Your web business’ domain name is your first impression with users and potential customers. The right one can give you instant credibility, succinctly express what your business is all about, or go viral.
That said, buying an eye-popping, expensive domain name is far from necessary to start a successful business, and in many cases can be a poor use of capital.
A keyword domain is a domain name that includes a keyword that your website will be targeting. For example, if you are starting a web business that will be selling blue widgets, some keyword domain names would include:
Google used to heavily reward “exact match domains,” or “EMD’s” in their search algorithms. Getting a top ranking for “blue widgets” was much easier if you were building your business on BlueWidgets.com.
This effect has been dampened with various tweaks to Google’s algorithms, but it is still present. Let’s take a look at the SERPs (search engine results pages) for “credit cards” and “online universities,” two of the most competitive sectors in internet marketing.
As you can see, CreditCards.com and OnlineUniversities.com dominate the results for their respective searches. A stellar keyword domain name doesn’t guarantee amazing search results, but it does help.
This past summer I became involved in the creation of a boutique internet marketing firm, Terran Marketing, alongside Taylor Caby, Mike Jackness, and Jim Varnon. We’ve focused on picking up keyword domain names and creating content-rich affiliate sites in industries we believe we have a solid edge in. We’ve picked up some great properties including IRA.com, OnlineStorage.com, and GraphicDesign.com. I’ve enjoyed learning a ton about internet marketing while working with a star in the business (Mike).
Domain names to avoid
While keywords in your domain name can help your chances of getting ranked, there are also several things to avoid when choosing a domain name:
A category killer is a keyword domain name that is an EMD for a short, highly competitive keyword.
Toys.com for example is a category-killing domain that was involved in a high-profile $5MM sale to Toys ‘R Us. Category killers are highly valuable domain names because they rank more easily, provide instant credibility to the owner or business, and even receive a fair amount of type-in traffic from users who randomly go to “toys.com.”
Drawbacks of Keyword Domains
Keyword domain names are not without their limitations. Most obviously, they aren’t particularly creative. Ira.com and OnlineDegree.com are category crushing domains that are going to take less work to rank well in Google with and pull in some serious affiliate traffic, but do you really want to start an investing business named ‘IRA’ or an education business named ‘OnlineDegree’? Probably not.
Tony Hsieh makes a great point about keyword domain names in Delivering Happiness: they can box you in and place limitations on your business plan. Before Tony became involved with Zappos, the company’s name was ShoeSite.com. Tony had the foresight to realize that if the business hit a home run, they would want to sell more than just shoes. They started playing around with the word ‘zapatos’ and settled on Zappos: a fun, catchy, brandable domain that a decade later sells a variety of non-footwear products.
In 1997, Larry Paige and Sergey Brin decided they needed a new name for their search engine project dubbed BackRub. A graduate student friend of theirs suggested the word “googolplex” since their project related to an immense amount of data, and a misspelling during their domain registration led them to decide on the name Google.com, the classic example of a brandable domain.
Brandable names are not unique to web businesses. For a brief time earlier this year, Apple (started well before the Internet’s existence) was the world’s largest publicly traded company. Of course, their business has nothing to do with selling apples. The advantage of brandable names is that they are catchy, fun, and prone to viral marketing. The downside is that they probably don’t tell your users much about what your business actually does.
Another problem with brandable domain names is that they can be hard to spell or pronounce. This can be a real issue in your business’ infancy and can make brick-and-mortar advertising campaigns difficult. How many D’s and T’s are in Reddit? Or is it Reditt? Redditt? You get the picture. There are plenty far worse examples; nginx, a very solid server company, for example just raised a serious amount of venture capital funding. Nwhat? It’s supposed to be pronounced “engine-x.”
If you browse around any of the most popular domain name marketplaces, you might be surprised at how expensive brandable domain names. You’re going to have to shell out some serious dough for a short and catchy domain. Some public brandable domains that have sold this year include:
- HX.com ($125,000)
- Kari.com ($63,000)
- Zillion.com ($14,800)
- Loket.com ($3,000)
- Tirco.com ($2,413)
A few weeks ago, I came across a new start-up called Stylate.com. Stylate has a solid portfolio of fresh, brandable .com domains paired with logos that are all for sale for $250. They’ve had some serious steals, and if you compare their names with equivalent ones priced on Sedo, you’ll fall out of your chair.
I have no affiliation with them whatsoever, but I’ve bought a few domains from them and have been very happy with their product and service. For $250 you’ll be hard-pressed to do better. Be very careful using domain name brokers, even the big players in the market. It’s a seedy industry and there are horror stories and ripoffs all over the Internet.
If you’re going to go the brandable route, keep it short and as pronounceable as possible. I’ve got a few brandable domain names; dartr.com, pirly.com, yilr.com, but only a small amount of very short ones I picked up cheaply.
Keyword-Brandable Hybrid Domains
One of the most cost-effective ways to choose a domain is to incorporate the strengths of both keyword and brandable domains.
BobsBlueWidgets.com is catchy, easy to spell, not excessively long, and contains your most important keyword. Sure, it won’t rank in search results as “BlueWidgets.com,” but it’s more personal and fun. It’s not as short or cool as “Bobbo.com” but it contains your keyword and tells your users what your business is about.
Best of all, it’s available to register for under $12. Can’t beat that.
The Domain Name Market
Millions of shares of Google, Apple, and Microsoft exchange hands every day in the world’s largest financial markets. This liquidity allows market participants to relatively accurately gauge the value of these companies. Domain names on the other hand are turned over infrequently in an illiquid, non-transparent, and sometimes corrupt market.
Many aspects of today’s domain marketplace feel like real estate in 2007; notably, leverage is lacking. “Domainers” today buy domains with no interest in developing them, purely in the hopes of selling them at a greater price down the road. Many of the most expensive, high-profile domain name sales are simply parking pages waiting to be acquired by another buyer.
There is a huge amount of inefficiency in the domain market and this is pretty much the definition of “greater fool” theory. Last week, one very popular domain blogger posted a list of a few of his domains for sale:
[paragraph removed -- I was unfairly harsh here. Although I found these domains overvalued, Elliot received an offer close to the asking price -- I was wrong. He has a lot more experience than I do in this industry.]
If you look hard enough, there are always bargains
I hope I’m not coming off as too cynical. There are bargains to be had in any market. A major part of our strategy with Terran Marketing is to be very selective with the domains we do purchase, and focus heavily on the price we pay for each property. Ensuring we have a large margin of safety is critical.
Domain name index
One pretty cool project I’ve come across is IDNX, the attempt to create a market index for domain name prices. They’ve factored in tons of sales and found that a domain index has closely tracked the NASDAQ index over the last decade. This isn’t terribly relevant, and I haven’t inspected the accuracy of their methods or results, but I thought it was neat.
If you are super paranoid about market risk to your domain portfolio, you could buy some long-dated far-out-of-the-money QQQ puts to hedge.
I’ll wrap up this blog post with a little bit of advice that will probably sound contradictory: don’t spend too much time or money on your domain name.
It’s so easy to get bogged down and spend weeks debating over the perfect name for your new business, when in reality you will have many more important tasks to stay on top of. Be decisive. Twitter was named by pulling each employee’s favorite name out of a hat. I hope I’ve given you some things to think about when selecting a domain name for your business, but don’t over-spend your time or money: you’ve got much more fun and important things to worry about.