While some domain names cost businesses as little as $19 to register for a two-year period, some are literally selling for tens of thousands of dollars in Australia. As a pure investment, domain names are possibly the greatest ROI opportunity that exists.
What’s the value in a domain name?
All domain names are not created equal. The more descriptive it is, the more valuable it is. If you were a business selling cakes, cakes.com.au would be the most descriptive domain you could have. The domain name industry call these “premium generic domain names”.
Another way to think of domains is as the online version of commercial real estate. In the offline world, the retail outlet with the best location will get the most foot traffic and makes the most sales.
George Pongas, director of product management, AusRegistry, a domain name registry service, says “Your domain name is not just a technical device, it is primarily an off-line marketing recall device. When people see or hear your domain in an ad you want them to be able to remember the address and use it to navigate directly to your website at their convenience.”
Premium generic domain names give you instant credibility. As consumers, we naturally assume that the company with the most relevant domain name is the biggest, the most established and by default, the best.
I rebranded my previous company from Beep to CarLoans.com.au and overnight, every metric we used to measure our business exploded. The domain name investment we made was paid back very quickly. Looking back, had I known what the domain name would do for our business, I would have done it a lot earlier. In my most recent venture, I paid $35,000 for the domain Lend.com.au, which is descriptive of the core business.
My advice to any new business, or an established business wanting to grow their online presence, is to invest in the best domain name you can.
Is there a competitive advantage in search results?
I’m a firm believer that there is an advantage. When a search engine results page is returned, if a user clicks on the more descriptive domain more so than websites listed above it, it has the potential to leapfrog above them. I call this click authority.
Click authority will also give you a greater advantage in Pay Per Click advertising too.
Big business is starting to take notice.
Erhan Karabardak from Melbourne law firm Cooper Mills says “.au domain names have grown exponentially over the past 5 years, this has been driven by the realisation that domain names are one of the most important keys to a successful online presence. We are regularly involved in representing parties acquiring and selling premium .au domain names, and have seen a significant increase in prices being paid over the last 5 years.”
As you’d expect, when companies are paying significant amounts of money, they usually require a non-disclosure agreement. Companies are buying domains to rebrand; launch new products; to further expand their online presence or as defensive plays.
Here are the 5 biggest reported dot com dot au sales in recent years:
- CarLoan.com.au $200,000+ (bought by CarSales.com)
- Cruises.com.au $110,000 (bought by OzCruising.com.au)
- HomeLoan.com.au $100,000+ (bought by Aura Capital)
- Poker.com.au $100,000 (bought by 888Poker)
- BasketBall.com.au $90,000 (bought by the National Basketball League)
The most obvious signs of defensive domain name acquisition is iSelect (ASX:ISU). iSelect have several premium generic names related to the services they offer, for instance LifeInsurance.com.au, IncomeProtectionInsurance.com.au and HealthInsurance.com.au.
Of course, not all domains sell for these amounts; here are 5 other examples
- VirtualReality.com.au – $6,999
- Snowboards.com.au – $6,478
- Tshirt.com.au – $3,088
- Stockbroker.com.au – $12,555
- Bourbon.com.au – $1,188
How to get started
You can register a domain name licence in Australia for as little as $19 for two years through any registrar. With 3 million dot au domain names registered it’s likely that the descriptive domain you are after has already been registered.
In this instance, you can use AusRegistry’s WhoIs tool to identify the current registrant. Simply reach out to the registrant via email and ask if they would be interested in parting with it. A pro tip here is to reach out from a non-work email address. If the current registrant can work out who you are and why you want the domain name, you’ll more than likely be paying a lot more.
Keep in mind that your licence for the domain name is only valid for two years. Towards the end of your licence, you will be offered the opportunity to renew it. Failing to renew your licence will see it expire. Once it expires, it then becomes available for anyone in the public to register it again. Due to the value of domain names, the re-registration of these “expired” domains is big business. There are several web services that will try and re-register the name on your behalf the millisecond it becomes available, literally.
Most recently, someone forgot to pay the renewal licence for toys.com.au. It later sold to a private buyer via NetFleet for $90,585. Ouch.
In summary, I always recommend investing in the best domain name you can afford.
About the author
Shaun McGowan is a digital strategist and entrepreneur who has utilised his expertise to grow multi-million dollar businesses from the ground up. His philosophy is “domain name first; business concept second” premised on the firm belief that any successful business can be developed with the right online “real estate”. Shaun is the co-founder of small business loan provider Lend.