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

Discussion in 'Domain Industry News' started by Whizzbang, Feb 28, 2017.

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  1. Whizzbang

    Whizzbang Active Member ParkLogic Staff Business Account ★★★★★★★★★★

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    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.”

    Read More >
     
    The views expressed on this page by users and staff are their own, not those of NamePros.
  2. platey

    platey Active Member VIP

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    Great points mentioned

    Domainers could do worse than hold a course for a couple of hours once a week where individuals and business owners alike can learn more about domain names and how to buy to use or buy to sell and what to look out for when buying a domain name etc
     
  3. todaygold

    todaygold Established Member

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    I don't think it's really because of ignorance that much. It's because most businesses, especially those starting up don't want to spend $x,xxx-$xx,xxx on a domain name...they see that as a ridiculous waste...and for most businesses, it probably is.
    If you are running 'John's Pizza Shop' and 'JohnsPizza.com' is already taken, rather than spend thousands of dollars on it, most people will just use 'JohnsPizzaShop.com' or 'JohnsPizzaCA.com'.
    Most people don't even type in URL's anymore, they simply do a search, so the business will be found either way.
    It's like someone saying 'hey, why is that new business owner renting an old building for their business instead of building a brand new store'? Because for most business owners, the rented old building (hand registered domain) will do just as well as building a brand new store (buying aftermarket).
    Domainers always think they have the greatest thing ever and can't understand why business owners don't want to buy...but you have to remember, 98% of the population doesn't really care all that much about domains...they don't see it as the 'must have' domainers see it as.
     
  4. pablohc86

    pablohc86 Active Member VIP

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    Second my opinion and long story short:
    Most of the business don't spend on domains because they don't know how to make that purchase profitable or they are not yet ready to make a domain profitable for them because they are too small.

    Lots of business owners are still thinking that money spent to market their business and advertisements are money wasted..
    They prefer to spend in growth hacking techniques that bring to them some new customers and go for a 1$ domain with a Godaddy coupon.
     
  5. joro001

    joro001 Business Member Business Account VIP

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    This is how I see it.

    I am also an end user and can tell you that's how I approach it for most projects I simply couldn't care less about domains, if the .com is taken i'll look at reg fee alternatives. Only occasionally will I be interested enough to spend big on a domain for a project and there would have to be very good reasons for doing so e.g. I want to really stand out with a great exact match domain for advertising reasons, domain gets type in traffic in a commercial niche and so on.

    I am part time domainer and even I couldn't care less most of the time. Sorry to all domainers who love hyping domaining but if i'm quoted too high i'll often go elsewhere and get an alternative. The aftermarket right now is stupid, domainers are often paying more than end users ever will. Good luck with that.
     
    Last edited: Feb 28, 2017
  6. Loxline

    Loxline Established Member

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    Can you give us an example (virtual or real)?

    What is stopping you to pay $5000+ for a memorable name, easy to spread @ social meetings, radio test passed, your company or product brand name representing the most perfect "meaning" in the industry or niche where your activity belongs.

    Dream is for free. The effort to bring that vision/dream to reality is called Belief. If you lose belief, you lose effort.

    Kind regeards
     
    Last edited: Feb 28, 2017
  7. joro001

    joro001 Business Member Business Account VIP

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    It's not important my examples but i'm telling you on the occasions as an end user i've emailed others if price is too high I move on quick.

    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.

    Domains just aren't that important to most end users, i'm the same, as an end user I don't care most of the time except in cases like the above I mention where paying up is worth it for me. Domainers clearly don't get it and think what they have should have end users mesmerized and drawling over their names. Sorry completely wrong 99.9% of the time. (ultra premium domains are another matter but you will need to put down massive money to buy them anyway) Maybe i'm the wrong type of end user lol.
     
    Last edited: Feb 28, 2017
  8. Loxline

    Loxline Established Member

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  9. Cdomains

    Cdomains Active Member VIP

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    That is because domainers are the end-users for the most part.

    The vast majority of the business of the registries is business from domain speculators and they know it.

    They already have that market covered.
     
  10. Ben Price

    Ben Price Account Closed

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    Oh sure... Presumably, they're "ignorant" because they just don't want to pay an extortionate price for a domain?!..

    You domainers need to understand that business owners are not necessarily there just to provide you with a living, and the likelihood is that they understand business far better than you do. So why not take a break from trying to lecture them with silly patronizing bull***t - few domainers are salesmen anyway,

    If you get a sale then great, good for you, but don't try to talk down to a group of people who are much higher in the food chain...
     
  11. KingslayerVR

    KingslayerVR Active Member VIP

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    Pretty much this.

    Also as a business owner myself. I can see the other side of the arguement in that i can see why Premium domains go for big money but why business owners are reluctant to pay several thousand to a person who has basicly done nothing to earn this money other than sticking their flag in the ground first for $8.99 (or less).
     
    Last edited: Feb 28, 2017
  12. Whizzbang

    Whizzbang Active Member ParkLogic Staff Business Account ★★★★★★★★★★

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    More a case of ignorance because they just don't care about domain names. What they do care about is there own business and don't understand how a domain may potentially fit into their business plan. The reason for this is no one has made the business case to them about how a doman may assist them. This is something the seller needs to overcome.
     
  13. todaygold

    todaygold Established Member

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    There is a difference between not caring and being ignorant. To be honest, you sound like you have a bit of an ego with this and your posts are borderline rude. Calling a business owner an ignorant person because they don't want to spend $10,000 on a domain, honestly makes you pretty ignorant in my opinion. Who are you to decide for a business owner what they should or should not do?
    As has been stated a number of times in this thread, many business owners (rightly) don't see a need to buy an expensive domain name. Most people nowadays do a search for the business's name on Google...and they will easily find the website that way, regardless of whether the domain is 'JohnsPizza.com' or 'JohnsPizzaShop.com'.
    Most small startups aren't going to spend thousands on a domain when they can spend that on equipment they actually need to run their business or use it to pay staff or whatever. And most established businesses are known by their name...and will easily be found using Google search.
     
  14. Loxline

    Loxline Established Member

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    Fictional Story

    We are Company selling the best psychedelic products!

    The idea for shoppadelic.com (yes, you can hand reg.) is to create an online shopping area where customers could go and grab all their psychedelic things, music, welter-pipe, roll & smoke equipment.

    It then lead to the registration of canabgum.com (yes, you can hand reg. this and earn up to 100K) as we realized the business would need extra protection and customers would not need to chew somewhere else.

    Indeed, fooddelic.com (yes, you can hand reg.) was able to shut out competition trying to do something similar.

    When you are drunk, you do a weird things, so by accident, we registered afterdelic.com (yes, you can hand reg.) and we smashed down the competition because we owned all the domaindelic.com names (yes, you can hand reg.).


    That's why we're selling like crazydelic.com (yes, you can hand reg.) because we control the market.

    For more infodelic.com , please visit our website Companydelic.com (yes, you can hand reg.)

    ———


    Is there any difference between Domainer and Company/Business?
     
  15. Whizzbang

    Whizzbang Active Member ParkLogic Staff Business Account ★★★★★★★★★★

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    My apologies.....the word ignorant is not a derogatory word at all and is definitely not rude. Ignorant means: lacking knowledge or information as to a particular subject or fact (source: dictionary.com)

    As I have stated a number of times (here and in my blog post), the onus is on the domain owner to make the business case for the potential buyer and not the other way around. I'm actually 100% agreeing with everything you've said :)
     
  16. Kate

    Kate Thinking inside the Box™ VIP ★★★★★★★★★★

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    Not everybody has the same definition of 'extortionate'. Even seasoned businessmen don't realize the value and think asking for more than $100 is extortion and they should own the domain because they are the 'logical' end user, just because ! (and even though tens of end users have expressed interest before).

    I think domain names are actually the most underpriced assets of our times. Just look at how much money is spent on (ephemeral) advertising vs the power of domain names in terms of brand enhancement, and traffic (= $$$$). Domain names look so cheap in comparison.
    A lot of money is wasted promoting bad URLs. A good names promotes your business (lifts you up), but a bad name will have to be promoted by your business (and drag your down). Which way do you want to go ?

    Few people understand the value of domain names, even among domainers. In fact, even domainers are reluctant to pay for a good domain. It's kinda funny sometimes, they want to sell domains to end users and for their portfolio website they struggle to find a regfee domain whereas the problem could be solved satisfactorily for $$$.

    Of course, they say that you can always find what you are looking for in Google but:
    • it doesn't always work well, simply put it's not guaranteed that people are not going to be diverted to your competition, or that you will always rank on top
    • and you sure have noticed those ads around the search results, haven't you ?
    • Google is not your friend
    • you can't rely solely on a third party to drive traffic (and clients) to you
    • strong brands need to be memorable
    • mysh*ttyregfeedomain.com can do fine for SEO but will never become big, advertising this on TV or radio is just a waste of airtime and money
     
  17. todaygold

    todaygold Established Member

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    You really remind me of a pushy salesman. As I mentioned in my example, there is often no need for most businesses, especially small startups, to spend thousands of dollars on a domain name. So you aren't 'helping' them or 'educating' them, you are trying to push them to spend money on something they see no need for.
    People aren't morons...if they feel a better/custom/perfect domain name is important...they'll look into it and research it. Just like companies manage to figure out how to get a 1-800 number (if they feel it is important) without a door-to-door salesman showing up to 'explain' the importance.
    Sure, I can try to sell a pizza shop brand new ovens, extra-deluxe boxes to pack them in, heavy duty soda cups, etc.(aka a premium domain)...But those 3 year old ovens, regular boxes and normal cups will work just fine in 98% of cases. (aka hand reg).
     
  18. Whizzbang

    Whizzbang Active Member ParkLogic Staff Business Account ★★★★★★★★★★

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    Hold the horses here! I'm 100% agreeing with you that unless there is a compelling reason for the business to buy the domain then they won't. It's up to the seller to make the compelling reason real for the business owner.....not the other way around.
    The great majority of the time the business owner will not perceive the need for the domain as they do not see it as intrinsic to their business requirements. Helping someone become educated on a topic allows them to make an informed decision. It doesn't meant they will buy the domain but it helps them make that decision from a position of undertanding in light of their other business goals. I'm a firm believer that everyone has the right to be treated with respect.
    As I said to my daughter prior to her attending NamesCon, "Never sell. Find out whether you can help the person your speaking with and if you can't then keep your ears wide open as they're likely to teach you a lot."
     
  19. todaygold

    todaygold Established Member

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    I really think you underestimate business owners. Maybe I'm mistaken, but I think the majority of business owners have a basic understanding of domain names. They know they are going on their ads, they know they are going on their refrigerator magnets or whatever...of course they want a decent domain, but they aren't going to spend the same amount of money as a new car for one. So how exactly are 'educating' them?
     
  20. Joe Nichols

    Joe Nichols >>> IdleDad.com <<< VIP

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    A good domain name isn't a brand new building. It's a prime location for your store.

    Better location = more visibility, more traffic, and ultimately more visitors.

    I don't care what kind of business you run... The easier people can find you, the more money you're going to make. It makes a difference. A lot of business owners don't get that.

    Some businesses get it, but don't yet have the capital to invest in a quality name, and to do so could be irresponsible in the startup stages. So we see a lot of them going for short, quality names in their respective cc, or .net, or .io, or .co... But inevitably, if/when they get the funds, they'll come after that premium .com, because they know how crucial it is to reach the next level.
     
  21. Whizzbang

    Whizzbang Active Member ParkLogic Staff Business Account ★★★★★★★★★★

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    This is the third time I've said that I agree with you LOL! I'm really sorry if I'm not understanding where you perceive we differ in opinion.

    To reitereate, business owners are smart and they won't spend money unless they believe they will get a return. Domain owners believe they have the answer to the business owners problems with a great domain.....it's up to the domain owner to educate the business owner on why this is the case. I also believe business owners are aware of domain names but are unaware of the differences and nuances between them. This is the education gap the domain owner needs to fulfill if they are to have any chance of selling their domains.

    I've been in business for myself for over 35 years and I wouldn't spend one penny on anything where I didn't fully understand the benefit to my business. Domain owners typically ask a lot for their domains (in the eyes of some business owners) therefore the benefits need to be clearly articulated for each and every asset. I do not believe there is a one size fits all for selling high end domain names.....maybe the subject of a future blog post!
     
  22. todaygold

    todaygold Established Member

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    I will say I disagree in 2 ways. First, a shiny new building will bring in more customers than an old crappy looking one. So I do think that example stands.
    Second, again using my example from before...there isn't going to be much difference between 'JohnsPizza.com' and 'JohnsPizzaShop.com'...except in the cost to buy it. John's pizza shop will do fine with either one, because people are going to search on Google for it.
     
  23. frank-germany

    frank-germany Business Member Business Account VIP

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    100% agreed this time
     
  24. frank-germany

    frank-germany Business Member Business Account VIP

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    you are missing an important aspect:

    marketing

    its not about typein

    its about branding
    and corporate identity

    Domains can make a small company look more important
    and grow the business

    the owner needs
    to spend less for marketing
     
  25. todaygold

    todaygold Established Member

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    You are missing an important point, 98% of the population could care less if it's 'JohnsPizza.com' or 'JohnsPizzaShop.com'...one or the other isn't going to make the business look 'more important' and one or the other isn't going to suddenly grow the business. 98% of the population, if asked when ordering their pizza at Johns Pizza Shop, probably wouldn't even be able to tell you the URL off the top of their head...it only matters that much to domainers.
     

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