poll What makes a domain valuable (or not) in 2020 ?

[Gube]

With the idea of building a new, open, appraisal formula in mind, we thought the domaining community could help.
Cast your vote on what influences the most a name's value to you.

An appraiser should help investors to invest at the right price, but can also be used when selling a domain to an end-user ("Proving" the price).
Making the number random wouldn't work..
But here are some elements we could use in a future (free) Appraiser :

• The domain length
  "the shorter the better" or another rule

• TLD used (Does a .com have the same value as a .paris, Increased complexity here, as some GTLDs might be a better fit than a general TLD)

• The domain age
  I think it's still believed age can be a deciding factor when buying or selling a domain. (More names available and registered in the past, meaning the average hand reg quality was better)

• Word balance ratio
  I did use that factor on my personnal scoring system, it worked that way : A domain with a small word size balance had a better score than others (Example : The dog was better than wonderful dog)

• Vowels/Consonants ratio
• TLDs taken count
• Potential end users
  In my formula, I was checking for the amount of similar domains registered (Count of all domains countaining the SLD of the name searched, it's not precise on short SLD, example : the.paris, it was matching all domains containing "the", but .paris was not taken into account - Should it be improved and used ?)

• Readability
  This factor might not be clear, but basically, we would check if a given name can be spelled and read easily

• Dictionary factor (If the name is part of a dictionary, and is commonly used for example, could it influences its value?)

• Similar names sold (Similarity % multiplicated by the sale price?)

• More factors? Feel free to discuss about them in the thread

You can vote for up to 3 different factors, but if you have more in mind, or would like to defend your point of view, please do.

Gube

 

[Rob Monster]

I think I know the background here.

As some folks here are aware, @Gube is the person behind NameInvestors.com. We have been discussing the limitations of current appraisal engines, especially for appraising brandables.

The existing domains place a great emphasis on search volumes which makes sense if domains still ranked highly based on exact match keywords in the domain name. Since Google Panda, they usually don't!

There are conventions that define the value of a brandable.

There are also language-specific dictionaries.

The appraisal engine should be able to tell you a number but also the reason why it is valuable.

This will also help people to not drop domains that have great value in a language other than their own.

Anyway, glad to see some innovation in this area.

 

[bmugford]

Everything is a factor. Domain valuation is highly subjective and requires a lot of nuance.

Obviously some things matter more than others, like extension.
A top branding word or keyword in .COM is obviously going to be worth more than some lesser extension.

Also, the potential pool of end users. The more potential buyers, the more potential value.

Brad

 

[Kassey Lee]

The value of a domain depends on two factors: (1) How badly does one or more end users need the domain? (2) How much can they afford to pay? Frank Schilling mentioned in a DomainSherpa show years ago that they sold a domain ending with "ings" for $20 million. Remember "ing" was not popular back then.

 

[HotKey]

Probably not the same rules across the board, I think every single one of the choices are important in and of themselves, dependent on the actual domain, and planned usage/target. Basically what Mugford said.

If we take this poll and apply it with a specific area or TLD in mind, say .com, it would be a bit more "one size fits all" scenario, but even then there are sub-sections to investing that different strategies apply to different areas. You can't take the rules for "short" and apply realistically apply them to "geo" or good-selling longtails, for example.

Basically, I look for a good name for what's its worth in it's raw format, and then depending on how I want to price it, how long I'm willing to hold it or who I think it could target, I use many of the options laid out by Gube (nice job) to determine moving forward on investing in the name.

Good points by Ryan and Jimmy as well, reputation and storefront potential are factors that influence value.

 

[Bob Hawkes]

Thanks for the thread and discussion, @Gube, but I think it is almost impossible, well impossible , to answer because it depends on the use of the domain name.

All of the factors you mention, and others, are of some importance, but which are more important, to a considerable degree, depends on the type of domain name being sought.

(1) For example, if I am looking for a brand for a big company main site, then the TLD (probably .com) is important as are factors like how it will look in print and when spoken. Generally shorter is better, but not always. But the most important is that the name fit the way the company wants to be perceived. Because different companies have very different ways they want to be seen, we have boring but respectful names, creative names, catchy names, descriptive names, etc. I think there are cases where dictionary words are wanted, and others where not. So subjective, which is why we can be so critical of automated appraisal attempts. In most of the world .com has a dominant advantage here.

(2) If looking for a name to be used for online marketing of a product or service, possibly a company name too but it is the marketing that is the focus, then things like how searched the keywords are and how descriptive and memorable the domain name is become more important than other factors. You want the name that is the one that people will guess, remember and spell correctly. Sure, if it can achieve that and also feel catchy, a bonus, but that is not the main thing.

(3) If the domain name is to be used for marketing or promotional campaigns, then the focus is rather different. Here is where I think the phrase, including both sides of the dot, should be as natural as possible to what people would say in everyday speech. Think of it this way could you write a Tweet with the exact domain name in the sentence and it would feel natural. With Twitter, and a few other mediums, just the dot make it hot clickable. Here the new gTLDs can shine, and in my opinion have been under-utilized.

There are other categories, especially non-profits and individuals, which will also have their own important characteristics. Product support, information sites, etc. each have their own considerations.

Things like how many TLDs, age, what similar names sold, etc. can be indirect proxies for worth, but clearly they don't directly matter much. An aged domain with links obviously is a huge bonus for (2), but someone having held a name a ton of years by itself means little other than the person kept paying the renewals.

Best wishes, but you have set, in my opinion, a very challenging task. I realize your question was a bit different, what makes a name valuable, rather than what makes a name valuable to an end-user, but I think the two are tightly connected.

Bob

 

[Name Trader]

The biggest factor of all is somebody must have the domain to run their business on that domain. Why do they want that particular domain? Well. Probably because more than one of the factors mentioned above. I think pronounce ability is very important. Which is what makes dictionary words so valuable. Made up names like Google would be included in this pronounce ability factor even though it is not a dictionary word. Deliberate misspellings might work also. Short, ie 4L, are favorites either because they are pronounceable or because they are acronyms. CVCVC+ or VCVCV+ are usually quite memorable as well.

But I think the biggest problem with a price estimator is that it doesn't take into account the how much the need is from the buyer, or how much they have the ability to pay, and the reluctance of the seller to sell. So estimates of brandable names will always be way below those of the news topping sales we see. This could somehow be factored in by knowing if the buyer has received any tranche of funding in the last year. But I don't see how that could be built into the model.

 

[Samer]

Length
(shorter is sweet) less is more,
3+word will always tempt; they avail for reason

TLD (only .com)

Readability
(another way to say “radio test”)

Thanks Gube!

Samer

 

[Ostrados]

#1 factor is potential end users, or in general can the domain be used by a brand or business. There can be many high value 3L .com domains with no end users, and many 3 words domains with plenty of end users.

Another important factor not mentioned here (rarely mentioned anywhere) is name scarcity, scarcity leads to higher value because of low supply. And this is not only limited to liquid domains (2L, 3L, 4L) but also to one word domains and even 2 word domains. For example category killer one word domains have high value because they are rare, similarly good 2 word combos in some niches & categories are limited and taken.

Brandable domains are the hardest to evaluate by a computer, because there can be made up names, unexpected combos, creative blends.. and many other possibilities that need human judgment to be evaluated correctly.

 

[7363824]

Readability, pote tial end users, and would I name a business that.

 

[biggie]

@biggie - isn't common sense programmable?

obviously, it's not

having been around some years before the bot, and seeing all the competitors and rivals which have came after,
one can see the effect they have had on domainers, who started after the bot, over the years.

on NP in particular, at least 2-3 times a year, there is a "how accurate is bot" post.

and.., when you view the lists of sales threads with bot evaluations, there is plenty of evidence that majority of those registrations, were not made using a "common sense" approach.

in the argument of bot appraisals, there are two sides
the builder of the tool
and the user

and to me, common sense says
the more dependent the user becomes on a tool for pricing,
the more power the builder, has over prices.

if you can find some fallacies there, i'll listen.

imo….

 

[Gube]

Thanks for commenting @bmugford
I agree on both, but retrieving a full list of end users is already more difficult.
And we could think of a way of estimating how a company/user is likely to buy a name.
The goal, I believe, will be to identify if the company has a worst name than the one estimated (or buying it wouldn't be useful to them), how they are doing financially (can they afford your name), and how buying that name will help them. More could be identified, but doing it manually takes a lot of time

It made me think of another factor, competition.
Let's say I own "the red pizza .com", could a related BIN-listed name influence the buyer, for example "the blue pizza .com" and in that case, limit your opportunities ?

Gube

 

[Gube]

Formula for something subjective?

Well, a price range is not subjective.
If you search for something totally random, it won't tell you it's worth 5M.

The thing is that, the more info you have, the less subjective it is

 

[YourBestTrader]

This is one of my favorite topics to read about, so thank you for starting this thread.

Over the last decade, I've determined that there are between 100 and 200 data points that might influence the value of a domain... a truly fascinating study.

The way you want to go about it for accuracy would be to have it act as a Wizard, with the first page asking which type of domain it is: Dictionary, Exact Match, Geo, Liquid, Numeric, etc.

The next page would ask relevant questions for that domain type if needed, and pull the data for all of the other factors either from its own database or querying other databases using API calls.

You'd have to run a LOT of testing using both programmers and mathematicians to figure out an accurate "weighting" of the data points... this is where the highest level of difficulty lies.

Of course, Pareto's law will end up holding true and only 20% of the data points will end up accounting for 80% of domain value... It will be interesting to see what those data points are!

A study showed Mike Mann's valuations could be predicted to 66% variance with just 4 data points.

This would line up with me imagining that of the 200 data points, you'd use only 100 for a given domain type... then Pareto's law would say only 20 of those points should account for 80% of the price.. then if you use Pareto again on the 20 data points... that leaves you with 4 data points... much like what Mike Mann is using.

Personally, for exact match domains, I'm using my own version of Andrew Rosener's valuation formula...

"Valuation" = Searches x CPC x Unique Competition Modifier x 12 month x 0.33 CTR x TLD Modifier x Niche Modifier

It gives me a good feel for a domain's potential value especially when comparing two similar ones and having to choose between them.

Someday when I have the budget I'll build the Ultimate Valuation System... but for now... I gather my data in secret and super enjoy threads like this

 

[Gube]

It's an impossible task Gube, you may as well give up now.

It might sound difficult, but not impossible

 

[ivey]

Brandability #1

 

[frank-germany]

the only factor that makes a domain valuable is:

somewhere out there does an end-user exist
who has the creativity/insight to understand that that special domain
will make him aka his company even more profitable aka successful

and as that end-user exits
there might as well a domain investor exist
who has the idea to buy it cheaper from you

 

[Gube]

Thanks for your comments

I see we would need to identify the domain type first and based on that first step result, the next calculations will differ :
If it's a brandable or a Geo name, a different calculation will be used on the length to be more flexible. (impact less the estimation if the city is large and take place in the name for example)

@Jimmysun Agree, the reputation can help in some circumstances to close a sale, and might have an impact on the sale price if the person has better negociation skills.
Broader, promoting our names can also help to sell them, but I will let that for another thread soon, I need to finish another experience before, based on the results, it could be valuable informations.

No worry @Samer - and the 3 criterias you mentionned have an important place in my current scoring system. I will share the main points I used at the end of the poll

Gube

 

[lock]

Just the best name to suit the industry targeted generic.

 

[Samer]

or personal reputation like domain king?

DomainKing would have been valuable in ANY owner

Glad it was the one and only

 

[lock]

DomainKing would have been valuable in ANY owner

Glad it was the one and only

There was the thread who real Domainking between Mann and Schwartz and the answer is the guy that bought it Schwartz. Face palm at it.

 

[Jimmysun]

I mean Domianking can sell high price bcz of his reputation, if someone else sell aACRepair for 1.5 million some people may think it is not worth so much, buying a premium domain from domainking could prevent being accused buyers are stupid, in fact you see his portfolio and all domain names are not always "that" good, I believe that a lot of NP domainers' domains even better than his but he can sell high price, which comes from his sales record and reputation.

The shorter domain doesn’t mean the more valuable it is if the reg volume isn’t big enough.
1 letter with 26 possibilities, 2 with 676, 3 with 17576, 4 with 456976, Its value comes from whether a large number of registrations make it rare.

 

[koolishman]

Thanks for your response @Bob Hawkes ,
It will definitely help.

With all of these in mind, it makes me think the appraisal should be dynamic.
It wouldn't be a true, "100% guarantee" appraisal but a sort of helper to gather facts on a domain and ultimately help give a price range estimate, based on data found programatically but also based on the end-user itself. (The user would be invited to complete a data sheet, which he could save and access later, and adjust as needed).
It would be used when buying a name as a reseller to check if buying it is (relatively) worth it and when selling to be able to offer a price, easily. It takes us to the next point :

A brandable would also do the role of (2) with some limits, here the sorter the better too.
If the goal for the user is to get type-in traffic, for example, we would need to have a sort of KYC "Know your customer" and try to understand his goals, but that part should go in a CRM I think.

(3) is also true, and brands could do a better usage of gTLDs and nTLDs, it made me think of the booking.yeah campaign, these (relatively) new extensions will defintely help when crafting new, original campaigns.

I will try to imagine a potential alpha formula of everything already said, but it won't be easy

Formula for something subjective?

 

[koolishman]

Brandable domains are the hardest to evaluate by a computer, because there can be made up names, unexpected combos, creative blends.. and many other possibilities that need human judgment to be evaluated correctly

This is 100% correct.

 

[BBQ Names]

Everything is a factor. Domain valuation is highly subjective and requires a lot of nuance.

Obviously some things matter more than others, like extension.
A top branding word or keyword in .COM is obviously going to be worth more than some lesser extension.

Also, the potential pool of end users. The more potential buyers, the more potential value.

Brad

Boom. Of course it us subjective. That is the artistic JOY of domaining! Sure, a range i suppose could be estimated, but, really, pricing (and then selling) is so much a salesman’s art. There are objective aspects of it, but “beauty is in the eye of the beholder”