What's a domain worth?

• Josh Mehlman
• 2 April 2009
• Page 1 of 2 : single page

Chances are, finding the right domain name won’t make you a millionaire overnight. However, it’s a decision that weighs heavily on the minds of many people just starting an online business or making their first foray into the digital world. Should I buy .com or .com.au, or both? How do I choose the best domain name for my online business? And what should I do if the one I want isn’t available?

First things first, what makes a good domain name?

“The best way to find the right domain, is to find a name that people would be most likely to type in when they are looking for your business or products,” says Brendan Yell, one of the pioneers of domain name trading, now chief executive of free offers directory ShopFree. “Also, because Google weighs domains names highly, a good name that describes your business as users would search for it will help in search rankings.”

Remember that your domain name will be one of the main ways people find out about your business, advises Jen Sale, business development manager at domain name reseller Domain Distribution Network.

“Ask yourself, ‘Does my domain pass the billboard and radio tests?’ In other words, would someone remember the domain if they saw it on a billboard and could they navigate to the domain if heard on the radio?

“Keep it short and simple, avoid hyphens and numbers and choose a leading registrar. Consider protecting your brand by registering multiple related domain names.”

Think global or local

By far the most common question Nett hears from its Kick Start session participants is, ‘Should I have bought the .com or the .com.au?’ In many cases, the answer is both.

“In Australia, .com.au is king,” says David Lye, general manager of .au domain name marketplace Netfleet.

“If you stopped someone in the street and told them your business name was called Hugo’s, 95% of them would guess your domain name was hugos. com.au. Only 4% would say hugos.com and 1% would pick hugos.net.au.

“However, if you are appealing to an international audience, .com is pretty much a necessity.”

“.com is the most popular extension worldwide and is typed into browsers by default,” adds Sale. “On the other hand, .com.au adresses also generate local search engine traffic and there are more to choose from.”

First come first served

More than 1.2 million .au domain names have already been registered, so it’s possible your ideal name is already taken. Two main options are available: find an alternative or buy it from the existing owner.

If your first choice isn’t available, domain name registrars usually offer you a range of alternatives such as substituting .net.au for .com.au, or a range of synonyms. However, it is important not to rush this important decision.

“Don’t compromise on the domain name,” warns Lye. “Registering the .net.au because the .com.au is taken is risky: any promotion you do for your website risks losing significant traffic to the .com.au equivalent. Similarly using dashes, numbers or excessively long domain names may confuse potential visitors and severely impact any advertising cut through.”

However, a bit of lateral thinking doesn’t hurt if it gets you a better domain name.

“If SydneyMortgageOptions.com.au is taken, check whether the acronym SMO.com.au is available or a variation such as SydneyHomeLoans.com.au,” suggests Lye. “A domain name doesn’t have to match your business name letter for letter as long as you use that opportunity to concisely describe your business.”

A tightly defined domain name can improve search engine rankings.

“If I wanted the name Milanos.com.au for my homewares shop but that name was already taken by a restaurant, I could try some variations like milanossydney.com.au or milanoshomewares.com. au,” says Yell. “That would increase my search engine rankings for people using ‘Sydney’ or ‘homewares’ as search terms.”

That said, a good domain name doesn’t guarantee search results. Search for ‘sex’ in Google and you have to go a very long way down the list to find sex.com – a domain name that sold for US$14 million in 2006. Even searching for ‘sex.com’ won’t find it!

If all else fails, buy it

No matter how clever you get, sometimes there’s one perfect domain name. What do you do if someone else already owns it? “Just because someone else owns the domain name, don’t assume it is unavailable,” says Lye. “If your major competitor has registered it and runs their business off it then yes, you’ll have a struggle to acquire it!

“But if there’s no website at the address or a parked page – one consisting mainly of advertisements – you might be in luck. That suggests a domain investor owns the name and, like many types of investor, they may be prepared to sell the domain for a fair price.”

These advertising-heavy ‘parked’ domains are one way domain name investors, also called ‘domainers’, make quite a bit of money – more about them later.

Until mid- 2008, it was illegal under Australian Domain Name Administrator (auDA) policy to resell .au domain names. This didn’t prevent under-the-table deals.

“The reality is people in Australia have been selling domain names for many years,” says Yell. “I have bought and sold many .com.au names dating back to 1998.”

In June 2008, auDA changed the rules and now allows owners of .au domain names to resell them after owning them for six.

Companies such as Netfleet and Domain Distribution Network are part of the growing .au domain name aftermarket – a marketplace where domain name owners can put their valuable or unwanted names up for sale.

“There are benefits to purchasing an existing domain: you get the domain name you want and it may already have a search engine ranking or generate targeted traffic,” says Sale.

How much should you pay?

Like any business investment, you should consider paying as much as a domain name is worth to your company. How do you quantify the value of a good domain name?

One way value a domain name is by the amount of traffic is brings to your website. This is a combination of search engine results and ‘type-in traffic’, where people type your domain name directly into the browser.