Domain Names Are Assets
Domains are just like real estate only online, right? Or are they? Well, it turns out that domain names are very different and much more important. Domains intersect with a brand on a much deeper level that leaps the value past the hard cost of the domain. For example, the Cars.com domain is estimated at $872M according to recent filings. The analogy of real estate really only scratches the surface of the value the perfect domain brings to a brand. In today’s post, I am going to explain why domain names are digital assets that impact the very DNA of a brand. Also, why every company needs to seriously consider the positive impact they can have on their brand, revenue, and online security.
One comment we hear quite often in our outreach is:
“We are happy with our current domain”
In some cases, these brands have built an impressive online business. Some in the hundreds of $MMM to low $M’s in revenue. The question we try and get them to answer is what could the potential be if you had the perfect domain name for your brand (shorter version, .com, exact match, category defining domain, etc..). Domain names are assets that impact the very DNA of your brand and marketing strategies. When a company acquires them correctly, a domain name becomes a strategic advantage and working asset that is inseparable from the brand.
Your brand may be one of the most valuable assets your company owns. Brands are how we differentiate businesses and find our perfect products. Here is how Jerry McLaughlin describes the definition of a brand:
“your brand is what your prospect thinks of when he or she hears your brand name”
They provide significant value to your company and revenue. For example, the Google brand is valued at $101B according to this article on Forbes. So why are we talking about branding? I thought this post was about domains.
I am going to make a bold statement.
The internet has now added an additional element to this discussion. Today your brand name is your domain name because by default it becomes how your customers find and interact with you online, communicate via email and how you talk to customers.
When your domain name and your brand do not match, it creates a struggle.
This struggle can lead to massive inefficiencies in marketing and consumer perception. Many business executives still do not understand the impact their domain has to conversion and revenue. The executives that do build amazing brands. Investing in your perfect domain name needs to be about the return on investment (ROI). Different types of startups will value a domain differently, however, the conversation should still be very similar. These key fundamentals will help you understand how to value your brand.
- You are losing traffic to the .com
- What happens when a different company has the leadership position with the (.com) domain
- You need to spend valuable marketing dollars on clarifying your domain vs. your message
- Your emails could be going to the (.com) domain creating a huge security risk
- How it impacts your SEO ability
- Domain names are regularly bought and sold while appreciating in value.
People crave simplicity and reward brands that make the journey effortless for them. This is one reason that people simplify domains and brands down to the basics. For example, if your company is Deco designs they typically reduce this to just Deco and assume depending upon your revenue size that you own Deco.com. The holy grail of traffic is type-in traffic from reoccurring customers. When you don’t own your exact match domain you most likely are driving traffic to another brand. We call this the “halo effect”. James Iles at NamepPros.com has some great interviews with founders of companies on how the acquisition of their perfect domain has impacted their business. These interviews are great because they show us first hand how domain names are assets that have a direct impact on businesses. Here are few examples.
- Hive Teams rebranded to Hive.com experienced a 45% increase traffic. This was just by updating their domain name.
- TeamWork initially launched under the domain TeamWorkPM.net. They were able to acquire TeamWork.com and experienced a hockey stick like growth.
Check out this chart that Peter shared. This has to be one of the clearest examples of the direct correlation to owning an “exact match” brand domain.
Seriously this is exciting!
I recommend reading Peter Coppinger’s journey on creating TeamWork. This post is jam packed with his personal insights on what went wrong and what he did well. Excellent read. The founders of Lawn.com (great business model) are veteran business owners and have a formula they use to determine the impact to owning a premium domain such as Lawn.com. They were so confident in this formula they paid $240,000 USD for the domain Lawn.com.
Domain names are assets that have a measurable and real impact on revenue and traffic.
Creating clarity for your brand is priceless. Segal and Gale publish a report showing that brands that communicate simplicity generate higher revenues and goodwill.
They state that: “Our seventh Global Brand Simplicity Index™ demonstrates more powerfully than ever that brands that embrace simplicity are more profitable,” said Howard Belk, co-CEO and chief creative officer, Siegel+Gale. “The research shows that businesses that haven’t been providing a simpler customer experience have left an estimated $86 billion on the table! Ignoring that kind of ROI is crazy.”
The online world though is changing the relationship on how to create this clarity.
Before the internet, your brand could dominate a vertical and never be in contact with the same brand name selling a different product
Take the brand Nitro for example. Ok, which Nitro are you talking about? Is it Nitro.com, GoNitro.com or NitroType.com. [![Nitro Boats]
Both companies have great branding. Nitro boats will forever have the dominant brand position and marketing advantage. In the past, Nitro boats would never have been competing with Nitro Software. This is not the case today. Because of the internet, there can only be one company that owns Nitro.com, Deco.com, Harbor.com, or Trunk.com. Add to that we are now in a global economy and domains have global appeal. In one way, the internet has massively increased competition for positioning and leadership. When you don’t own the leadership position for your brand you run the risk of driving traffic to your competition, another brand and creating confusion for your customers.
Domain names are assets that have a global appeal and market. Brands are now competing with companies in different verticals that have their same brand name. Only one company can control the dominant position for any keyword.
Great brands own their exact match domain making the brand journey effortless for their customers. The real momentum and power are achieved by creating simplicity and clarity. Your domain should go unnoticed because it reinforces your brand. When it doesn’t your brand suffers. Let that sink in for a bit. I think this point alone may be the hidden gem in this article.
If you have to explain that your domain is different from your brand you are wasting precious marketing dollars. This needs to be a primary consideration. Will you need to say we are GetExample.com, not Example.com every time you direct someone to your website? In the examples above with Hive.com and TeamWork.com when they updated their brand it produced significant results. Just to clarify this will not help every business. The lifestyle startup or the small local business will most likely not see any significant return on investment. The scaleable and buyable startups that have plans to dominate their vertical online will see the biggest impact. Here is an example from Nick Macario the founder of Remote.com on why they paid well into the six figures for their perfect “exact match domain.”
Can you reveal how much you paid to acquire the domain name Remote.com? How did you justify paying this amount? “I can’t disclose the exact amount, but it was well into six figures. Justifying the cost is easy; this domain is a fixed-asset with lasting value, which will appreciate over time. Aside from the resale value, the name is going to put us in a position to build a very strong brand and a company that has the potential to change the world.
Everyone understands how important security is online today, right? Security breaches can be very costly. Just look at how much this cost Target. Target paid over $18.5M in fines just to the States, not including the impact to lost revenue. If you are in healthcare industry not having the proper security measures to enforce HIPPA laws will lead to massive fines. Her is another example of a security breach with a fine of $400,000.
Most businesses don’t think about how their domain impacts their email security. Well, I am John@MyExample.com how would they get my email? You would be surprised how many times customers will type in only John@Example.com and leave out the “MY” in the beginning. Setting up a catch-all email address only takes several minutes. This would capture any email sent to a mistyped domain. If you customers mistype your domain or use the wrong extension, someone could be capturing your sensitive emails. The thing is, most of the time this is very legal (I am not an attorney or giving advice). It is the sender’s fault they sent the email to the wrong company. It goes back to the examples above. If your brand is Deco they could mistype and send the email to Suzie@Deco.com versus Suzie@GetDeco.com or even Suzie@Deco.co. Check out this interview with Andrew where he mentions dealing with a large health organization. Once they were made aware of this security breach (email’s going to the wrong domain) they took action, acquiring a domain that was crystal clear for type in emails.
Domain names are assets because of how they impact email security. When your domain name does not match your brand name, your email security could be at risk.
I don’t think it anyone will disagree with me when I say SEO is crucial to any brands online success. Most companies can easily spend between $2k to $20k a month on SEO. The benefit from ranking on the first page can be priceless for your traffic, conversion, and revenue Domain names do directly impact your SEO strategies and success.
Here are several of the ways that domains impact SEO in a positive way.
- Communicate leadership positioning
- Link building
- Building trust
- Ease of sharing and going viral
- Avoiding confusion with other brands
- Connecting with consumer intent
You can read my in-depth article that breaks down each of these points here.
What do customers think when they see a brand adding fillers to their domain. You come across them all the time. TheExample.com or GetExample.com or even ExampleApp.com. In the case of Dave.com the owner felt that adding words to their brand created trust issues and inferior positioning of their brand. You can read the full interview here.
…People are trusting us with their finances and TryDave just didn’t seem to give me the same confidence as Dave.com. The team loves it too. Everyone loves wearing a Dave.com hat, t-shirt, sticker, etc.
Additionally, when people ask where we work or when we answer our phones, we always say Dave.com. It’s easy to say and share. The trouble with some of the new companies using human-type names for their startups is they sound awkward unless you own the .com.
These are excellent points on how your domain name impacts the very DNA of your brand. I like this example because it just makes sense. The power and the genius are in the simplicity and clarity. The consequences to revenue, profit, and your brand ethos are very real and measurable. Owning the exact match domain instills trust and confidence for your brand. I wrote a detailed post in February 2017 about. Today consumers will rarely find you in a silo (thanks Google). Your band will now be ranked against your competition with your domain being a significant factor. Sometimes this is done in less than 10 seconds. Great domains help you move up the brand ladder and differentiate your brand as a leader.
Domain names are assets because of how they impact the very DNA of a brand. Great brands own their domain online creating simplicity and clarity. This makes the journey for their customers effortless.
Don’t assume you will be able to get the (.com) domain whenever you get around to wanting it. One of the most frustrating things for owners is when they realize the current owner of the domain will not sell it. It is almost a crushing feeling to realize your perfect positioning will never be available. Sometimes the opposite is true, and your domain becomes available for acquisition.
A brand may have the once in a lifetime opportunity to acquire their perfect domain name.
If this does happen, I recommend seriously taking the time to consider it. One reoccurring scenario we see very often is when a brand waits on the sidelines to make a decision and is slow to act. They think their domain will be available whenever they come around to make a decision. Remember domain names are assets that have global appeal. Just last week we reached out to several companies for a domain that perfectly fits their brand. We received one offer very quickly and informed the other brands we were considering accepting it We reached out to one company we felt should have been the perfect owner. They own about 20 domains with active sites like exampleCars.com, ExampleChevrolet.com, ExampleToyota.com. They clearly also spend lots of money on advertising. They passed, most likely thinking they had time and it was a sales tactic (bluff). Remember buying a domain is a math problem. What does it cost and what is my return.
A week later they came back and offered 300% over what the other company paid for the domain. It was too late. The first company will never sell the domain. The second company will forever need to pay a premium on every piece of advertising to ensure their customers go to the correct domain. They were crushed. We see this type of scenario happen about once a month. As a broker, I truly feel it is my duty to communicate this rare opportunity. There is immense satisfaction in helping a brand position themselves with the perfect domain.
**Key Takeaway: **Domain names are assets with global appeal. Your domain name will not always be available. In fact, most of the time once they are acquired they are never available again because they become working assets are more valuable than just the cost of the domain name.
Let’s bring it back to the numbers to show why domain names are assets. The consistent sales of domain names prove that domains provide value to companies. If domain names did not provide value VC’s, boards of directors and founders would not consistently invest in premium domains. The truth is, domain names are great investments. Brands regularly invest in six to seven figures USD to acquire their perfect domain. A great example is the recent sale of Freedom.com for $2M. Here are some recent sales over the past year. You can view more at NameBio.com (great tool). As an asset class, they are regularly bought and sold and have consistently appreciated in value.
Domain names are assets that have consistently appreciated in value. As an asset class, they are regularly bought and sold. Companies are willing to invest in domain names once they understand the return on investment equation and how they impact the DNA of their brand.
In the domain industry, we like to use the analogy of real estate to explain the value of domain names. The truth is, this only scratches the surface on the value and impact of the perfect domain name. Domain names are assets because of how they reinforce a brand’s positioning, marketing, and communication. Your brand positioning is crucial to driving sales, revenue, goodwill, employee morale, etc. Domain names are an essential part of the DNA of every brand. Great brands own their exact match domain making the brand journey effortless for their customers.
The real momentum and power are achieved by creating simplicity and clarity between your domain name and your brand. Domain names are a great investment. If you have question, comment or story to add please feel free to reach out to me Chris@MediaOptions.com Did you find value in this article? Please share it with your network.