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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[Lox]

and he told me that he will be broke

Owners do listen to the marketing & advertising consultants. And none of them believe in miracles, because they are doers by nature of business. So, my team go out, have a meeting, initiate conversation and let the owner take out all of thoughts and worries. Once the owner stops with the spitting difficulties, she/he is ready to take advantages and available solution represented by my team.

It can take a year before we figure out how to increase sales.

Kind regards

 

[nomen]

Are they though?

Sure, Mike isn't going to buy a premium domain for his pizza joint or gardening business, but that is kind of expected from the get-go IMO. And this wouldn't probably change no matter what would happened. He just doesn't need it.

But Johnny would. Cuz he's trying to solve the world's food problems with an app. He's ambitious, probably a bit ego-tastic, and understands branding. He would be happy to pay $2.5k for a domain that suits he's needs. Or not exactly happy but would consider it as necessary evil.

Let's buy domains for Johnny, not for Mike. Online services instead of offline services. That way you're at least in the market where domains are being bought in the first place. In the market where domains are considered as POS and not as mere emails.

IMO...

 

[frank-germany]

Are they though?

Sure, Mike isn't going to buy a premium domain for his pizza joint or gardening business, but that is kind of expected from the get-go IMO. And this wouldn't probably change no matter what would happened. He just doesn't need it.

But Johnny would. Cuz he's trying to solve the world's food problems with an app. He's ambitious, probably a bit ego-tastic, and understands branding. He would be happy to pay $2.5k for a domain that suits he's needs. Or not exactly happy but would consider it as necessary evil.

Let's buy domains for Johnny, not for Mike. Online services instead of offline services. That way you're at least in the market where domains are being bought in the first place. In the market where domains are considered as POS and not as mere emails.

IMO...

exactly

nobody wants to convince people
who have no advantage of any domain

 

[Registry Services]

didn't .com start in the 80 s ???

Right - RFC-882 & 883 was Nov-1983 - https://tools.ietf.org/html/rfc882 - before that John Postel managed the assigned numbers list (aka hosts.txt). RFC 1034 & 1035, which are the basis of what we still use today, were Nov-1987

RFC 920, which established dot-COM was Oct-1984 - https://tools.ietf.org/html/rfc920 - in RFC-920 the original GTLDs were included, but cc's and multiorganization-TLDs where allowed for - "As yet no country domains have been established", "As yet no multiorganization domains have been established"

But it wasn't until Web sites were invented in the 90s that the internet & DNS started being something more than a technical curiosity, largely used by academics and research scientists. Before that closed proprietary dial-in services like AOL were the main consumer solution.

many cc's didn't appear in the ROOT until the late 90s.

The "dot-COM bubble" is generally cited as 1995-2001 - https://en.wikipedia.org/wiki/Dot-com_bubble

 

[frank-germany]

Right - RFC-882 & 883 was Nov-1983 - https://tools.ietf.org/html/rfc882 - before that John Postel managed the assigned numbers list (aka hosts.txt). RFC 1034 & 1035, which are the basis of what we still use today, were Nov-1987

RFC 920, which established dot-COM was Oct-1984 - https://tools.ietf.org/html/rfc920 - in RFC-920 the original GTLDs were included, but cc's and multiorganization-TLDs where allowed for - "As yet no country domains have been established", "As yet no multiorganization domains have been established"

But it wasn't until Web sites were invented in the 90s that the internet & DNS started being something more than a technical curiosity, largely used by academics and research scientists. Before that closed proprietary dial-in services like AOL were the main consumer solution.

many cc's didn't appear in the ROOT until the late 90s.

The "dot-COM bubble" is generally cited as 1995-2001 - https://en.wikipedia.org/wiki/Dot-com_bubble

and now you make an informed decision

 

[Rachel Mcdonalds]

everybody tries to negotiate
but good domains are definitely sold well.

 

[lennco]

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

Excellent and well said Kate

 

[poweredbyme]

And to @poweredbyme... The price of a good domain is determined by the free market. And it's justified by the time, money, opportunity cost, creativity, experience, and reputation of the domainer selling it. That's how you explain the cost to a potential buyer. No business in the world is as simple as "sales price minus acquisition cost = profit."

Indeed, it's exactly that simple. To sell a domain for more than its cost, you need more buyers when you are about to sell. To have more buyers, you have to sell quality domain and have to promote the sale well. Quality is the biggest factor and is determined by demand, number of interested buyers. In other words, low quality domains are the ones only a few people are interested to buy.

 

[Joe N]

Indeed, it's exactly that simple. To sell a domain for more than its cost, you need more buyers when you are about to sell. To have more buyers, you have to sell quality domain and have to promote the sale well. Quality is the biggest factor and is determined by demand, number of interested buyers. In other words, low quality domains are the ones only a few people are interested to buy.

I think you missed the point.

 

[poweredbyme]

I think you missed the point.

It depends on what you understand from "free market". I think we are describing free market differently. Anyway, let's agree on we will not understand each other well.

 

[Joe N]

It depends on what you understand from "free market". I think we are describing free market differently. Anyway, let's agree on we will not understand each other well.

I wasn't talking about the free market. I was responding to your comment that business owners wouldn't understand why they should pay more for a domain:

Domain pricing depends merely on the buyer need. So sometimes domainer might look like a profiteer from buyer's perspective. Because buyer knows if he could register before the domainer, he would pay only reg fee. So the domainer is trying to make profit just from acting earlier than him. Buyer also knows in his offline business, his profit is equal to sale price minus cost. What's the cost of a domain? Reg fee. Any price above the reg fee is perceived unfair by a buyer unless apparently there are other buyers (competitors of the buyer) who might pay more.

Most business owners should understand why they have to pay more than reg fee for a good domain. It's not as simple as supply and demand. There are costs to the domainer that need to be recouped in sale prices.

I was just trying to help you out with some justification in the event that you're ever challenged by a potential buyer.

 

[FreshAvails.com]

I think most domain sellers don't do a good job outlining the benefits/advantages and have a hard time justifying their price...even if the price is reasonable. It is the job of the domain seller to bring them up to the price, not the other way around. It's called selling ladies and gentlemen.

 

[iAchilles]

Excellent topic. I still recall the first time I searched for a domain for a project. I visited countless parked domains with messages that the domain was for sale for $xxxx+.

My mindset was basically, why the hell would I spend all that money on a domain when they cost $10 to register!? They're all a bunch of ripoff merchants.

None of the domains I visited offered information that might have changed my mindset. I'm not talking about random sound bites you find on some landers. I'm talking information that's backed up with facts and figures that outlines how this domain will save me money in the long run and how it will help my business achieve a better ROI.

Nowadays I do practice what I preach as a domain seller and I pony up for good names, but I still like to hand reg when I see commercial value in a domain. I'm in the process of developing a two kw name with a dirty dash in the middle. I went with the dash only because it was previously developed and it has an incredible backlink/seo profile. The non dashed name is available for sale but this domain will give me a much bigger kickstart. I'll see how dev goes and I may reconsider acquiring it at a later date if the site gets big, for now I just don't need it and the money would be better spent on content creation.

 

[Bullock]

I'm in the process of developing a two kw name with a dirty dash in the middle. I went with the dash only because it was previously developed and it has an incredible backlink/seo profile. The non dashed name is available for sale but this domain will give me a much bigger kickstart. I'll see how dev goes and I may reconsider acquiring it at a later date if the site gets big, for now I just don't need it and the money would be better spent on content creation.

But in this way you increase the value of "non dashed " domains... owners shlould thank you

 

[Registry Services]

The non dashed name is available for sale but this domain will give me a much bigger kickstart. I'll see how dev goes and I may reconsider acquiring it at a later date if the site gets big, for now I just don't need it and the money would be better spent on content creation.

This is kind of the situation I'm in - I'm considering buying a premium dotCOM, the brand doesn't need it as such (the dot-TV works better for the brand), but I'm worried I might leak visitors to the dotCOM if I don't buy it.

The other issue is that its a plural (e.g. BigHomes.com) - so I'd really also have to buy the singular (i.e. BigHome.com) - you can buy a lot of other publicity for the price of two premium dotCOMs.

 

[iAchilles]

But in this way you increase the value of "non dashed " domains... owners shlould thank you

The dashed version has been developed since 1995, the non dash has been available to purchase all this time. It hasn't managed to realize this increase in value after all those years. I've no plans to advertise on billboards, tv and probably not even adwords. If the site goes viral, I can always rebrand and 301 redirect the domain if I can't acquire the non-dash for a sum that makes sense. I've got options.

This is kind of the situation I'm in - I'm considering buying a premium dotCOM, the brand doesn't need it as such (the dot-TV works better for the brand), but I'm worried I might leak visitors to the dotCOM if I don't buy it.

The other issue is that its a plural (e.g. BigHomes.com) - so I'd really also have to buy the singular (i.e. BigHome.com) - you can buy a lot of other publicity for the price of two premium dotCOMs.

Quite a different situation tbh and I don't envy it! In my case all traffic will be via serps and social media. If you've any plans to market the brand, I'd try and lock down one at least. I've many names that get traffic from cctlds and non .coms.

 

[jmcc]

1. What a domainer thinks is a good domain is not necessarily what a company considers a good name.

2. A good company name or brand is defensible and can possibly be trademarked but a generic domain may not be so easily protected.

3. The company may have already spent a lot of money on paperwork, advertising and branding and doesn't want to have to redo all that work and spend more on a domain name.

4. Most small businesses consider their web presence like print advertising and only update it once a year. (Most of the web is brochureware and does not change much over the course of a year.)

5. Most small businesses don't do their own web development or handle their domain registrations and hosting. It is outsourced to web developers and SMEs often go on the recommendations of these web developers so contacting the companies directly might be a waste of time.

6. Dot COM is not king outside the US market. The local ccTLD is often far more popular.

7. A company is more interested in developing a brand rather than a domain name.

8. People remember brands.

9. They are doing well with their existing domain name.

Regards...jmcc

 

[Bullock]

The dashed version has been developed since 1995, the non dash has been available to purchase all this time. It hasn't managed to realize this increase in value after all those years. I've no plans to advertise on billboards, tv and probably not even adwords. If the site goes viral, I can always rebrand and 301 redirect the domain if I can't acquire the non-dash for a sum that makes sense. I've got options.

Thanks for clarifying...

 

[Robert91]

companies are already established and why would the acquire a new domain at high cost when they can spend that money on proper advertising.
however many companies spend good amount of money on domain names to eliminate competition.
.coms are not always desired by the companies who do not have a global reach.

 

[JamieHines]

I have an exact match two word domain for an insurance company that was dropped and I only paid 8 bucks for it. There's four different agencies I've found so far and they're all small independent agencies that use a three word domain that includes Agency or Family in it. They make only around $100.000 per year so I offered them the LLLLinsurance dot com domain for 400 bucks. I'm guessing they're good and don't care for it because I've heard nothing back. Life!

 

[gromovnik]

The same as with any other sales: no money, no time, no need, no urgency or no trust.

 

[NigelD]

I think timing is the major issue when marketing a domain to an end user
- if you knock on their door (telephone or email) at just the time they're thinking about their online presence then you're half way to a decent sale.
Another issue is the hassle factor for the buyer - so he buys this nice domain - but he knows its going to take a lot of time and effort in getting the website launched. So he is reluctant to move forward. Imagine if you offered a web design service, with the purchase of the domain, so you take all that hassle away. I've never heard of a domainer offering that type of sale, but if you have the web design skills and the right domains, you'd make a ton of money and never be short of work.

 

[Kate]

Indeed, companies don't want to fix what ain't broken, mess with SEO etc. It's only natural. They might consider upgrading their domain name but the move must be as painless as possible.
Domainers should offer assistance with the migration where needed, set up 301 redirects, alias mailboxes etc, or at least present a short strategy plan.
I have met many small businesses that rely on some web design guy, and the 'guy' is normally never an expert at branding, and never an expert at domain names. And he is not your friend.

 

[TRY]

Trying to sell a premium domain name to a small business is like trying to sell a homeless guy a BMW.
He'd love to own it but can not afford to buy it in his present circumstances.

Small businesses are looking for a cheap online solution domain/website/advertising.
The company that advertises their services to small businesses will need a domain that conveys credibility at the least IMO.

 

[garptrader]

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.