DomainBinge

I’ve written before about localized generic domains and the potential upside they provide for a new business:

“I like to think of these little gems as ‘instabrands.’ Imagine you’re a an entrepreneur opening a relatively modest local business…say, a tree care company in Toledo, OH. … You head on over to GoDaddy and start hunting for a great domain name.

Here’s where the savvy and not-so-savvy entrepreneurs part ways. The not-so will immediately think of (and probably be able to register) a unique domain based on his chosen company domain. Think “MadHatterTreeService.com.” He’ll rejoice in the fact that he was able to get the domain for 8 bucks and happily move on to setting up his website. What he won’t realize - probably for several years - is that the use of that brand-oriented domain will greatly increase the work he needs to do to educate his customers - and potential customers - about his services, and indeed about his existence.

The savvy entrepreneur, however, gladly seeks out a localized generic domain that accurately describes his business and the geographic area in which he operates. ToledoTreeCare.com is born and he’ll probably be rewarded with high localized search results.” (from the original instabrands post)

Just a couple of short weeks after writing that post, I came across a great example that illustrates my instabrand point:

I’ve been ‘collecting’ domain names for several years now, but have only recently started thinking of them as investments. In that sense, I consider myself new to the domaining industry even though I’ve had a portfolio for some time.

In these early days, I’m soaking up as much information as I can and am trying to distill all of it into a framework that can guide me over the long haul.

So far, I’ve managed to identify five principles that I’m using to guide my early domaining efforts. I find them useful and hope that others will, too.

They are, in no particular order:

Technorati Tags: domain names

The great race for generic domain names is on and crazy money is being paid for such domains in aftermarket sales. Need examples? Check the list.

The race is producing sale amounts that can be quite discouraging for people trying to “break in” to the domain name industry. Sure I can fork out a couple grand for a domain, but can I muster up hundreds of thousands of dollars on a speculative play? Do I want to?

So what’s a beginner to do?

This made me chuckle a bit. The guys making money by selling text links at market price are a tad upset about the market-driven increases in the price of domain names.

Beyond the irony, the post offers a nice case study of the current domain name environment. Picking a domain is an important part of getting a new company or new project off the ground. The smart folks in the world pick smart domains, assign a value to the domain, and determine if they can buy it within the confines of their budget. This reality ensures that market prices for good and great domains will continue to increase.

Some domains will always have intrinsic value. Think news.com, suppplies.com, and trucks.com. These are the ultra-generics - subjects that are not overly sensitive to the constantly shifting focus of our collective mind. People are always looking for news. Purchasing managers are always thinking about supplies. And construction workers are always thinking about trucks (well, maybe not always).

The value of “hot topic” domains, in contrast, shifts as the focus of the collective mind shifts. Think WorldSeries.com, 2008election.com, and even parishiltonjailpics.com. Determining the value of these domains is a bit trickier than others because it requires a timing component and an assessment of the sustainability of the underlying topic.

Typosquatting - buying domains based on a misspelling of a domain name (e.g., gogole.com) - is fraught with legal challenges.

But what about reverse-typosquatting?  Here, a company bases its tradename (and probably registers the mark) on a misspelling of a generic term.  Think of Flickr and Flicker (and of several other popular web 2.0 sites and their developer’s penchant for dropping vowels).

The presumably innocent owner of the generic domain can be flooded with typo traffic as non-savvy web users (those not in on the dropped vowel branding strategy) go directly to the generic site.  This might be a desired result if the generic owner monetizes his site with advertising, but what if they were hosting a site that was simply the “web home” of a business (say, a firebox manufacturer)?

Generic domains - those that generally describe a class of products or services - are typically more valuable than those directed to a particular company or product name (brand-oriented domains). The reason is simple - web surfers typically use generic terms when searching for content (and when they’re searching for a particular company or product name or brand, the game of converting them to your company/product is entirely different than just introducing yourself).