What Makes A Domain Name Valuable?
By Mark Rofe
11 min read
Tuesday, 19th May 2020
One key aspect of the online world are domain names, it’s essentially the land where your website lives on the internet.
Just like plots of land waiting to be developed, every domain name has characteristics that make it more or less valuable than other domain names.
I sold my first domain name back in 2011, and while I wouldn’t class myself as a professional domainer (someone who buys and sells domain names for a living), over the years I have had a number of modest domain name sales. I have been fortunate enough to acquire domains that I am particularly fond of too, with ChristmasTrees.co.uk being my personal favourite.
In this post I’ll be providing an overall look at domain name characteristics, the different types of domains, what makes a domain name valuable and how much they could be worth, and whether there is any money to be made.
Quick links Domain Characteristics Types of domains Exact Match Domains Benefits of EMDs Valuing Valuing Exact Match Domains
What makes a domain name valuable?
Generally good domains are short, memorable, easy to pronounce, spell, and use a familiar domain extension (domain extensions are the bits at the end of a domain e.g. .com or .co.uk etc).
What can devalue a domain name?
- Use hyphens
- Use numbers
- Use homophones - as these can cause misspellings e.g. sea and see
- Use unfamiliar domain extensions
The reason these traits can often devalue a domain name is because they essentially make them difficult to remember.
Types of domains
There are many types of domain names, but I’ll be explaining about how each of these three types of domains can be valuable.
- Exact match domains
- Brandable domains
- SEO domains
Exact Match Domains
An exact match domain or EMD for short, is a domain that matches the word or phrase that is being searched. For example, if someone searches for ‘sex toys’ in Google, then the EMD for that query would be sextoys.co.uk.
Historically EMD’s used to carry a lot of weight in Google’s algorithm. This made it very easy to create mini websites to ‘trick’ the algorithm and rank websites on the first page of Google with very little effort.
It meant that crappy websites were able to punch above their weight and rank above legitimate sites due to their exact match domain. Back in 2012 Google made an update specifically to address this issue...
While the SEO value of these types of domains has eroded since that update, high quality EMDs still offer plenty of benefits, and it’s these benefits which make them valuable.
Benefits of EMDs
The words used in a domain are taken into account in search engines
While the weighting of this is not as strong as pre 2012, from my personal experience there’s definitely a positive effect here. It’s particularly prominent in Bing, for example, sextoys.co.uk ranks 1 for sex toys in Bing, but at the time of writing appears on page 10 of Google.co.uk.
Increase Click Through Rates (CTRs)
If you perform a search on Google and are presented with the results of brands and websites that you’re not familiar with, it’s likely that you will click on the URL that matches your query. This is because psychologically, you’re thinking it’s the result that’s most likely to provide you with what you're looking for.
An old PPC experiment demonstrated that EMDs increased CTR’s from the search results page by 45%. From an SEO point of view, this means you can win more clicks from the search results page vs your competitors. From a PPC point of view, it means it could help to increase your ad rank (a component of how much a click costs using Adwords), which can lower your CPCs (cost per click) and paid ad spend. Back in 2013, an Australian business bought the EMD CarLoans.com.au and saw a 35% decrease in ad spend.
EMDs can also mean that when people link to your website, they will do so with the anchor text of your site. For example, some of our clients who use EMDs such as BroadbandDeals.co.uk will pick up links with the anchor text ‘broadband deals’. The anchor text used in links are taken into account by Google and can help you to rank for that term.
Trust and Authority
EMDs can bring instant trust and authority. Consider mortgages.com vs. brandnamemortgages.com. Users are psychologically more likely to find the former more credible, because people tend to believe that the best companies own EMDs. This can often translate into higher conversion rates, and increased revenue.
Pros An exact match domain can provide a competitive advantage due to many of the benefits mentioned above.
Cons The main drawback of EMDs is that they can restrict you to a certain market. For example Amazon started off selling books, and then later began selling a variety of other products. If they started off with a domain like Books.com, they would have quickly outgrown it.
Examples of brands using EMDs
You might not be aware, but many well known brands own EMDs. However, most of them have been redirected to the brand website, suggesting that they may have been bought as a defensive strategy (to prevent anyone else from buying and using them), or perhaps they were too restrictive for the products and services that the company provided.
Brands redirecting EMDs
Footballbetting.co.uk - Ladbrokes Flowers.co.uk - Eflorist Toys.co.uk - Toys R Us Holidays.co.uk - First Choice CloudComputing.com - Dell
Brands with active websites using EMDs Hotels.com Diy.com - B&Q MetalDetectors.co.uk - Viking Metal Detectors Fancydress.com - Angels Fancy Dress CreditReport.com - Experian
More examples can be found on Domain Sherpa or Memorable Domains (although these are old posts and could be a little outdated).
Valuing Exact Match Domains
When it comes to value, the EMDs that will be typically worth the most are the ones that have a high search volume on search engines, and a high cost per click in AdWords.
Although anything that describes the exact service of a business, provided it is not too narrow in it’s scope will most likely be worth something.
If we take a look at the top domain sales of .co.uk domains, most of them are exact match domains in competitive or valuable niches such as gambling, travel and finance.
Biggest Reported UK Domain Sales Of All Time
1. Money.co.uk £1,200,000 2. Cruises.co.uk £1,100,000 3. Cruise.co.uk $1,099,798 4,. Furniture.co.uk $700,000 5. Gold.co.uk £600,000 6. WebHosting.co.uk £500,000 7. Recycle.co.uk £308,000 8. FreeCreditReport.co.uk $300,000 9. Phones.co.uk £175,000 10. Free.co.uk $205,000 (£160,000) 11. Software.co.uk £150,000 12. Sport.co.uk £135,000 13. Ink.co.uk £130,425 14. Mobile.co.uk £120,000 15. Purple.co.uk £108,000 16. Models.co.uk £100,000 16. Onlinecasino.co.uk £100,000 16. HorseRacing.co.uk £100,000
Source - Brandwise.co.uk
Brandable domains are often domains that use a catchy word or words with no descriptive meaning.
Although they can also be dictionary words (Very.co.uk), first names (Ricky.com) and surnames (Kipling.com). They are essentially anything you would name a brand.
Pros As brandable domains are often made up, they generally can be registered more easily, take for example our own brand name RiseAtSeven.com which was available to register because nobody else was using it.
Cons Sometimes brandable domains can be difficult to remember, pronounce or communicate. Amazon was initially going to be called Cadabra, as in the magic word ‘abracadabra’. However, after Jeff Bezos' lawyer misheard it as ‘Cadaver’ over the phone Jeff decided to change it to Amazon.
SEO domains are those which have become available to register or buy that have lots of high quality links pointing to them from when there had previously been a website on it before.
These can be valuable not because of the actual name of the domain, but because of the domain’s history. For example, I recently saw a domain sell for £700+ which caught my eye because based purely on the domain name it was overpriced. However, looking into its history I can see that it has links from the likes of the BBC, Guardian, Telegraph and the Financial T, and this is where the value lies for this domain.
Pros As links are an important factor in Google’s algorithm that can help you to rank more highly, acquiring a domain with pre-existing links can act as a shortcut and supercharge your SEO efforts. Often people will rebuild a new website on them.
Cons If you rebuild a website on an SEO domain, you are generally stuck with the name or topic of the website that was on it before. For example I saw someone trying to use a domain that had previously been used as a Japanese tourism site, and is now trying to use it as a dating affiliate website. The name of the domain doesn’t fit with the topic or theme of the current website.
How much is a domain worth?
While domains have characteristics that can make them more or less valuable, there is no easy way to estimate the value of a domain name. There are tools that claim they can, however it’s best to take the valuations they provide with a pinch of salt.
For example Godaddy’s domain appraisal tool tells us that free.co.uk is worth approximately $15,000, however it sold in March this year for $205,000 - which is an incredible discrepancy.
Domains are only worth what someone else is willing to pay, and for everyone this is a different amount. The best way to understand how much a domain could be worth is to take a look at prices that similar domains have sold for. However, this can be tricky in itself because it’s a relatively opaque market, most domain sales don’t get reported or disclosed.
If you’d like to get a UK domain valued, it’s best to ask someone in the know. Acorndomains.co.uk is a domainer forum full of helpful members with years of experience, and they have a domain appraisal section - however, even seasoned domain experts can have conflicting views on valuations.
Historical Domain Prices
The best resource for reported domain sales is DN Journal, who provide monthly updates of the highest publicly reported sales for all domain extensions.
Seemly.co.uk provides a great database of historical UK domain sales. However the sales reported here are a mixture of sales to end users, and other domainers - which can make things a little more complicated. End users are typically companies or brands who purchase a domain to use and develop. Whereas domainer sales are sales from people who try to buy and sell domains for profit. You can think of this as almost like a wholesale market.
Because of this end users sales are typically much higher than domainer sales, as domainers typically buy them cheaper so that they can keep some margin to sell on for a profit.
Is there money to be made?
Yes, but it’s not as easy as it sounds.
These are the main ways that I’ve observed how people have made their money when it comes to buying and selling domains...
These are domainers that started registering premium domains back in the 90’s and held onto them until an offer they were willing to accept came their way. Since we can’t go back in time, this isn’t really an option that can be utilised now.
These are domainers that will spend lots of time looking at lists of domains that are expiring. They then set up a bot or piece of software that will register or ‘catch’ the domain to the millisecond of it becoming available to register.
Many great domains can expire for whatever reason, perhaps the business no longer exists, the domain is no longer wanted, or someone simply forgot to renew it. I recently had a personal experience where I forgot to renew a domain and a drop catcher caught it, put it on an auction website, and sold it for £1,550. So there is money to be made here, but it’s not as easy as it sounds. It can be time consuming trawling through lists of domains that are about to expire and often a good domain will have many drop catchers after it, almost turning it into a raffle for who ‘wins’ it.
Often drop catchers are looking to turn a profit and sell their freshly registered domain quickly, and because they don’t want to hold onto them for too long this can sometimes present a buying opportunity for other domainers.
Buy undervalued domains and sell for more
This is exactly what it describes. Look for domains that appear to be underpriced, buy them, then sell them for more. This isn’t as easy as it sounds because you have to know and understand what makes a domain undervalued.
For example Men.com was bought for $15K in the late 90’s and later sold for $1.3 million in 2003
My personal strategy when it comes to flipping domains is to spend very little to minimise risk, and to make sure there’s a broad market I can sell it to.
A couple of examples of my sales include VertinaryHospital.co.uk - paid £60 on Domainlore and sold for £500 FuneralCompany.co.uk - paid £30 on Acorndomains and sold for £500
I only tend to buy domains to flip if I see a bargain, it’s my version of going to a car boot sale and looking through all the junk to find something of value.
Buy a good domain and develop it
In my opinion, the best way to make money with domains is to buy a good one, use it, and turn it into a business, because that’s where you’re going to get the most value from it.
For example the best domain that I own is ChristmasTrees.co.uk which I’m looking to turn into a business that will bring me in money each year. If I sell it, I’ll get a one off payment which is nice, but once you sell a domain it’s gone. I’d much prefer to have something that brings a recurring revenue or income stream.
Here are some links to resources and people I recommend following
Domainlore - UK domain auction website Acorndomains - UK domain forum Dropped.uk - UK drop catching service Seemly.co.uk - database of publicly sold domain name sales DN Journal - Domain Industry news magazine Peter Askew - buys and develops premium domains and turns them into businesses, examples include Onions.com and BirthdayParties.com @Domain Flippin - tweets about UK domain sales and domains that are about to drop @BrandwiseUK - tweets by George Marshall a UK investor in premium brandable and generic domain names @DomainKing - Rick Schwartz is a well known domainer who has sold multiple domains for over $1 million. @iamrofe - (a make no apology for this shameless plug)