Extremely Undervalued .coms

[creature]

Are the top selling domains undervalued at the moment?

If you compare a domain name to a house or a shop it seems that way to me.

eg blue dot com 500k

Probably about the same price as one average size newsagents shop in a UK city center.

Surely there is a greater chance of a million Mr. Anybodies from Anywhere going to blue.com and spending a pound rather than visiting the one newsagent shop in some UK city for example.

Therefore don't you think that some of the top level .coms are extremely undervalued at the moment ?

 

[floatingworld]

blue.com is a parked page, whereas my local newsagent can sell me an icecream.

 

[accent]

The arguement can be made both ways. Diamond dot com sold a little while ago for (I think it was) 7 million. I think you could say that, along with the plural, this was the best internet "property" in the diamond business. I don't know where the best diamond real estate is but I would imagine it is several orders of magnitude more valuable.

So what does the buyer of diamond dot com get? Well, he gets some type-in traffic looking for diamonds, but I question that many people will buy diamonds that way. Probably a whole lot less than 7 million dollars worth.

The new owner gets to promote his business as "diamond dot com". How much is that worth versus say, "finequalitydiamond.com" which I found in a couple minutes search. finequalitydiamond.com has two additional keywords.

I am hearing four word domains on the radio frequently these days. There seems to be a resistance of many advertisers to pay for domains. They seem to believe that a reg fee domain is as good as a high priced one. A recent Pepsi ad features a four word dot US domain. They expect their customers to type in four words PLUS remember that it is a dot US. And this is in a national promotion probably costing millions of dollars.

How close is the real estate analogy? It is about as easy to get to one website as any other ..... the quanity of domains is unlimited ..... so the two real estate proverbs: "location, location, location" ; and "they aren't making any more of it" do not really fit.

I am throwing thoughts out here. I do not claim to know where they lead.

 

[Ronald Regging]

Diamond has an OVT of 258,000... Thats 258,000 people every month looking for diamonds... And according to some people, the actual values can be upto 8x higher than OVT results... But lets say they get 10% of that in type-ins... Thats 25,000 hit's a month from direct type-in, by people who are specifically looking for diamond jewelry. Obviously not everyone is going to buy something, but just getting them to the site provides for more opportunities for conversion. Sign up for our free newsletter, click here for a 10% coupon, low Christmas Gift Prices, etc... So let's say 5% of those people actually buy something... that 1,250 sales per month just from type-in... Whats the average someone spends on diamonds? $99-5,000 We'll go $250 to be on the low end...

Given those rates they can get the $7 mil back in 2 years time... And this isn't taken into account SE placement, marketing, advertising, etc... just pure type-in...

If I ran a diamond business, $7 mil would have been a bargain... Plus the best real estate in the world isn't going to get you the magnitude of exposure that you can get on the internet.

 

[floatingworld]

Diamond has an OVT of 258,000... Thats 258,000 people every month looking for diamonds... And according to some people, the actual values can be upto 8x higher than OVT results... But lets say they get 10% of that in type-ins... Thats 25,000 hit's a month from direct type-in, by people who are specifically looking for diamond jewelry. Obviously not everyone is going to buy something, but just getting them to the site provides for more opportunities for conversion. Sign up for our free newsletter, click here for a 10% coupon, low Christmas Gift Prices, etc... So let's say 5% of those people actually buy something... that 1,250 sales per month just from type-in... Whats the average someone spends on diamonds? $99-5,000 We'll go $250 to be on the low end...

Given those rates they can get the $7 mil back in 2 years time... And this isn't taken into account SE placement, marketing, advertising, etc... just pure type-in...

If I ran a diamond business, $7 mil would have been a bargain... Plus the best real estate in the world isn't going to get you the magnitude of exposure that you can get on the internet.

nobody but nobody is going to buy a retail quality diamond over the internet.
only cheap crap.
..the site however may draw interested punters (and robbers) to the shop by making its stock known...

 

[rome2ng]

wow,

in the first place,how do they even registered the name blue.com so easily ? sigh, i wish i know domain long ago to purchase such good names

 

[wot]

The value is in the pocket of the "buyer' - simple as that!

 

[Ben42]

nobody but nobody is going to buy a retail quality diamond over the internet.
only cheap crap.
..the site however may draw interested punters (and robbers) to the shop by making its stock known...

I tend to disagree. If I didn't have a guy that I trusted (oh yeah, she got a ROCK! ) I would go to a name I trust like blue-nile or Tiffany's. A trusted, "Big" company over the internet with the right paperwork would get my business before some Jewler down at the mall.

 

[Flaresolutions]

Diamond has an OVT of 258,000... Thats 258,000 people every month looking for diamonds... And according to some people, the actual values can be upto 8x higher than OVT results... But lets say they get 10% of that in type-ins... Thats 25,000 hit's a month from direct type-in, by people who are specifically looking for diamond jewelry. Obviously not everyone is going to buy something, but just getting them to the site provides for more opportunities for conversion. Sign up for our free newsletter, click here for a 10% coupon, low Christmas Gift Prices, etc... So let's say 5% of those people actually buy something... that 1,250 sales per month just from type-in... Whats the average someone spends on diamonds? $99-5,000 We'll go $250 to be on the low end...

Given those rates they can get the $7 mil back in 2 years time... And this isn't taken into account SE placement, marketing, advertising, etc... just pure type-in...

If I ran a diamond business, $7 mil would have been a bargain... Plus the best real estate in the world isn't going to get you the magnitude of exposure that you can get on the internet.

You cant just pluck these figures out of thin air. There are so many variables its laughable to try and cover them all in this way. I will say that at $7 million, I think this domain was a bargain, especially in the competitive & high value diamond market.

 

[gingeman]

I tend to disagree. If I didn't have a guy that I trusted (oh yeah, she got a ROCK! ) I would go to a name I trust like blue-nile or Tiffany's. A trusted, "Big" company over the internet with the right paperwork would get my business before some Jewler down at the mall.

Good point, I would also note that to me at least, the (hypothetical) company diamond.com must be a serious company, whereas (e.g) finestonlinediamonds.com would have to build that sort of trust. A solid, generic name like that shows you are a major player. Like everyone else has said, there are many variables here, and I've yet :hehe: to be involved in a $7million domain sale, but its certainly not a ridiculous price :imho:

 

[Shorty]

It's funny that diamond.com was mentioned actually, because...

In the UK a relatively new car insurance company has popped up called Diamond, and in their TV adverts they constantly refer people to diamond.co.uk, and I was thinking that they've got a great domain there, wondering if they even knew how good.

If a new company, even a rich insurance company, can get their hands on a domain like that, then yes I agree. Some very good domains are going for cheap. (Even if it is a deprecated .co.uk!)

 

[Ronald Regging]

You cant just pluck these figures out of thin air. There are so many variables its laughable to try and cover them all in this way. I will say that at $7 million, I think this domain was a bargain, especially in the competitive & high value diamond market.

The point I was trying to make was that even at a conservative outlook, the domain will pay for itself in a few years merely from the type-in traffic... Obviously I wasn't using hard figures, but I don't think my figures were too far off. It's not unreasonable to assume that 5% of visitors specifically looking for diamond jewelry will purchase something from the site. Or 2.5% or 1.25%... Either way, the domain pays for itself within 6 years merely from type-in traffic... How many pieces of real estate will pay for themselves in 6 years without any form of advertising or marketing??

As to the person that said people don't buy diamonds off the internet, I think you'd be surprised. I've bought them on several occassions... Mostly from Zales.com, because I trust their quality. I think it comes down to the credibility of the company and like someone mentioned, owning Diamond.com adds to your credibility... Also there are a lot of small ticket diamonds that are given as gifts... these usually run $99 - $199 and include the heart pendants and miscellaneous stuff like that. Most jewelry places carry these and at that price you don't expect high quality diamonds, because they never are. So that type of stuff I'd definitely buy off the Internet, because it saves me a trip to the mall. And things on the higher end will have IGA certifications and the like... Hell, you'd be surprised how many people buy diamond jewelry off of Ebay...

 

[Matrix1976]

Companies spend and make many billions of $ per year mining and/or selling diamonds...at 7 million $, Diamond.com was a steal (pocket change in that market). It could have easily sold for many times that IMO...

 

[TestCase]

Personally I think super premium domain names (and many more not so super premium dn's) trade at really cheap prices if you look at it in terms of the "big picture" - ie. the projected longevity of the company, brand or product the domain will represent.

With companies paying hundreds of thousand of dollars to create a single TV ad that will run for just a few months, or spending a million dollars per 30-60 seconds to run an ad during the Super Bowl (that most people would be hard pressed to remember 6 months down the road), buying a highly targeted domain name that can specifically define/represent the company, brand, niche, and/or product for many years to come is relatively cheap purchase at $XXX,XXX or even $X,XXX,XXX in the long run - especially when the "maintenance" cost on the asset is just the $8 a year renewal fee.

The payback scenarios mentioned in the previous posts are right on target and demonstrate that the longer the name is used, the closer you get to point where the domain name's original cost becomes negligible.

At the same time, ideally the value of the dn is increasing geometrically as it becomes more representative of the particular product, brand or niche.

It strikes me as a very smart and cheap, no lose proposition for those companies that can afford it to spend their big bucks on the super premium dn's.

All this even holds true on a proportional level for premium and even some not so premium domain names that do a very good job of representing a particular product line or niche.

 

[chld]

Think of it like buying an old house. No domain name is going to make you serious money jus by you registering it and parking it somewhere. Its kinda like a fixer-upper.

You have to develop content source or manufacture whatever product you plan to sell etc etc. Even the shortest .com name can can become a dud it left underdeveloped

 

[Ben42]

Personally I wish I had grabbed a dozen or so 3-letter .com's a couple years ago when they were High XXX to Low XXXX. Seems now they are almost all Low XXXX to Mid XXXX now minimum.

Ah well....

 

[snoop]

The point I was trying to make was that even at a conservative outlook, the domain will pay for itself in a few years merely from the type-in traffic... Obviously I wasn't using hard figures, but I don't think my figures were too far off.

Agree with the other comments, the numbers you have picked up look to be coming from nowhere with the resultant revenue figure sounding totally unrealistic. Even then the figure that matters is profit not revenue.

 

[accent]

Again I go back to the Pepsi ad that sent radio listeners to a four word .US website. Granted those who make big bucks can be idiots as much as anyone else, but they sure seem to be in disagreement with domainer conventional wisdom. I have a investment in domains, so I believe this market is growing, if not booming, but I see an awful lot of parked domains and a lot of big money advertisers using reg fee domains.

At the least the sales pitch for premium domains is not getting through to a lot of companies - I guess that could be seen as a sign of an even larger market to come as easily as a sign of a hole in the logic.