“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:

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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

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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?

First, abandon all hope that you’ll be the first to register a great generic domain. I’ve managed to find a few that I like, but the opportunities are few and far between. Very few, and very far between. Broad generics are just not available for registration anymore. If you want these, you’ll have to pay for them. Dearly.

Second, restore a tiny bit of the hope you just abandoned. I’ve learned to never assume that a generic domain has already been registered. If you’ve identified one that you like, check it. You never know.

Third, restore a little bit more of your abandoned hope. I’ve noticed that generic names that relate to some niche fields are still available for registration (other niches, however, have been fully explored by others). You’ve got niche experience in something…use it. Identify a few great generic names in your fields of expertise and check the registrars. If some of these are available, explore a bit more. You might be surprised to find that your niche provides fertile ground. I was when I recently registered fdaguide.com and fdatests.com.

Identify your niche and own it. And do it for every niche you’ve got.

Technorati Tags: domain names, niche domains

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.

Others take a different approach. They keep checking GoDaddy until they find one that’s available for registration. This strategy is guaranteed to produce a false sense of success and will yield a truly great domain in only limited circumstances (e.g., localized generics).

Technorati Tags: domain names

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.

The sustainability calculation is relatively straight-forward for some topics. Think about the 2008 election. People are already interested in the topic, and we know (approximately) when that interest will begin to fade. The value window is quite well-defined, and the value of domains tightly related to that topic will likely remain high in the window, and drop once the window closes.

Sustainability for other topics, though, is quite difficult. Think about poor Paris Hilton. Surely people are thinking about photos of her in jail today…but how long will that remain the case? What if she gets thrown in the slammer again…and again? What if she truly did find religion?

DNJournal reports that, this week, Iran.com sold for $400,000. From a US point-of-view, it seems to be a “hot topic” domain with uncertain sustainability. How long will Iran be on the collective mind? It’s probably a safe bet that we’ll be thinking about it for awhile, but that focus could also disappear overnight (perhaps some Tuesday night in November of next year).

The key for domainers, though, is that it shows that “hot topic” domains with questionable sustainability can still hold significant value. The interest in domain investments is reaching new highs, and it’s good to see the value of these speculative plays increase as well.

Technorati Tags: domain names, iran.com

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)?

And what if the generic owner decides to sell the domain to the web 2.0 company.  Is he a squatter?  In most scenarios, the generic registration likely pre-dates the web 2.0 domain (dropping vowels has only been popular for a couple years).

An academic exercise?  Nope.  Flicker.com is for sale and the owners have indicated that the site gets about 150,000 unique type-in visitors per month.

150k.  That’s a lot of traffic to unleash on an unsuspecting server.  With numbers like that, I think you’d switch to an advertising-based site right quick if it wasn’t your monetization strategy already.  It’s the “highest and best use” principle being played out in domain names.

Location-based generic terms, what I’ve come to call “localized generic domains,” are one of the hottest areas in the domain industry right now. Think ClevelandPCHelp, ToledoMechanics, and ColumbusMotorcycles. Why the sudden interest in these seemingly narrow generics? First, the search engines (Google in particular) have repeatedly stressed their interest in further development of “localized search,” which aims to tailor results for a user’s search to his/her current location. Search for “motorcycle dealers” from your home in Toledo, and you’re more likely to see ToledoMotorcycles.com near the top of the list than BobsCyclesofScottsdale.com.

But the value of localized generic domains goes beyond search. 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. It’s 2007, so you absolutely must have a web presence, right? That’s a given. So 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 (think of all those people in norther Ohio searching for information on the Emerald Ash Borer that has given us fits over the last few years). This doesn’t mean that he has to forego a brand-oriented domain. Nope, this smart guy will launch two or more websites when he opens his business, using the localized generic domain to lead the way and drive traffic to his brand-oriented domain(s).

If you don’t yet see it, here’s the domainer’s angle in this story: the savvy entrepreneur will likely be glad to pay a premium for that localized generic domain. He gets it, and he’ll pay for it.