Exact match domain (EMD) names haven’t gone the way of the wind. Thousands of new extensions are being made available, but none will ever hold as much authority as the original dot-com extension.
LasVegas.com is one of the most expensive domain purchases in history. The domain name sold for a whopping $90 million in 2005, but would it have demanded such a price if it had been LasVegas.tv, LasVegas.net or some other non-dot-com extension?
The simple answer is: No.
Can you guess the buyer who paid $90 million? It was Vegas.com, and you will find both domains in the top of many Vegas-keyword-related search results today. Their strategy has paid off in tremendous ways.
(It should be noted when researching previous domain sales, these sales often incorporate other business transactions outside of the domain itself, such as the existing website.)
The exact match domain industry is healthier than ever before thanks to several factors: internet size and growth, the original dot-com extension, age, demand, search volume, branding, and the inherent SEO value that is unmatched with nearly all other marketing and branding investments.
In early 2017, we bought VPN.com for $976,730. I have been blessed to be a part of several multimillion-dollar domain transactions over the years. Putting massive domain deals together has taught me many things, much of which I want to share with you today.
How To Value Exact Match Domains
To value an exact match dot-com domain, I use the simple formula below. For exact match non-dot-com domains, the final present domain value is divided by 10 or more.
Present Domain Value = Number Of Global Monthly Average Searches x $1 Cost Per Click (CPC) / Number Of Years Required To Be No. 1 In Search Engines From Today
Essentially, you are valuing the EMD on global search volume provided by Google Keyword Planner and factoring in the amount of time it will take you to grow the domain to the No. 1 position in search engines.
For example, in 2016, the global monthly average of “VPN” was about 8,800,000. At $1 per search and four years to become No. 1 in Google Search results, this still indicated that $976,730 was a great deal.
Example Formula = 8,800,000 Monthly Searches x $1 CPC / Four Years = $2,200,000
Fast forward to July 2018, and we see the 12-month average of global search volume for “VPN” was 13,600,000, suggesting that the current value of VPN.com has grown to $5,500,000 in domain equity alone.
Note, the appreciation is where the real value exists with all premium domains, especially those in growing markets.
Timing and search volume are the most important aspects of discovering the value of your desired exact match dot-com domain name.
I like to use a 12-month search volume average instead of just the last month’s average. This approach accounts for any seasonality, which can help you avoid paying a premium for domains in fad industries with short-lived or volatile demand.
This brings me to the second piece of the formula: the $1 cost per click.
The average CPC for most industries is $2.69 for search, according to a report by WordStream. For many industries, the average cost-per-click is much higher.
For example, in the legal industry, the average CPC is $3.44. So, every time a searcher clicks an ad, the advertiser is charged $3.44 for each click. This should explain the high price tag of domain names like Insure.com ($16 million) and Insurance.com ($35.6 million).
Finally, the amount of time it will take to become No. 1 in search engines is a critical number. If your niche is hyper-competitive, like the VPN space, it will take at least several years to become No. 1. Usually, three to six years is a safe bet, as it takes time and effort to capture the potential these exact match domains offer.
Try to keep this number updated in your formula, as it will help you realize the appreciated value of the domain as time goes on.
If you find yourself in a situation like mine, where your company and brand will benefit from an exact match domain name, just use this simple formula to determine whether or not the purchase is worthwhile to your bottom line -- both now and in the future.
Present Domain Value = Number Of Global Monthly Average Searches x $1 Cost Per Click / Number Of Years Required To Be No. 1 In Search Engines From Today.
By using this same formula, you can make a lot more sense of the asking price. Now, when you come to the negotiating table with solid formulas for assessing and understanding value, you become much more informed with what you are willing to pay and what simply doesn’t make sense.
In the end, you want a deal where all parties walk away with a smile on their face. The seller wins, the buyer wins and the brand obtaining the new name will forever be propelled towards enormous, non-duplicatable success.
CEO at VPN.com. Helping 1 billion people protect their privacy online by 2025