NameSilo

End user demand

Labeled as guide in Domain Buying and Selling Discussion started by Dave, Oct 12, 2019.

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  1. Dave

    Dave Top Member VIP ★★★★★★★★★★

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    Introduction

    In the world of domain investing, we can sometimes get too caught up in how good a name sounds, without really thinking about the commercial viability and the probability of demand on a domain. Sometimes a domain name can look and sound great but may actually have very little if any demand.

    How then do we research end user demand? Then based on this demand how much should we be willing to spend on the domain as an investor?

    The following is for .COM domains only. Writing a guide that caters to every other TLD would take a really long time, so unfortunately I am going with what is still the number one sought after TLD in my opinion. If you disagree with this, stop reading now.

    The Factors of Demand

    The following list is ordered in what I perceive as priority order for working out demand, so 1 being weighted strongest and so on.
    1. The quality of the domain name itself. Read my domain investing guide to help you figure the quality and sell through rate of your domains.

    2. The number of developed websites operating with the same or very similar names, either on other tlds or variants of it on .com.
      • The key here is that they must be developed. Not a parked page or unused.
      • For example if you own Tomato.com you'd want to see developed sites on other tlds or variants of it, so something like TomatoUK.com, TomatoWorld.com, TomatoPlanet.com and so on.
      • Include hyphenated version of your domain in any calculation as well

    3. The number of companies with the same name, or very close to it.
      • There are tools and databases out there to help you research this. This guide will not go into depth on how to do this, you'll have to figure this one out yourself.
      • These must be active companies that are still in business, disregard all others

    4. If the keyword(s) are generic (not made up) then the number of trademarks is a bonus, not a negative
      • Yes, trademarks are not some binary definition. If you own a generic domain and trademarks exist this is more than likely good for you.
      • Multiple trademarks in various classes is what you really want to see
      • Generic keywords are words that have meanings that have a relatively wide scope
      • If its a dictionary word, it is generic
      • I am in no way endorsing trademark infringement here. There is a big difference between owning a domain with no bad faith intended, and obvious trademark infringement.
      • These must be active trademarks, disregard any inactive ones

    5. The number of other TLDS registered
      • More weighting to be given to tlds that are registered by end users but are unused, so you may want to research whois and history
      • I know this can be difficult to figure out, but anything with private WHOIS that has an offer landing page or for sale message on it will need to be considered another domain investor

    6. The length of the domain name in question. The shorter it is, the more likely it is to sell, since shorter names work really well in branding and advertising.

    7. The number of social media handles taken that match your domain minus the tld. I personally would only base this on Twitter and Instagram.
    How much to spend?

    So how much should you be looking to spend if you take into account the above, in addition to the quality of the domain.

    This is a really tough question to answer, and each investor has their own limits on what to spend, and knowledge of certain niches and markets.

    All I know is that the more developed alternatives, companies etc there are, the more chance you'll have of selling a domain name.

    I personally don't mind spending more on a domain when many of the above factors are at least true and have good numbers.

    NOTE: This guide is not investment advice. It is my own personal opinion on domain investing. Spend your money wisely, and only spend what you can afford to lose. It is also NOT legal advice in regards to trademarks. I am not a lawyer, I merely understand the above mentioned statements to be true, and thus I am sharing my thoughts and opinions with you.
     
    Last edited: Oct 12, 2019
    The views expressed on this page by users and staff are their own, not those of NamePros.
  2. Dave

    Dave Top Member VIP ★★★★★★★★★★

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    (Hypothetical Calculation of Probability

    The following is more open to discussion than a guide. How could we propose a formula that takes the various factors we know of above, and use that to gain some kind of insight into the probability of end user demand?

    Let's now look into how we can take the above variables and put them into a formula to help us calculate the probability. What we need is a formula known as a weighted sum, for each of the variables above except the first we decide on a weight, which is a effectively a number that is a score point.

    The first variable is our base to work from in any calculation, which leaves us with 6 variables to apply a weighting to. Number 2 should have the most weight, down to 7 with the least. With 6 variables to use in our calculation from the base, I propose we give an initial score of 1 to variable 2, and then reduce by a division of the initial score with each variable that follows.

    This leaves our weighting as:
    • Variable 2 - w1: 1
    • Variable 3 - w2: 0.834
    • Variable 4 - w3: 0.668
    • Variable 5 - w4: 0.502
    • Variable 6 - w5: 0.336
    • Variable 7 - w6: 0.17
    This would leave our formula for calculating our score looking something like this:

    score = stat1 ( n ) ⋅ w1 + stat2 ( n ) ⋅ w2 + stat3 ( n ) ⋅ w3 + stat4 ( n ) ⋅ w4 + stat5 ( n ) ⋅ w5 + stat6 ( n ) ⋅ w6

    The statn functions used in the formula are for calculating the sum of each variable/stat value, and then multiplying it by the weight.

    For variable 6, length of domain, the shorter it is the better. This means for variable 6 we need further calculation internally to calculate its necessary sum for weighting. What you want to do is set yourself an upper limit of what you deem acceptable max length for a quality domain and minus the length of yours from that. For example I deem 15 characters the max length.

    sumOfLengthOfDomain = max length (15) - length of domain

    It would be an almighty challenge converting this hypothetical formula into practice.

    This is purely hypothetical, applying exact science or math to domaining is something I wouldn't try recommending to anyone. ;)
     
    Last edited: Oct 12, 2019
  3. Haykay2005

    Haykay2005 Top Member VIP

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    Interesting.. Thanks for sharing dave
     
  4. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent Gold Account VIP Trusted Blogger

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    I think this is going to be one of the NamePros threads with the most valuable contributions! Thanks so much for building on your previous superb post, @Dave !

    Even though there is much uncertainty in most of the factors, I think trying to be quantitative is definitely a step forward.

    I agree that quality should have the highest weighting.

    The number of developed sites is clearly important, but I think it is also important to look at the trend in that. Like if there were 2 comparable sites a year ago, but 50 now, that is far different than if there were 100 a year ago but now only 50. Also, will be difficult to assess how many of those are meaningfully active without research.

    Related, I have no idea if it is easy to do, but is there a way to see how many Wix sites are developed in a topic? Because active Wix sites without a dedicated domain name are a big potential pool of end users.

    In terms of length, is the number of words also important? Like is a 12 letter domain that is one word much more valuable than a two word 12 letter which in turn is more valuable than a 12 letter combination of three short words?

    One could, I think, fairly readily extract stats related to prices of NameBio listed sales in .com versus length. I may see if someone has already done it, and if not do it myself.

    Thank you for a fantastic thread Dave! (y)(y)(y)(y)(y)(y)

    Bob
     
  5. vravis9

    vravis9 Top Member VIP

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    @Dave Great analysis and info...that is good continuity for your previous post for beginners in domain industry...

    You gave some good parameters...actually exact parameters to be in pool of selling names. I am very sure most of the domain investors don't follow this type of method. we should to be on safe side.

    With your next analysis mentioning all factors and formula...well thought of running away ;) but if your hypothetical explanation comes to practical implementation it will be more easy to understand and also more can add their thought I think.

    If you already deep into this formula...if you don't mind give us with real examples and names....some for sale names and some already sold names...that will be great.

    by the way are you some sort of mathematician or something like that....?

    Do you do domaining part time and teach mathematics as fulltime job...or other way around... ;)

    well joking...was curious since you jumped into analysis and deep into factors.

    Thanks again for your knowledge...
    Ravi.
     
  6. Recons.Com

    Recons.Com Top Member VIP

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    Thanks, Dave. Great, as always.

    Wix: that is always a bad news. A company that is too cheap to pay 10 bucks a year on paid hosting will not invest xxxx into a good name.
     
  7. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent Gold Account VIP Trusted Blogger

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    Quite probably true in most cases, although with over 100 million active users, there are more than 50x as many active users on Wix as there are domain name sales for all time listed on NameBio. A tiny percentage can be significant.

    But that was not my only reason to look at use on Wix. In addition, it helps to gauge interest in a topic. If I discover there are 10,000 different Wix sites around some topic, it tells me that there is globally a lot of site/business/organization interest in that topic. I just wondered if there is any easy way to extract the information easily. I don't know.

    I agree that would be illuminating. Perhaps @Dave first wants to discuss the principles, and then look at specific examples to test out the formula, which makes sense, but I agree @vravis9.

    Thanks again Dave and everyone!

    Bob
     
    Last edited: Oct 12, 2019
  8. Dave

    Dave Top Member VIP ★★★★★★★★★★

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    Thank you for your reply Bob.

    I agree with @Recons.Com in regards to Wix. A company not willing to invest in a proper website will most likely never spend 4 figures or above on a domain name.

    In regards to domain length, I think it really depends on the words and how well known they are. There are times where some two word domains are more valuable than a one word if that one word is not popular or such.
     
  9. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent Gold Account VIP Trusted Blogger

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    Thanks for your response.

    Definitely true in general, although there are exceptions - e.g. one on this DNW summary from last month.
    At least initially one of the $500k purchasers of a new gTLD were still using Wix (not sure if that is still the case).

    Even if 0.1% of the subset of Wix that currently are paying for a plan were to buy a domain name in a year it would be 4000 domain sales (this is not counting the other platforms that are similar). But again, my point was not as a way to find end users, but rather to see what topics those new businesses that scale well and are in every city and region are in. Anyway don't want to take it off-topic, just an idea on how to quantify popularity of a topic, but it seems not a good idea.

    I personally might leave out the social media handles from the weighting. It seems to me if given much weighting in formula it will prop up names that are not that great on other measures, and are not probably saleable as a domain name, even though popular on social media. I may well be wrong.

    Am I correct that your weighting is intended for .com domain name sales to businesses, or do you see it more broadly applied. If it were to be applied to new gTLDs for example, the match of the word to the TLD is the most important factor after and related to quality, Also the TLD quality would come in as a factor of lesser importance.

    If including generic country code then I think the other TLD analysis is a little more complex. Maybe important to clarify at outset whether your formula is intended only for .com, only for legacy big 3 or for something broader.

    Thanks again,

    Bob
     
    Last edited: Oct 12, 2019
  10. Dave

    Dave Top Member VIP ★★★★★★★★★★

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    It is broadly applying to .com only, but with some focus mentioned on targeting companies/businesses. I did mention that it was for .com in my OP here:

    This has the lowest weighting out of all factors, but I genuinely think that if somebody has registered twitter.com/{name} or instagram.com/{name} it still shows some sort of demand, even though it maybe minor in comparison to a company or such using the name.

    In regards to new GTLD's there are so many further variables at play it would take a considerable amount of time coming up with a guide and some kind of formula for those.

    In my personal opinion for new gtld's the left of the dot has to flow with the right. Names like send.money, my.world, digital.agency and things like that work really well in my opinion.

    But even with good new gtld's like that, quantifying them into some form of probability or expression of demand is not something I feel like wrapping my head around right now. :xf.smile:
     
  11. FolioTeam

    FolioTeam Top Member VIP

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  12. davidnyang

    davidnyang Upgraded Member Gold Account

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    I do agree with your ideas. @Dave

    Currently, there are two ways to sell the domains:

    1. Parking and sell - In this way, we just need to park our domains in the marketplace market. And then, we just only await any upcoming demand to make a potential deal.

    2. Marketing and sell - As you mentioned in your article, we are able to dig and stimulate any demands of the potential buyers, in which case we need a set of methods.
     
  13. AYORich

    AYORich Established Member

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    Interesting piece ..following up
     
  14. satyadeep singh

    satyadeep singh Established Member

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    How can i research to find the "Keyword" any tool to help us to find keyword
     
  15. sharastar

    sharastar Established Member

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    Wisdom as again and again Thanks @Bob Hawkes

    Also Thanks @Dave for this Awesome End User Demand Thread
     
  16. lock

    lock PremiumNameDomain.com VIP

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    That's the nerdy way I just like it is all I need. lol. Seriously thanks for posting though.
     

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