Got a Killer Domain Name? Good. (Pt. 1)

DON’T Use That Domain Name & It Could Be Worth MORE!
By Tim Morse, President and CEO, Penguin Search Engine Services, Inc.

Domain Names. Live domain name auctions. Another week of online bidding to follow. The two Moniker live auctions alone pulled in over three million dollars. Yet some people inside and outside the domain industry are still wondering how much a domain name is really worth. Domain name appraisals will vary according to the name. Is the domain related to a product, service, food type, brand, or idea? Do people search the terms frequently? How much money is the domain name making? How much money can it make for ME?”

Some say that a domain name is worth, “whatever someone is willing to pay for it.” But is that always true?

http://www.penguinses.com - Deeper Domain Name Values

Domain name sales prices are attached to revenue potential and PPC/ROI models. We suggest, however, that sometimes buyers might push aside revenue models to look at “deeper values” for certain types of domains. Sometimes, buyers may be looking at the advantages of owning but NOT utilizing the name.

To obtain maximum value from this kind of domain name, circumstances would have to call for HUGE tangible and intangible advantages for the organization owning the name. Advantages that would last far longer, and grow much greater, over time when compared to a straight forward accrual of income. Core aspects of the business and interrelated systems are involved at this level.

Owners in this category are very large organizations, including major corporations, international enterprises, or otherwise big end users. Or they could be smaller players who are seeking extreme leverage in a particular niche or market. We’re talking about domain names that are flexible enough to be used defensively and/or offensively. These domain names are those that could either save (or lose) a company vast amounts of money, build or wreck reputations, and severely impact customer loyalty, branding, and brand management. These domain names can ultimately affect not only consumers, but shareholders and employees as well.

For ease of reference we’ll call them “DEO” (Defensive / Offensive) domain names, or deo names.

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In this sense, a deo name is a domain name that has a magnitude of power attached to it that is so great that it would be imperative for an organization wishing to gain the upper hand to own it. But, even if there are such types of names, could a domain name REALLY be worth more to an owner by not using it? Maybe.

Granted, this is a major paradigm shift for the domain industry. And, in the case outlined below, it’s a moot point. That name is long gone. But are there others out there? We think so. By following the history and circumstances surrounding this particular registration, we hope that domain investors and end users will become more aware of the potential of identifying and owning a deo domain name.

Finding Corporate Domain Name Buyers

The domain name registration we’re going to examine involved a major corporation and an incredibly big product recall.

More than 18 months ago, in February 2007, domain registrations and strategic activity in this particular niche were pretty intense. If the domain in question had already been purchased and was on the aftermarket, we feel pretty confident that the owner may have gotten an offer for it.

Once you read a bit further, it should become clear that deo domains would be highly attractive for corporate buyers. Buyers who are properly educated, that is. To help in this education effort, we are exploring the registration, even though it’s more than 18 months past, for three main reasons.

First, since this particular domain name registration, other major food and product recalls have been announced, heightening awareness of food-borne diseases and product safety. These recalls have, in turn, competed for “mind share” in the consumer space and have created shifts in they types and brands of products that consumers are willing to buy. This news has sometimes disrupted consumer confidence and forced producers and manufacturers into damage control status, while they struggle to regain profitability and market share.

Also, companies are slowly taking advantage of generic, brandable domain names to help craft corporate messages that augment or widen current marketing activities. Some companies are beginning to understand that they can create unique domain names to build messages and Web sites around.

We also believe, however, that many more don’t yet understand the opportunities, or the potential of acquiring an existing domain name that is more broadly keyword-focused. And we think that many companies don’t have a complete understanding of, or appreciation for pricing in the domain name aftermarket, as compared to the value received, either.