When the time comes to acquire a domain name, too many buyers focus on the length of the name and how it fits into an existing or planned marketing campaign without giving adequate attention to valuation. They use free appraisal services without realizing the results can be inaccurate or, at the very least, misleading. No one wants to acquire a domain name by paying too much for it. Making valuation a part of the research undertaken before purchasing an aftermarket domain name begins by having a clear understanding how value is determined and what it means in terms of the success or failure of a business venture.
What goes into making a domain name valuable?
There are many intangible and highly subjective factors that go into determining the value of a domain name to a particular buyer. A particular domain name might bring back a pleasant childhood memory making it extremely valuable to a particular buyer, but other potential buyers might not see the value in the name and shy away from it.
As a general rule, the ability of a domain name to represent the owner’s brand is probably the most important factor contributing to its value. A high-value domain name should increase an organization’s online visibility. It is something uniquely associated with a particular company or product.
Among the factors associated with valuable domain names are the following:
The ability to use a domain to carry a company’s brand across multiple local, national and international markets contributes to the valuation of the domain name. For someone in the market to purchase a domain name, the factors determining a domain’s value must be taking into consideration in light of their importance in the marketing and advertising plans and needs of the potential purchaser.
Supply and demand influence domain name valuation
Dot-com domain names continue to be the most valuable. One reason for this is supply and demand. The creation of generic top-level domains are adding to the number of domain names in use commercially on the internet, but high-quality dot-coms continue to be the ones drawing the most attention from buyers. As demand continues for what has become a limited number of available domains, the value of those offered for sale increase.
Domain names as an investment
A high-quality domain name has the ability to give a business an advantage over its competition. Its ability to represent a company, product or service through branding has the potential to generate traffic to a website and make a domain name a valuable asset and investment for its owner.
Traffic data, name length, word popularity and other data-driven factors are some of the ways to evaluate the value of a domain name to a company or business, but they are not the only ways. Data is important, but potential buyers must evaluate a domain name in terms of how it fits with the goals and purposes of the business with which it will become associated. Valuation of domain names is truly a combination of art and science.