How Much Are Domain Names For Campaigns Worth?

How Much Are Domain Names For Campaigns Worth?
by Laurie Sullivan, Thursday 11th Feb 2010, MediaPost.com

Marketing and advertising agencies looking to strengthen campaigns might pay just about any price for a solid domain name if it means building a better relationship with consumers.

Companies can build the greatest campaign in the world, but if no one identifies the Web site domain name with the brand, even the most expensive names become useless. Direct navigation, where people open a browser, type in a name and expect to find the correct Web site and content, remains the No. 1 Web navigation technique.

That's why when typing in Vodka.com into a Web browser consumers can expect to find drink recipes and information on vodka makers. Vodka.com sold for $3 million, but not all domain names sell for that much. In fact, the average name sells for several thousand, according to Jeremiah Johnston, chief operating officer at Sedo, a trading platform for online domain names and Web sites.

"The company bought the site to start to build a relationship with consumers in America," he says. "The only way you can do that if the customer comes back to your Web site by building on the TV or radio campaign."

Johnston says people use domain names like search terms. Rather than entering them in a search box, they enter the name in the browser. So, when a company runs a campaign, they should make sure the domain name matches search terms that marketers would expect consumers to enter into a search query box on an engine, such as Google, Microsoft Bing, or Yahoo. The short, concise terms also position the company as the expert in the field. For example, Calvin Klein owns Bras.com.

Domain names matching search terms that define the business can generate between 10,000 and 30,000 unique visitors monthly, according to Johnston. He makes the case by suggesting that Sedo research demonstrates that these domains can lead consumers to the site much more easily then if they had to find the information through a search engine. "With search engines you have to invest a lot of money in search engine marketing, both SEO and paid clicks," he says.

Brand owners need to acquire domain names early in the campaign- and product-development cycle, but they run the risk of letting the cat out of the bag. Johnston explains that this is one reason Apple didn't acquire iPad.com before making the announcement.

Sedo's brokerage department, which handles the bigger-ticket sales, keeps these deals confidential to allow companies to swoop in and buy the names. It's no surprise .coms are the most demanded domain extension, accounting for 44% of all domain sales on the Sedo marketplace in 2009.

The number of fixed-price domain names changing hands grew 4% last year compared with the prior year. Top-selling domain categories for 2009 included software, employment, services, regions, country and cities, tobacco, insurance, three-character domains, hardware and casinos.

The average price of a .com site dropped approximately $719 in the fourth quarter of 2009, sequentially. The "seven-figure sales" weren't as prevalent during the year, but more domain names were sold, Johnston says. The dot-biz extension, however, saw the biggest jump in the average sale price. Sedo attributes this to growth in sales of one character dot-biz domains, which first became available through the dot-biz registrar in September 2009.