The Factors I use in Evaluating a Domain Name

Good Morning from Istanbul.


I believe a domain name has a value that is in direct proportion to the population it serves and the spending power associated with those particular groups. That is why I have always believed in dotcom. It just serves the largest sector. The wealthiest sector. The most global.


So if you have .gr for Greece, that is the population and the economic center that you tap into. It’s your base. Expanding that base is the trick. Same with all country codes. So there is a formula that you can form that helps to show the value. China may have the largest populace, but may not have the biggest spending power. There are other factors. Some items are more popular in one geographic region but not another. The point is there are all just a few factors that go into a value of a domain. Then we get to what somebody could do with it. What their potential is. Again, the point is there are so many things to consider. Each with a value. Each with a mathematical number attached to it. Dozens and dozens of factors.


Now this is something that there is no analytics’ on. Few really understand how many different facets there are to weighing a domain. And even when some consider it, their timeline is not included which is perhaps the biggest facet. But to be honest, there are many competing facets. Too many for me to even mention. You don’t have all day to weigh each and every facet. You have to learn to do it rapidly.


So I look at crappy domains and folks, they are as worthless as anything on this planet. Does not mean you can’t make it the next Google. But the inherent value is nil. You add up all the facets and it adds to zero. It adds to minus zero since it is a liability not an asset. Maybe I am exaggerating. Maybe the domain you have gets a 7. But the problem is it is a 7 on the scale of 1 million. Valueless. Worthless.


This period is your last best chance to find gold at below market prices. The window of opportunity will be quite short. It started just last month and could be over by this fall. Puff. Here today, gone tomorrow. The aftermarket next year won’t be as good as this year for the simple reason that there will be less domains of quality up for sale. Many will change hands this year. It won’t repeat next year as those that buy are buying to keep as opposed to flipping. The pool of quality domain names will not be what they are today. The window of opportunity is open. Don't blow it this time!


Have a GREAT Day!
Rick Schwartz




9 thoughts on “The Factors I use in Evaluating a Domain Name

  1. Solid Namer

    I agree that there certainly are a lot of great domain out there right now below market price, the problem is that you really need a lot of money in order to invest in something that you will not be able to sell in the current market. Who knows when the market will change? Even though I believe strongly in the domain market I would also characterize it as a risky investment form.
    Thanks for a good post!

    Reply
  2. UFO.ORG

    While most domainers understand CPC/CPA and CTR many miss the one called Probability.
    Always amazed to see domainers valuing domains on the basis that another domainer would pay xyz for it. Amazed when domain holders can’t specifically list the reasons why they bought a particular name.
    There are two sides to this industry and one is probability/risk and the other is everything else.

    Reply
  3. James Cogan

    This ‘last chance’ to scoop up premium domain assets that you speak of is quite logical when you take into account what advertisers are now telling their media buyers.
    Everybody wants integrated advertising campaigns now. It’s not just about ‘print’ or ‘tv’ or ‘web’ or ‘radio’ etc. they all want campaigns that cross-over and integrate all mediums, and in most cases now the end campaign goal is to get the consumer to interact with your brand on the web.
    As URLs continue to become central components to the overall advertising message, more and more companies are starting to wise-up to the notion that high-recall, descriptive/generic domain assets make every ad dollar spent go farther. Whether it’s higher click-rates on display ads, better recall off print and radio ads etc., the domain name is fast becoming the glue that stitches together all campaign elements, and it all boils down to dollars and performance.
    Furthermore, the above factors will only be exacerbated and take on greater importance over time as the marketplace gets more saturated and cluttered with URLs and brand messaging in addition to the fact that we are going to see an explosive uptick in ad dollars flowing through the web as we move from a current 10-12% share of the ad spend pie, to a 50% share over the next few years.
    Indeed, there is a fundamental shift on the horizon, and I don’t think any of us can truly comprehend the changes that are coming, both in dollars and mindset until it plays out.
    Fun times!

    Reply
  4. Pommy Singh

    Not enough domainers think about the liability of a domain name… In my view, shortly these liabilities will become much more of a problem, when the time that Rick describes above happens -“the pool of domain names will not be what they are today” – companies will use the UDRP/TM law even more :( Beware

    Reply
  5. Jessica

    Well I got a client who refuses to sell his domain for a much lower price simply because he thinks his domain is like gold in a haystack. He’s right – I agree with him totally as his certainly can not be considered one whose inherent value is nil, as Rick mentioned. Quite the opposite.
    But one (important) factor in weighing a domain’s worth is, current sales trend in the aftermarket which reflects the”buying” power of the consuming populace.
    Your domain could be worth millions but if no one can afford it, or the right candidate is not in a hurry to liquidate it at your desired asking price or is not so much interested or is only waiting for you to lower your price (further) – you better keep it till the market is ripe again or the economy bounces back…
    Or, settle with a lower but decent price if you need the money and want to sell quickly.
    Sometimes the hard part is not in finding the right buyer, but in convincing the owner it’s time to say,”Deal.” :)

    Reply
  6. Successclick

    Hi Rick,
    Thanks for sharing your great expertise in evaluating domain purchases. You obviously showed this to us all at the last TSV auction. Hotproducts.com is a huge winner!
    However, you are overlooking the constant influx of new technology items coming in every day by the hundreds, and these domains provide”maturing” value if anyone following the niches is smart enough to lock down the generic prodservs that will be huge when the trend goes mainstream. It’s like gambling, but isn’t that we have all done since buying domains (my first purchase was in 1995)?
    So, the world turns, and each revolution provides another series of opportunities for domainers to wrap up some domain prodservs that may take a few years to”maybe” hit the mainstream, and when they do, it’s cash in their pocket.
    I don’t want to give away any secrets without you first waterboarding me… (lol)… but new domains are”sprouting” up every single day.
    The domain universe is expanding.
    cheers!!!

    Reply
  7. steve m.

    Unless you need cash flow, I believe this is not the best time to sell a domain. Buyers, especially domainers know there are sellers out there that are strapped for cash and are waiting to hear from them on the forums or via email and then they wait to reply to emails and let sellers cook, until the sellers get back with a lower price to purchase. If you can hold on to prime domains right now I believe this is the time to do it. If a company or investor or collector wants your domain enough to fit in with their business plan then they will close a deal on your terms given its realistic. Unless your business is to flip domains and quality bulk aqcuisitions is your specialty.

    Reply
  8. crinu iliescu

    If the domainers will take a stand against Google’s monopoly and enforce the removal of all references of domains in their portfolio from being listed, this Godzilla Google would be brought to its knees and tamed to display just boring untargetted stuff.
    crinux.com

    Reply

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