about that! I guess I was so excited to see your article that I wrote this too quickly. I have fixed it.
Robert Haastrup-Timmi says
I’m curious to learn if any domainers are using google monthly search queries to value a keyword domain. If so how are you applying the value. As pointed out in the SEO article above, a theoretical value of $45,000 appears to have been extrapolated by comparison to the asking price of $20,000 on the domain in question.
Why is all this important? well IMO, if domainers are going to somehow transcend beyond domainer to domainer sales and go for the real beef of domainer to end-user sales as it should be, then there really needs to be some transparency that every potential buyer or agent can relate to.
What I find remarkable about this excellent Andrew’s post, is we have an extremely influential SEO specialist Mark Jackson, conceding to the idea that seems to have eludded the SEO industry for many years now. I think it is important that we find ways to embrace SEO specialists and build formidable relationships. Because if you think about it prudently, SEO’s are a more approachable conduit to potential end buyers, as oppossed to advertising agencies. They are a significant direct link! Should’nt we be cutting them a piece of the action?
I’m just suprised there has not been a lot of feedback on this important post particularly, especially in light of the big Roomdividers.com sale for $75k.
So again, are there domainers out there who concede that empirical google monthly search queries on a keyword, multiplied by an average ppc factor of $X, is a better way to evaluate a domain name? I ask this question because I am finding astounding results on some of my domains, forcing me to have a serious re-think on value. E.g Cheapcarinsuranceuk.com shows a google monthly search average of 1,500,000 …now that is shocking! so what is the value? average ppc is $0.32
Tell me! …Andrew, thanks so much for this intelligent post.
Cheers!
Kelly lieberman says
Here are a couple of posts on this topic:
26 Kelly Lieberman // Aug 24, 2008 at 9:35 am
Yes, but enough about domainers. We are trying to reach non- domainers and the perfect way to reach end users is to start by educating the web developers and strategists they work withโฆ
The attendees of the SES show are Search Engine Strategists and Search Engine Marketers who are at the conference attending seminar after seminar looking for creative ways to increase traffic to the websites they are designing, developing and optimizing for CLIENTS they work for. The very people we would like to have buying our domains.
So, while they are already all together and interested in learning something newโฆ
Letโs educate them about the benefits of owning domains so they can bring back the information to the companies they work for and the clients they work with.
These kinds of conferences, along with Web Strategies seminars, Internet Retailing, Affiliate Summit, are the perfect places to begin to engage potential buyers by educating them first.
These conferences are always looking for engaging topics and speakers and I think everyone would agree that we have the most exciting topic of the times and some of the most entertaining and engaging personalities to deliver it.
If it ends up costing an extra 3% on the back end of an auction to pay for the speakers fee, or a professional PR firm to get the party started then why not?Kelly Lieberman // May 31, 2008 at 3:30 pm
Here is another idea.
Go to this link and see what it costs to buy the top positions on Googleโs search page for the keyword term that describes your end users need. For example: Letโs say I own http://www.ClinicalTrials.com. Letโs say I want to sell the domain to one of the sponsored links on the search page for โclinical trialโ or โclinical trialsโ.
I just plug in those words with quotes, into the ad traffic estimator, and it I can get an idea of what it might cost them to maintain that top position per day. Multiply times 365 and you have their yearly expense. Multiply that times 3-5 years and you could have a basis for a price.
https://adwords.google.com/select/TrafficEstimatorSandbox
Here is my example:
https://adwords.google.com/select/main
You can see that you have to do a little averagingโฆ but letโs say at $600 a day multiplied times 365 days in a year = $219,000 for an ad budgetโฆ.for a year. Give or take. Letโs say they plan on spending this for the next 10 yearsโฆthat is $2,190,000โฆ
They might think that buying a domain with the โexact keyword match termโ not only gives them very targeted leads but also will likely put them more naturally at the top search position with a decent SEO strategy. I am assuming that if they are already spending that kind of money on adwords they probably have someone working on search engine optimization as well.
Think of the money they will save over the long term by owning the keyword(s) fo their search term!
โIf you own the word you own the searchโ -you can quote me on that!
So even if you only ask for one years worth of ad dollars for that domain it is a great return on a hand regโฆ Of course you will see that alot of search terms cost per click are not as high as โclinical trialsโ, and if your domain happens to be http://www.ClinicalTrialSsites.com you will have to settle for considerably less.. but it does throw some light on to the whole valuation process.
I have been studying this method for quite awhile now and I would REALLY be interested in other peopleโs thoughts on this because nobody ever seems to mention anything along these lines so am I tototally off base???
14 Tony Lam // May 31, 2008 at 9:32 pm
Kelly, you are not off base at all. This is the perfect pitch for the end user/madison ave corporations. However, even your thought process doesnโt take into account the total worth a good domain would bring to a business. You are only looking at ad expenditure savings which is a baseline. If you look at the actual revenue or profit the business gets from the additional traffic the domain gets, it would bring another order of magnitude to the valuation. For example, say you own newyorksurgeons.com. It might not get that many natural type-ins, say maybe a couple of visitors a day. But of those, couple of visitors a day, one a week becomes an actual patient of yours. That extra patient of yours is an additional $2,000 in revenue for argumentโs sake (not unusual for a surgeon). Over a year, thatโs an additional $100,000 in revenue just off the type-in traffic. If you use SEO and put other relevant content, it would only increase. How much is the goose that lays eggs worth? My answer would be priceless. That domain hypothetically puts an extra $100,000 in your pocket a year. Thatโs why you canโt just look at ad cost savings and traffic frequency of a search term. You must look at what the asset brings to the business.
15 Steve M // May 31, 2008 at 9:59 pm
Most people are too busy working to make any real money.
16 Tony Lam, DMD // May 31, 2008 at 10:09 pm
I wanted to say in my last post: โhow much is the goose that lays GOLDEN eggs worth?โ If you are a New York surgeon, newyorksurgeons.com would be priceless.
We are still very early in this industry. Valuations are very primitive and based on PPC or natural traffic or some other metric that has little to do with what a good domain is actually worth to a business. This is why Frank Schilling thinks a name like ceilingfans.com will one day be worth a million bucks. And why he had trouble sleeping hoping that someone wouldnโt outbid him for rumcakes.com (which he won for $4,100). You own a good name and you have an inherent advantage over your competition. You can become an instant contender even if you are just starting out because youโd have a steady stream of free visitors and word of mouth viral advertising from those visitors. You can scale up if you do additional advertising. With any of those types of names, you can build a million dollar or higher business around.
This is what happened with 1-800-Flowers when they bought flowers.com and built their business around it. They overcame the leader in that space (FTD) a few years later. Much of corporate America still does not understand. If Iโm Papa Johns, Iโd cut $5 million out of my ad budget and buy pizza.com and pizzadelivery.com. Iโd leverage those domains to catapult myself past Dominoโs and Pizza Hut. If a domain name can help add $100 million to a companyโs stock market cap, how much is it worth to that company? How much is flowers.com worth to FTD or 1-800-Flowers if it were on the market now?
I just saw celluliteremoval.com sold for $10,000 at the Traffic live auction. Thatโs another name that will be worth at least 6-7 figures to the right company who gets it. I own cellulitereduction.com and would not sell for anything less than 6 figures for that. That is a huge industry and it will only get bigger. The right cosmetics company can add immensely to their bottom line and market cap with those domains. To let it go for $10k is a shame.
17 Kelly Lieberman // May 31, 2008 at 10:33 pm
I agree that you have to take a very comprehensive 360 degree look at the domain in order to assess any evaluation to it. I think that a lot of companies need these kinds of examples to wrap their head around the power of a good domain.
n a Kansas City minute to pony up ten grand for a cure!!! That domain will be worth a mint to someone!!!
18 Tony Lam, DMD // May 31, 2008 at 10:42 pm
Thanks, Kelly! As a side note, I outbid Frank Schilling for that domain!
As an example of good names still available for registration. A few weeks ago, I hand registered enhancelongevity.com. This is another industry that will only get bigger with products like Resveratrol and others hitting the market now and in the future. Always keep reading and itโs really never too late to get started!
19 admin // May 31, 2008 at 10:49 pm
Tony
Outbid frank for a domain.
Thatโs one for the record books.
Now you just got to beat Kevin Ham on one and you can call it a Career
20 admin // May 31, 2008 at 11:04 pm
Kelly
I donโt think your valuation model is off base at all.
However the point I was making by the post was that your message, my message has not reached the general public as evidenced by fact that they are still not spending the huge sum of $7 to renew their domains.
So if only you and I agree on value and the general public does not, your not going to sell your domains for the price you think you should get.
Kelly lieberman says
I know it is a very long post, but just wanted to show that there has been some discussion on it but I m also very suprised by how little discussion it got back in May as well…
This is the message we need to get out to end users and I think that the SEO conference was a great opportunity.
Robert Haastrup-Timmi says
Kelly,
That’s an excellent feedback response and frankly what I was hoping to hear.
I agree its not about domainers Kelly, I was only trying to provoke debates from other domainers on this evaluation method. I absolutely agree we need to court prospects at SEO, PPC and other Internet related conferences, as they are ultimately a critical part of the chain to the end user.
I think we both agree in using a percentage of the monthy search estimates which is empirical and transparent through google or other mediums, multiplied by the average ppc rate, times a multiple of 3 to 5 years.
What people in this industry are not realizing, is we must develop the most open and transparent method of evaluation, that anyone anywhere can use to reach and negotiate a value. I strongly believe in this model, which is why I registered DomainBookValue.com for development very soon hopefully, so look out!
For us at Domain Advertising Agency, its very clear where all of this is heading. Lets suppose for example, Google one day decided to start selling aftermarket domains, and lets suppose they provided a domain value estimator/calculator, how do you think they would do it?….I think they would do it exactly as kelly has pointed out! Simply because it is the most transparent method of estimating the value of keyword domains. All the data is right there in the open, number of monthly searches on a keyword/s, average ppc rate and ad positioning, level of advertiser competition on the keyword and the number of keyword search results. That is what google would use if they were in this business of selling aftermarket domains.
Therefore, keyword domains such as rumcakes.com or lasertreatment.com for example, can be sold to any end business user with realistic ROI projections that are not hideous!
Finally, one thing domainers are not realising is this, when you sell a keyword domain such as RoomDividers.com to the end business user, it actually becomes a “TANGIBLE” asset with empirical data that can be used in overall company asset valuation for a Trade Sale, IPO Listing or Raising Capital.
This market is going to get far more interesting for domain investors who really really get it! Sorry, but valuing domains based on natural type-in traffic is just ok and naive IMO, but certainly not a good measure at all by comparison to what Google says it should be and could be going forward as more people come online and through mobile phones.
Don’t under-estimate your assets, its what Rick Schwartz has been saying for a long time!
Kelly lieberman says
I have always wondered how companies like Estibot, Moniker and the like were running their algorithms when deciding on what was going to auction or in Estibot’s case, how they put a value on domains.
I think when domainers start to run some of their domains through this type of model and do some short math they will begin to see the true value of their domains.
More importantly, fellow domainers who might have scoffed at what they thought looked like a lousy long tail domain might be doing a double-take. Search is determined by the individual, and Wordtracker is only an indicator of volume of search not the value of search. Adwords is what advertisers use to buy search terms, so that is what Google uses to value keyword search terms.
If you own a targeted keyword search term that delivers the right customers, you might get rewarded by $23 per click.. That 2 or 3 keyword domain may be worth more than the home you are living in.
To an end user, with a little SEO, pointed to their own domain or even as a stand-alone these domains can have a huge impact on their business.
For the domainer, the possibilities are just starting.
Chris Nielsen says
I’m an Internet consultant who started doing SEO in 1999. At this point I have been into domaining for about 2 years, but mostly as a bottom-feeder. After buying some junk in the early days and not making anything from sales or parking, I got some advice that made me focus just on parking income. To this end I buy keyword phrase domains with high bid prices. I check monthly search potential using the Google Keyword Estimator tool. I buy domains with high traffic, high bid price, or (OMG) both. I only need $7 a YEAR to break even on my investment.
There is value in this thread, and I have been offering links and ads on parked domains for a while with no takers yet. Not sure why, but I think it’s because people view them a trash. Too bad, because there is nice valid traffic to be had, and at a bargain price. ๐
But I think it’s VERY MISLEADING to let a client think that a keyword domain is going to deliver the kind of numbers that are mentioned. The keywords in the domain does factor into the SEO equation, but it can be easily eclipsed by an optimized, content-rich site in my opinion. Anyone thinking a $20k domain is going to provide good ROI needs to examine the current traffic and income that domain is generating. Frankly, if it’s a domain parked at most services it’s likely to have little traffic and income unless it’s getting type-in traffic.
Even if a domain is parked at a place like WhyPark that provides something like a real site to develop traffic, that’s all going to go away when the domain is purchased and moved elsewhere. So even if a domain does have traffic and is currently worth $20k, that current value may decrease. You really have to know what you are buying.
And just to make sure my main point is clear: You can spend a lot of money for a keyword domain that has high search volume shown in Google and WordTracker, but that is only a vauge way to estimate what your actual traffic will be for a domain that uses the same keyword phrase. The keywords in the domain DO have SEO value, but it is not a major factor from what I have seen. Just do some searches for competitive phrases and see how many listings there are for domains that have the search phrase. You may see some, but I’ll bet most are there because of the site and links to that site, not the domain.
Robert Haastrup-Timmi says
Hi Chris!
You are right in saying a keyword domain may not essentially translate in to those vivid numbers as suggested. However lets diagnose this whole trend prudently because I think a lot of people may mis-construe the tru value!
First of all there are 2 types of domain buyers, 1. speculators which in general are domainers 2. Developers or Businesses that already exit, looking to leverage and boost sales through domain acquisiition. What I describe here does not apply to the former at all, instead it applies to the latter. But lets first address the “Domainer” . It’s hardly suprising that a parked domain will all of a sudden rank very high on google after an expensive purchase, especially if its a parked domain, it actually has no real content value or leverage. Its value is basically in natural-type in traffic period. However I would argue, that if a parked domain goes on to be developed with “RELEVANT” conten and backed, I say this very firmly a good “PRESS RELEASE” , then not only is this domain ready for business, it is the business. The exact match with relevant content, therefore a very high PR potentially.
It’s important to realise google is in the business of providing relevant results, therefore if a parked domain all of a sudden becomes very relevant because it was developed with relevant content and relevant services, then it will ultimately have a high PR within just a few weeks. Infact, Yahoo does it better!
But lets focus on the number 2. The already existing business who is the real potential end buyer with deep established services and relevant content. When this type of business buys an exact match keyword for its content, and hear me very clearly, does a “PRESS RELEASE” using those keywords…wow! they are very very likely to be PR number 1 within just 48hrs!! Why would’nt they? they now have everything you are looking for, the content, the services and the “EXACT MATCH”. Google has an obligation to deliver and that is the increasing trend. I understand SEO’s go on about link popularity, but all that is very misleading and I beleive the search engines ultimately prefer deep content & sevices matched with the right search terms.
Lets draw a line here, of course there are no gurantees to anything in life, however if you adapt the right pragmatic measures, you gain ultimately. Why do businesses lease premises in the hotest commercial locations in london or new york? A clever business realizes they still need to combine that hotspot with “Marketing” to achieve better sales and trounce the competition.
I have noticed a lot of domainers have no marketing skills! Its a bit like an artist who still needs an art dealer to market their best paintings.
So in conclusion, Mark Jackson, who this thread alluded to is a top SEO specialist and SEO’s are actually sceptics or have been for a very long time for all kinds of reasons. But the truth is, like we tend to say in investment banking…you can’t buck a trend!
Google is in the business of marketing keywords and msn wants in too. You’d be much better off owning the tangible asset for your business and that is… the KEYWORDS!
Chris Nielsen says
Hi Robert,
There is another type of domainer, and that is the ones like us that buy domains for income, not potential sales/profit. Yes, I hope that our domains increase in value and can be sold someday, but I don’t expect much from a three-word .info with 3 hyphens! ๐ Still, as long as the domain is earning money each month, I am satisfied.
What I heard in your post sounded like a lot of option and not as much scientific “fact”. That may sound funny coming from a SEO, since there is so little that we have to point to in the way of “facts” for SEO, but there is some if you have been doing SEO for a length of time.
I can take any domain name and have it generate traffic if it has the right content. The domain can help, but I think that help is limited. For $20k if would have to be helping a lot, if we are just talking about traffic and not branding. I would expect a domain like that to be generating revenue monthly in the range of $400-$800. If it’s not, I’m not sure where the price comes from, branding? Generic keywords? Ok, but where’s the money???
I have seen a domain on one medical topic, get links with anchor text on a completely unrelated medical topic (by mistake) and rank very well for the keyword that did not appear anywhere on the site. Google bombing can work.
I don’t like linking because it is no longer a good indication of the value or relevence of a site. But I can’t deny that linking done correctly can be very effective. My concern with linking is that it may or may not last over time, so I feel content is the most important aspect because of it’s consistancy.
We promote our domains to get links and PageRank. We also add some unique content, but they are still parking pages. Many of our domains get PageRank and nice traffic over time. I do agree that any site that is added to a domain like this will have a “head start” over others, but I have reservations about what the value is, and I’m selling them!
But let’s go back to the main issue of is it worth buying an “expensive” domain for the returns it can bring? The answer in my mind is a solid “maybe”. It really depends on what the domain is currently getting in the way of traffic. Not just the AMOUNT of traffic, but also the “quality”. Is it US traffic or non-US traffic that may not understand the site or be able to purchase what the site offers. Has the domain owner done anything to generate bogus traffic, such as pay to surf sites, wholesale targeted or untargeted traffic, and so on?
Companies or SEOs considering using domains as a marketing / traffic generation tool really need to know what they are buying. That’s why income stats are as important as traffic. Part of that is what is on the domain currently? Has it been optimized or does the title just say “domain.com”?
I recommend that for any purchase over $1,000 that the buyer as for a guarantee and if possible ask for a test. Determine what the seller claims to be earning per day and pay them that amount for a week to test the traffic, either at a domain parking account or some other landing page where you can have total control over the monitoring of the results. As a domainer with over 1,500 domains I can tell you that I would be HAPPY to provide a test like this for any company interested in paying me $20k for one of my hyphen-infested domains…! ๐
Robert Haastrup-Timmi says
Interesting response to the above Chris! But I must beg to differ and here’s why:
You are absolutely right there is another type of domainer like yourself who went into this business to specifically create an income through ppc. It’s great to learn you are doing quite well with generating ppc income for your domains. However if you have been a keen follower of recent events, a lot of domainers are now very concerned about the long term viability of parking to generate an income. Surely you will be aware that Oversee.net laid off 10% of their staff recently, there are so many problems with parking that it seems a very shaky model.
However lets look at someone like myself for a minute. I have never ever bought a domain based on what parking income it will generate …never and hardly ever will! Like you I have circa of 1500 domains. I started out as an internet media company and that is where I see the long term value..DEVELOPMENT & MARKETING, either for myself or for the end business buyer or my clients.
Not one single buyer has ever asked me about natural-type in traffic or what income a domain makes before they buy, not one! I can tell you the same stands for several domainers out there who have consistently sold big or small names. Why is this? It’s a very simple scientific fact….the web fundamentally is about acquiring land to build on, offer services and compete with others for business in the new world we call the internet.
We don’t need to get technical, that is the fundamental purpose of the web. Now when domainers come along and extract money by manipulating arbitrage opportunities, its really a bit like being a stockmarket “Day Trader”. Now that is ok, however that is not the primary reason why people start a business online. If I had an opportunity to buy Diamond.com, if it was available for whatever price i could personally afford, be it reg fee or $1M and my business is called RobertJewellers.com, I’d be quite daft or an imbecile to pass up the opportunity to purchase that domain given the chance, for very obvious and pragmatic longterm reasons.
This Chris is why it is just the very beginning of domains such as RoomDividers.com, washingmachines.com or whatever .com selling for thousands. Very simply, the science is in the numbers of businesses ultimately that must gravitate online to compete for the same thing…your eyeballs! Fact is, the web is where everything is going and Google or Yahoo simply can’t fit everyone onto one page, for the same reason TV can only give you a few second spots for BIG BUCKS!
So lets forget about the technical side and look at the long term pragmatic side of why domain names are now a crucial part of marketing strategy for clever companies.
Advertising online is going to get more and more expensive until it ultimately matches what you pay for a spot TV ad, or a page display ad. Therefore own the keywords and you will ultimately save yourself a fortune…period!
Chris Nielsen says
“Not one single buyer has ever asked me about natural-type in traffic or what income a domain makes before they buy, not one!”
I understand that, but I feel it’s because they don’t understand what they are buying. Perhaps posts like this will begin to change that. And sellers should fear this. If they can provide traffic and income figures their domain should only be worth more, unless the value was inflated to beging with.
Domains with good type-in traffic are worth a lot, domains without type-in traffic are only worth as much as the buyer and seller think they are worth. Investment made without facts may provide good returns, but it’s risky in my opinion. Investment made on documented numbers is much less risky.
By the way, TV advertising is getting less expensive. I’m buying cable network for as low as $0.50 CPM for a 30 second ad. ๐
You have rasied quite a few interesting points, but I think further comments on related topics by me are inappropriate.