sales Why Are Companies Reluctant to Spend Money on a Good Domain?

[Whizzbang]

The last article on “Underpinning Domain Sales” sparked an interesting discussion on the domain forum, NamePros. One of the respondents asked the question, “Why are companies reluctant to spend money on a good domain?” In this article, I hope to answer that question.

In my opinion, the dominant reason businesses don’t spend money on domain names is because of ignorance. On the whole the domain industry has not been able to mobilise itself and communicate cooperatively to businesses about the importance of domain names. I’d like to unpack this a little further.

The biggest problem has always been the question of whom should put up the PR/Marketing money to generate interest and understanding in domains. Some people point to the registries, others the registrars while others say the current domain owners should all chip in. These discussiona often degenerate into name-calling and a lot of inaction.

What domain investors need to appreciate is that once they have purchased a domain name the registries and the registrars have effectively done their job. There is NO incentive for them to try and market on behalf of existing owners to increase the demand for already registered domains so the price goes up. That’s an almost impossible job.

The job of registries and registrars are to convince existing owners to renew and to get new registrations from wherever they can. On the whole, new gTLD registries have been excellent at selling their product to the domain investor constituency based on scarcity. “If you don’t buy this domain you’ll miss out like you did in the .com rush.”

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[todaygold]

People keep saying small businesses cannot afford to spend money on a domain. I say BS because operating a business costs money and many small businesses do spend money on advertising - even though the outlets they choose are likely very ineffective and even more costly than a domain name. I have seen realtors pay for mobile billboards which are carted around town. You think that is cheap? How many leads result from that? Other realtors pay for color print advertising in those freebie circulars they give away at the grocery store which noone even pays attention to. We were looking for a restaurant and I noticed a billboard on the side of the road. The ad had the word "passion" which caught my eye. It was an ad for a restaurant. A couple hours later I cannot recall where the restaurant is located or what its name is or what type of food they serve. How much did that billboard cost? I have seen a local spa put an ad on a bus stop bench in front of my apartment complex. Are their target customers going to be found there?

However, I did see one ad on the side of a local bus that did catch me eye and thought it was effective. I live in West Palm Beach and the ad was. TestPalmBeach.com - for an HIV testing service in West Palm Beach.

First, I think you are mistaking what is a 'small business' and what is not. Most real estate agents belong to an agency...who pays for the ads. Very few real estate agents run a one-man show.
Second, for people in the MARKET for those particular goods and services...those advertising mediums are effective. Sure, if you aren't looking to buy a house, you don't care about those real estate books. But having recently been in the market for a new home a few years ago, I can tell you that we picked up those books all the time...and we did visit the real estate agents website to get more pictures and information on the houses.
Likewise, with billboards or mobile billboards, if you are in the market for the particular goods/service offered, then you do notice them. Just because you aren't looking to buy a house and don't care about John Smith's agency, doesn't mean no one is.
And honestly, I'm surprised you considered that last one effective...I wouldn't remember 'testpalmbeach' 15 minutes later, much less when I got home.

 

[Lox]

TestPalmBeach.com

Whoever approve to run campaign on this way must be someone staring through the window and dreaming of being successful. At least, one WET honeybee landing page should be there instead of forwarding to the 1990s style Florida health gov official website. Waste of tax payers money. Agree with @todaygold

 

[DN Invest Ltd]

Business owners are uneducated, period.

Some company owns Furniture.com (fictional example). So what? That doesn't means they can't benefit by owning CustomWoodenFurniture.com.

No matter how many stores and showrooms they have, there will always be more people that visit them online than offline. OK, Furniture.com is ultra-premium domain. Yes, but CustomWoodenFurniture.com can rank better than Furniture.com (after quality development) for the "custom wooden furniture" search phrase. Didn't check, but lets say 5,400 people search for this keyword phrase each month. Why not taking them? After proper development CustomWoodenFurniture.com will be on the first position on Google (any other domain will need much more effort) and it is expected that it will be receiving about 32% of those 5,400. That means at least 1,728 visits a month (plus those who will be attracted by "accidential keywords"). Lets talk about conversion rate of only 1% and only after we take into account bounce rate of 50% (very conservative). That means 8 sales a month. Lets say that pure profit per sale is only $50 and we are at $400 a month. That means $4,800 a year. Yes, that is nothing for a big company, but if they paid for this domain only $1,000 and if their IT department spent only 40 hours on quality development and SEO that will be all what they needed to do. Their pure profit for the first year will be $3,800 and then $4,800 for each additional year. If they do the same thing with 100 domains (big companies can do that) they will be making pure profit of $380,000 a year more than if they didn't do that, without any additional effort, without any cut in their expenses etc. What if they get domains with higher exact monthly search? Lets say 20,000 a month. Then they will be making way more than $1 million in additional profits, without any additional effort. What if their conversion rate will be 2% and their bounce rate only 30%? Get the point?

OK, and what about some other company which uses another non-premium domain? They should spend all their marketing resources on additional domains (and proper development) instead of paying a fortune to costly AdWords campaigns which will last only while they are paying. Only one domain with decent exact monthly search which can be purchased for $1,000, or less, when someone outbound them, can bring them $3,800 a year (later even more) in additional profits. For a small company this amount is not something they should ignore. Well, they actually ignore this because they are uneducated.

We should all together start working on global campaigns which will educate people of the importance of domain names.

 

[todaygold]

Business owners are uneducated, period.

Some company owns Furniture.com (fictional example). So what? That doesn't means they can't benefit by owning CustomWoodenFurniture.com.

No matter how many stores and showrooms they have, there will always be more people that visit them online than offline. OK, Furniture.com is ultra-premium domain. Yes, but CustomWoodenFurniture.com can rank better than Furniture.com (after quality development) for the "custom wooden furniture" search phrase. Didn't check, but lets say 5,400 people search for this keyword phrase each month. Why not taking them? After proper development CustomWoodenFurniture.com will be on the first position on Google (any other domain will need much more effort) and it is expected that it will be receiving about 32% of those 5,400. That means at least 1,728 visits a month (plus those who will be attracted by "accidential keywords"). Lets talk about conversion rate of only 1% and only after we take into account bounce rate of 50% (very conservative). That means 8 sales a month. Lets say that pure profit per sale is only $50 and we are at $400 a month. That means $4,800 a year. Yes, that is nothing for a big company, but if they paid for this domain only $1,000 and if their IT department spent only 40 hours on quality development and SEO that will be all what they needed to do. Their pure profit for the first year will be $3,800 and then $4,800 for each additional year. If they do the same thing with 100 domains (big companies can do that) they will be making pure profit of $380,000 a year more than if they didn't do that, without any additional effort, without any cut in their expenses etc. What if they get domains with higher exact monthly search? Lets say 20,000 a month. Then they will be making way more than $1 million in additional profits, without any additional effort. What if their conversion rate will be 2% and their bounce rate only 30%? Get the point?

OK, and what about some other company which uses another non-premium domain? They should spend all their marketing resources on additional domains (and proper development) instead of paying a fortune to costly AdWords campaigns which will last only while they are paying. Only one domain with decent exact monthly search which can be purchased for $1,000, or less, when someone outbound them, can bring them $3,800 a year (later even more) in additional profits. For a small company this amount is not something they should ignore. Well, they actually ignore this because they are uneducated.

We should all together start working on global campaigns which will educate people of the importance of domain names.

WOW. This is by far one of the craziest posts on here. You seem to have zero clue as to how real businesses run. This is nonsense that you expect a company that makes custom wood furniture to go out and buy 1,000+ domain names and that's somehow going to make them millions more in profit....uh, no. What exactly should each of those domains go to? A custom website? So one company should have hundreds or thousands of custom websites?
Your example is also bogus. You don't need to spend money on a premium domain to get it to rank...take your own example 'custom wooden furniture'...ranking on the first page is Vermont Wood Studios, David Stine Woodworking, Joel Bare Woodworking and Ohio Hardwood Furniture...notice that not one of them has or needs 'CustomWoodenFurniture.com' to be on the first page of Google...so why spend premium money for it?
And lastly, while there are online businesses of course, most new small businesses are local...so getting more people to their website won't matter if they don't live in that local area.

 

[DN Invest Ltd]

WOW. This is by far one of the craziest posts on here. You seem to have zero clue as to how real businesses run. This is nonsense that you expect a company that makes custom wood furniture to go out and buy 1,000+ domain names and that's somehow going to make them millions more in profit....uh, no. What exactly should each of those domains go to? A custom website? So one company should have hundreds or thousands of custom websites?
Your example is also bogus. You don't need to spend money on a premium domain to get it to rank...take your own example 'custom wooden furniture'...ranking on the first page is Vermont Wood Studios, David Stine Woodworking, Joel Bare Woodworking and Ohio Hardwood Furniture...notice that not one of them has or needs 'CustomWoodenFurniture.com' to be on the first page of Google...so why spend premium money for it?
And lastly, while there are online businesses of course, most new small businesses are local...so getting more people to their website won't matter if they don't live in that local area.

You didn't understand me.

First of all, ultra-premium domain together with non-premium domains was just an example, and it was not pointed on ultra-premium against non-premium but on ultra-premium alongside non-premium. If you are getting 100,000 visits a day (through your premium domain) why wouldn't take the opportunity of getting 100,100 a day?
McDonalds has thousands of restaurants but you can be sure they will take any opportunity to open a new one.

I didn't mention that some small business will go out and buy 1,000s of domains and develop each of them. I wrote that some big company is able to buy 100 domains and to develop each of them.

Yes, if possible, one company should have 100 domains and websites. Why not? Just as some company has 100s of offline stores. More websites=more visits=more profits Very simple.

My example with CustomWoodenFuniture.com was without any check outs from my side. I dont know which domains rank for this phrase, but it is not important at all. If the owner of CustomWoodenFuniture.com decides to be on the first position and is prepared to invest (time or money) in website development and SEO there is no chance ANY other domain will be able to be ahead of his domain. That is how Google works, and if you dont understand SEO you cant understand domains.

 

[DN Invest Ltd]

And lastly, while there are online businesses of course, most new small businesses are local...so getting more people to their website won't matter if they don't live in that local area.

There are some situations when they dont need additional domain, or even any domain, like some small local fast-food restaurant without any intention to grow. However, in the most cases there is a need for additional domains and when used wisely they can help a lot.

If some business owner is currently on the forth position with his domain and that is his maximum then he should think about additional domains. Not to replace his current one but to use them alongside his current domain. I dont agree that it is better to spend $1,000 on AdWords campaign than on a domain with decent exact monthly search. Yes, with AdWords you will get instant clients, but with decent domain (and quality development) you will be getting clients forever, for free.

 

[todaygold]

You didn't understand me.

First of all, ultra-premium domain together with non-premium domains was just an example, and it was not pointed on ultra-premium against non-premium but on ultra-premium alongside non-premium. If you are getting 100,000 visits a day (through your premium domain) why wouldn't take the opportunity of getting 100,100 a day?
McDonalds has thousands of restaurants but you can be sure they will take any opportunity to open a new one.

I didn't mention that some small business will go out and buy 1,000s of domains and develop each of them. I wrote that some big company is able to buy 100 domains and to develop each of them.

Yes, if possible, one company should have 100 domains and websites. Why not? Just as some company has 100s of offline stores. More websites=more visits=more profits Very simple.

My example with CustomWoodenFuniture.com was without any check outs from my side. I dont know which domains rank for this phrase, but it is not important at all. If the owner of CustomWoodenFuniture.com decides to be on the first position and is prepared to invest (time or money) in website development and SEO there is no chance ANY other domain will be able to be ahead of his domain. That is how Google works, and if you dont understand SEO you cant understand domains.

Apparently you don't understand. McDonald's uses a bunch of domains, but why are they not buying millions and developing different websites on each one of them? Surely they can afford to buy a million domains each year to develop?
And why not? Did you think that through? Because for most businesses, the point is to build a BRAND. How the heck is a customer supposed to trust you and buying from you, when they go to 3 different domains, each of which has a different website with your name on it? They will have no clue which is the 'real' website and which isn't. Branding is about being uniform...that's why every McDonald's looks similar...you don't want 1,000 different websites for your brand...you want 1.

 

[MapleDots]

It's funny you mention $5k as I did recently spend just that on a domain name for a company project. However, the domain is a category killer in a highly commercial niche with significant type in traffic = free marketing on tap as a bonus. I contacted another person in this niche asking how much and was quoted $50k, I just quietly moved on no point carrying on the discussion.

I agree with you, I sell for 5k and I have bought a few domains for 5k for my businesses. I recently went as high as 15k for a .ca regional domain and was quoted 75k. The guy had the domain for over 10 years and was still holding out for a big payday. Chances are he will never be offered 15k again. I registered the same domain name for 10 bucks by adding the name store on the end.

So yes, I see it from both sides, the 75k quotes might hit once in a while but it seems like now everyone wants that.

 

[DN Invest Ltd]

Apparently you don't understand. McDonald's uses a bunch of domains, but why are they not buying millions and developing different websites on each one of them? Surely they can afford to buy a million domains each year to develop?
And why not? Did you think that through? Because for most businesses, the point is to build a BRAND. How the heck is a customer supposed to trust you and buying from you, when they go to 3 different domains, each of which has a different website with your name on it? They will have no clue which is the 'real' website and which isn't. Branding is about being uniform...that's why every McDonald's looks similar...you don't want 1,000 different websites for your brand...you want 1.

You can have the same website structure at all your websites and place your logo on each of them. They will surely improve your brand awareness. You can also link to your corporate website if you like. The point is that with additional domains you will have more visits, especially if you do know how to develop them and if you know how to do SEO properly.

There are a lot of domain types. Furniture.com is ultra-premium domain and it will bring a lot of benefits. AntiqueFurniture.com is premium domain, but far away from ultra-premium. However, it can help a lot to the business who owns Furniture.com as there will be a bunch of people (potential customers) who will search for antique furniture and will miss Furniture.com. No matter how many millions Furniture.com makes, for the owner would be wise to acquire AntiqueFurniture.com and even some other domains. Of course Furniture.com will be their main domain, but additional domains would also be of help.

Lets say John Smith owns JohnSellsMiami.com, or even better, SmithsEstates.com and that name is also their BRAND. Do you really think they would not benefit by owning BeachFrontPropertiesMiami.com ? Four-word domain that can help a lot in some situations. Moreover, they should acquire other related domains too, if they are serious about their business. I cant help you if you dont understand why.

 

[todaygold]

Do you really think they would not benefit by owning BeachFrontPropertiesMiami.com ?

BeachFrontPropertiesMiami.com is a pretty terrible domain name. You seem stuck on this idea that your SEO is all about the domain name...that's not how it works. You type a lot, but I don't think you quite understand how things work. Seeing as how you have a whopping 25 posts on here, I would recommend that you spend some time reading through the forums and learning a bit more.

 

[AutoDealer]

I see the point with the long domain name being desirable but the real gem is the exact keyword search or phrase that is used and it also makes this domain worthless.

Here is the gem:

Miamibeachfrontproperties.com

Miami beach front properties is going to have a higher search rate vs the phrase of your domain. I've made this mistake over and over. I have galvestionbeachrealestate.com and all the other versions of this are taken. An up and coming real estate agent will be more interested in this for that reason only.

If you want to make money with that domain the only answer is to put content on it for SEO. When it ranks, it's valuable.

 

[Lox]

McDonald's uses a bunch of domains, but why are they not buying millions and developing different websites

MCD developing different websites.

example

happymeal.com
werkenbijmcdonalds.nl
mcdonalds.jobs
mcdonaldsrestaurant.nl
www.mcdvoice.com
anything.mcdonalds
mcdonaldsneo.com
mcdonaldsnytristate.com

Scout further!

 

[DN Invest Ltd]

BeachFrontPropertiesMiami.com is a pretty terrible domain name. You seem stuck on this idea that your SEO is all about the domain name...that's not how it works. You type a lot, but I don't think you quite understand how things work. Seeing as how you have a whopping 25 posts on here, I would recommend that you spend some time reading through the forums and learning a bit more.

This is business account. I am not the only user of it, but we dont post much with this account. I can tell you that personally I am active on NamePros more than 10 years

I didn't want to mention that you are active here only 1 year as you might be in the industry for years so my advice is that you dont judge based on the post number or registration date.

Yes, I just checked and BeachFrontPropertiesMiami.com is not that good as I thought before I checked it. However, a similar domain with decent exact monthly search would definitely be a plus for SmithsEstates.com from my example. I am not saying this kind of domain should be their main domain, but should be their additional funnel for getting clients.

SEO possibilities are just one thing that makes a domain valuable. Some domains have nothing more than that, but some domains have a lot more and thats why some domains are premium and some are not, and thats why some domains are worth $100, and some are worth $100,000 and even more.

Domain name is not only a brand, otherwise domains like GamesForGirls.com or ErectileDysfunction.com would not be paid six figures.

And yes, SEO is very important and it is important that your domain can bring you SEO benefits. Premium and ultra-premium domains bring even much more, but they also bring SEO benefits.
If you understand how SEO works and that EMDs are still advantage then you can save a lot of dollars needed for SEO (or marketing) by acquiring EMD. Many business owners are not aware of that. It is ideal that domain is an EMD and that also can be a brand, like Furniture.co.uk which was sold for $650,000 I think. I dont remember that I ever some some brandable domain (prior it became a brand) sold for six figures. There is a reason for that.

The problem is that many domainers actually dont understand why domains are valuable. How then we can expect that some John who sells furniture will understand that? Many domains thinks that domain must be single-word commercial name to be valuable. That kind of domain is definitely valuable, but there are a lot of three-word and even four-word domains that cant become a brand, but are more valuable than some single-world domains.

Regarding case studies and signals from Google (Cutts and now Muller), thats a bunch of BS. Google lies, and case studies are mostly done on amateur way. You cant properly compare two domains without having all parameters equal. Many case studies has been done unprofessionally and still proved that EMDs are still in the advantage of 10-20%. I claim the advantage is even higher, when every other SEO factor is equal. Now if you know how much time is needed to make one quality backlink (or how much does it costs) you can figure why is incredibly important to be able to rank with 10,000 backlinks instead of 15,000. If brandable non EMD needs 15,000 backlinks for the first position I guarantee that EMD will need not more than 10,000, if everything else is equal. You need the whole army to build 5,000 quality backlinks, or you need a lot of $$$ to pay for that job.

If some small business is cleaning carpets in Chicago and owns CarpetShine.com and Carpet Shine LLC nobody can tell me that they dont need CarpetCleaningChicago.com. They might do well without it, but this additional domain would definitely be of help to them. This was example of one non-premium domain which is valuable anyway. They need CarpetCleaningChicago.com because of SEO (assuming there is some decent exact monthly search), but also because some other things like impression when their potential clients are still on Google, and more.

This took too long and I am not even sure if I expressed myself well, but I definitely understand the value of domains and know that most business owner dont. Thats the problem.

I am out

 

[AutoDealer]

You can have the same website structure at all your websites and place your logo on each of them. They will surely improve your brand awareness. You can also link to your corporate website if you like. The point is that with additional domains you will have more visits, especially if you do know how to develop them and if you know how to do SEO properly.

If you do this^^^ Google will ignore your sites and exclude them from search results. This is the most irrational thought and maybe it worked ten years ago but not today. Doing SEO properly is to have relevent and intellectual content that is unique to your site. Linking can get you deranked forever. Lookup nofollow and dofollow links. Google SEO released the requirement for a nofollow html tag on all links. Your link will still work but it will hurt you if you don't have the tag.

 

[DN Invest Ltd]

If you do this^^^ Google will ignore your sites and exclude them from search results.

Just the same (or very similar) website structure, not the same content of course.

 

[todaygold]

MCD developing different websites.

example

happymeal.com
werkenbijmcdonalds.nl
mcdonalds.jobs
mcdonaldsrestaurant.nl
www.mcdvoice.com
anything.mcdonalds
mcdonaldsneo.com
mcdonaldsnytristate.com

Scout further!

Two problems with your 'example'. As I said McDonadls has a lot of domains, but they aren't buying millions per year...why not? They can surely afford it.
Second, you will notice that all of those domains serve a purpose to their core brand...not one of those is 'Goldenfriesaregreat' or 'hamburgersarereallycool'....every single one either has 'mcd', 'mcdonadls' or the name of their product in it...that's different then what DN Invest is talking about.
Try again.

 

[todaygold]

If you do this^^^ Google will ignore your sites and exclude them from search results. This is the most irrational thought and maybe it worked ten years ago but not today. Doing SEO properly is to have relevent and intellectual content that is unique to your site. Linking can get you deranked forever. Lookup nofollow and dofollow links. Google SEO released the requirement for a nofollow html tag on all links. Your link will still work but it will hurt you if you don't have the tag.

Agreed. I think 'DN Invest' is talking about things from years ago and seems to be out of touch with current reality. DN Invest claims to be an expert, but seems to have trouble understanding the basic concepts.

 

[Lox]

@todaygold

Please read again! "MCD developing different websites" . I did not mention domains. Did I mention domains?

 

[AutoDealer]

"CarpetCleaningChicago.com because of SEO"
chicagocarpetcleaning.com is the high dollar geo.

Also backlinks are very bad. I mentioned nofollow links below, this is the new Google rule. I read Sugarrae.com to keep up with all the latest Google rules and how they'll help or hurt me. This lady really knows her stuff.

 

[todaygold]

@todaygold

Please read again! "MCD developing different websites" . I did not mention domains. Did I mention domains?

Pretty much the same thing I mentioned earlier. But I will change the wording to make you feel better:
McDonadls has a lot of websites, but they aren't developing millions per year...why not? They can surely afford it.
Second, you will notice that all of those websites serve a purpose to their core brand...not one of those is 'Goldenfriesaregreat' or 'hamburgersarereallycool'....every single one either has 'mcd', 'mcdonadls' or the name of their product in it...that's different then what DN Invest is talking about.
Try again.

 

[Lox]

@todaygold Thank you!

 

[AutoDealer]

Agreed. I think 'DN Invest' is talking about things from years ago and seems to be out of touch with current reality. DN Invest claims to be an expert, but seems to have trouble understanding the basic concepts.

It takes effort to keep up with changes. I bought a domain off a drop list for a local real estate office that closed down. I just went to their site one day and it was gone. The domain dropped, I bought it and it was ranked on the first page of Google for three months after that and because I didn't put up content the domain disappeared off the list. I tried to sell it to a local bank and they said it's no longer worth anything. I still have it. It's like a boat anchor but I can't let it drop.

 

[todaygold]

It takes effort to keep up with changes. I bought a domain off a drop list for a local real estate office that closed down. I just went to their site one day and it was gone. The domain dropped, I bought it and it was ranked on the first page of Google for three months after that and because I didn't put up content the domain disappeared off the list. I tried to sell it to a local bank and they said it's no longer worth anything. I still have it. It's like a boat anchor but I can't let it drop.

Yeah, you can easily loose your ranking quickly once your good content goes away. DN Invest is stuck on this idea that by simply having keywords in your domain, that will automatically put your site on the first page of Google, but of course that's not how it works.

 

[AutoDealer]

Pretty much the same thing I mentioned earlier. But I will change the wording to make you feel better:
McDonadls has a lot of websites, but they aren't developing millions per year...why not? They can surely afford it.
Second, you will notice that all of those websites serve a purpose to their core brand...not one of those is 'Goldenfriesaregreat' or 'hamburgersarereallycool'....every single one either has 'mcd', 'mcdonadls' or the name of their product in it...that's different then what DN Invest is talking about.
Try again.

McDonald's are franchises so the many different sites could be franchise owner sites. Wouldn't it create confusion with consumers if you have hundreds or thousands of different sites for your corporation? That's the opposite of brand development or brand strength. When you want to shop at Target online you go to Target.com and not targetissexy.com or targetstores.com

 

[todaygold]

McDonald's are franchises so the many different sites could be franchise owner sites. Wouldn't it create confusion with consumers if you have hundreds or thousands of different sites for your corporation? That's the opposite of brand development or brand strength. When you want to shop at Target online you go to Target.com and not targetissexy.com or targetstores.com

I'm not sure if McD allows individual franchises to have their own domain and website...most of the websites mentioned are for things like customer feedback, locating McD's in your state/area, applying to work for them, etc. And Target is a bit different...Target you can actually go and shop on their site. You can't buy McD food online, you have to go their in person...so it's a bit different than actually shopping on their site.