Category Killer Domain Names?

May 26th

Dr. Pete shared examples of the marketing funnel, highlighting how we must overcome hurdles (or break through barriers to conversion) in order to make a sale.

Why People Buy Premium Domain Names

The idea of an exact match domain (EMD) is that you are buying a piece of land right next to the highway. You sink in a lot of money upfront, but hope that it backs out over time by lowering your traffic acquisition costs. For many years this model was both logical and profitable.

At the peak of the domain name bubble recently, the domain name Poker.org sold for a million Dollars.

A domain name is an asset just like a stack of cash, a piece of gold, or a CDO is. But rather than having a fixed universal value, it is only a *relative* store of value that can go up or down based on market conditions. (Many of these other "fixed" stores of value also change in value when measured against other value stores over time, but they typically change value somewhat slowly and due to the acts of the entire market. With domain names, Google can use their dominant search position to drive massive changes in value in a short period of time).

Search Engines Influence the Value of Domain Names

Search is the primary mode of online navigation. For years search has been replacing almost all other forms of online navigation as the new default. There are about 7 billion people in the world with about half of them online. Google likely gets about a search per person every day!

Search engines can decide what variables they want to count & how much. In a world where subjective marketing aspects (like branding) are replacing signals of relevancy the value of keyword domain names is greatly diminished.

If your model works out to where it takes 3 or 4 years to break even & recoup the initial investment, then that model may look quite different if Google manages to redirect 50% or 60% of that traffic stream at some point in time ... at some point the price of the domain has to adjust to the new market conditions.

An Example of the New Normal in Search

With the above in mind, I thought it would be worth highlighting how the domain bubble grew & ultimately popped.

First, lets start with a current search result. The below example is for "pool tables."

Note that brands get a number of options to play here: AdWords ads, AdWords product ads, Google Product Search, branded navigation, big brands in the organic search results, niche vertical brands, and any local results for nationwide chain brands with a local outlet. Go back a couple years and this search result would have mostly been dominated by smaller online retailers & niche hobbyist websites.

The below image is from 2008. Notice how small the AdWords ads are & how 7 of the 10 organic listings on page 1 have "pool tables" in the domain name.

Today most of those results are off onto page 2 or 3 or beyond, where few searchers dare to go. Now even the exact match domain is forced to buy AdWords to compete for it's own name. Without the AdWords ad, the exact match domain would require a searcher to skip over 45 other links before finding it somewhere below the fold.

Other keywords (like engagement rings) which once left room for review & comparison sites have been completely dominated by brands. Outside of end consumer reviews (and who but an expert publicly reviews more than 1 engagement ring? and who is not biased in their review of said rings with emotional attachments?) there is no way to get a comparative view of quality. There is no room for such an idea in Google's brand-only search results.

Update: Checking back in a few years later ... as of August of 2013 this post has only grown more true over time. In the following image, notice how the ads keep on scrolling, the size of the local result insert increased & now even the .com EMD "category killer" isn't even on page 1 of the search results any longer.

Let's pick apart how we got here...

Google Boosting Rankings of Authoritative Brands

In 2008 Eric Schmidt made the famous quote about how consumers are hardwired for branding. I mentioned how he was signaling the future of the algorithm, but was largely ignored at the time. Since then Google has launched:

The algorithm is only going to keep adding more signals that boost brands. PoolTables.com might have better editorial content than a mega-retailer like Amazon.com, but it is hard for them to collect as many reviews as Amazon can.

Social Search Brand Boost

Matt Cutts also stated that they like the potential of +1:

Cutts confirmed what Google said when the +1 button launched: Google will use +1 activity to influence its search results.

“It’s definitely a signal we’re paying a lot of attention to,” Cutts said. “It has tons of potential. It looks very promising.”

Big brands can do giveaways to their core customer base to expand into new markets, allowing customers to pay for the discounts with a vote, stuffing the ballot box on these new "relevancy" signals.

Bigger AdWords Ads

Google shifted the top AdWords ads to having a longer headline, which provides roughly a 13% lift in CTR.

In addition, AdWords ads have grown larger due to other ad extensions, like:

  • sitelinks
  • product extensions
  • phone numbers
  • maps
  • other nascent extensions, like videos

For commercially viable keywords these have the net effect of pushing the organic search results further down the page. A recent study by Optify highlighted that while low CPC & tail keywords send most clicks (~89%) to the organic search results, for high CPC & head keywords AdWords ads consume most search clicks (~ 60%).

Google Comparison Ads

In certain high money verticals Google offers Google Comparison / Google Advisor ads, which allow them to place a 4th ad slot above the organic search results.

Notice how much larger some of these ads are than typical ad units. When Google targets your keyword with one of these ads they significantly change the dynamics of the market.

Product Ads

Google has offered graphical product ads automatically matched to the search results. Generally for bigger brands Google offers these on a risk-free cost per acquisition pricing, whereas smaller advertisers need to pay by the click to use this ad format.

Googler announced that searchers clicked on this ad format nearly twice as often as regular search ads & in some cases Google has even started testing including these ads in their ad space that appears above the organic search results.

Search clicks are a zero sum game, so the more risk-free clicks the big box brands get from this ad format the lest clicks there is to go around for everyone else.

Product Search Listings

These serve as more eye candy to distract searchers from the organic search results. Once again these typically feature listings from larger brands & Google doesn't mind if these are a bit off because they still push the eye away from the organic results and toward the AdWords ads.

Look how off those "necklaces" are. Evidently if you are not a sport's fan you have no business wearing necklaces ;)

Localization

Localization is a boon for small local businesses which can now gain a slice of the local traffic stream that they were priced out of the market on. However, as a domain buyer, the value of AutoInsurance.com drops significantly after the large metro areas have localized results which do not allow the cost of an expensive domain to be amortized by the potential to rank everywhere. What is worse, is that the largest cities are the ones with the most vibrant economic activities (more businesses, more residents, larger loan sizes, and so on). Through localization any generic unbranded nationwide player simply misses out on the most valuable traffic.

Verticalization & Double Dipping Ads

Much like how localization locks generic players out of local markets, Google's increased verticalization (and allowing certain brands to double or triple dip on ad serving) now means that some results have over 80% of the screen's real estate dominated by a single key player.

Search Box > Address Bar

When Google Chrome launched it replaced the address bar with a search box.


That allows Google to...

  • intercept & redirect type-in traffic demand
  • re-highlight content you have already seen in the past (likely to be from some larger brands, as they have larger ad budgets & more ways to be found)
  • recommend popular searched-for keywords (which are often brands, since awareness-based advertising creates search demand

When Internet Explorer 9 was launched Microsoft also adopted these features

Taking control of the address bar one step further, Google has a beta version of Chrome out where the address bar is not even visible unless you scroll over that part of the page. Firefox also offers a similar beta extension! If this feature goes mainstream it wouldn't be surprising to see Microsoft follow suit.

Google Suggest / Instant

Google Instant's search auto-completion directs users away from some keywords and toward others. At first that statement seems like it could be saying that it consolidates search volume to a smaller set of keywords & thus could make domain names more valuable. However, if you have ever looked at a list of the most popular keywords you would know that they are largely filled with branded keywords. The media was aware of this obvious shift & Amit Singhal had to do an interview stating that there was no brand bias to Google Instant.

Awareness-based advertising biases keyword recommendations, which is why Pontiac ran a TV commercial telling you to search Google for their brand. Of course when SEO consultants did similar things they got whacked. ;)

Extra White Space

In the most recent beta Google has tamed this down a bit from the absurdity they were first testing, but Google has shown an interest in using whitespace trickery to drive the organic search results further down the page.

The rise of mobile applications & mobile search devices further pull leverage away from publishers & toward ad networks.

Google Acting as a Publisher & Affiliate

Not only Google, but all the major search engines are beginning to act as publishers & affiliates.

What's worse, is through personalization they have an asymmetrical information advantage over publishers in their ad network. They can tell you that you are getting 68% of the value of an ad click, but how do you know if they don't undervalue the contribution of that click while overvaluing the contribution for clicks where they keep 100% of the income on?

Google Small Business Taxes

Some sites get the benefit of the doubt, whereas other sites just get doubt. I highlighted how Google's approach to link buying, AdWords penalties & other issues vary based on who is getting whacked in our recent post about Google small business taxes.

Too Small to Matter

Smaller sites are more likely to come under attack from "the algorithm" as they are easier to knock over & are generally less stable. That gives them a higher risk factor & makes it even harder to build reliable business processes around it. How do you scale employment (or even inventory) when one month you are up 50% and the next month you are arbitrarily off 60%?

Further, Google has consistently screwed up original source attribution, which makes it even harder to justify for a small business to go the extra mile & spend extra money creating premium content, if the result will be Google paying someone to steal that content & wrap it in AdSense ads.

Where Does this Lead Us?

If you buy a "category killer" it is critical that you rank #1, but in many niches the exact match domains that ranked #1 for nearly a decade are now #3 or #4 in the organic results. Add in 3 AdWords ads above the organic results & things like product ads and it isn't hard to end up below the fold. If your relationship to that 1 keyword is your core competitive strategy but you can't even promote the keyword (because you are below the fold) then the strategy is a failed one.

Further, as Google keeps adding more usage signals into the relevancy mix that will keep favoring brands.

This is not to say domain names are dead across the board. there is still plenty of opportunity in some areas, but equally some names require large investment & as an SEO strategy may get thrown under the bus by any of the above (or similar future moves in other market niches).

I Stopped Buying Domain Names

I believe I was one of the first SEOs to publicly highlight the benefits of exact match domain names. Back when Google engineers were dismissive of it some of the smart money was dismissive of what the engineers stated and made plenty of money from it. But I have prettymuch stopped buying domains at this point...as in most cases the valuations generally don't make sense on a risk adjusted basis in the current market (let alone what the market will look like after the introduction of +1 & other brand signals).

Deep Pocketed SEOs Are Selling Their Domain Names

The person who was likely the single SEO most responsible for running up the price of exact match domain names (he over-paid for some of them based on the presumption that the numbers would back out similarly to some of his earlier investments in a market that was dominated by a government-sponsored bubble) has now become a domain seller.

You don't get much more amoral capitalist opportunistic than this person is (see the following before and after for his payday loans effort)

Now even he is now dumping many of his exact match domains, which I discovered in the most recent Media Options newsletter:

In March Matt Cutts talked down exact match domain names, but the truth is that Google never really needed to discount them, simply by adding more criteria to the relevancy algorithm which boosts brands they already had the same impact.

Search has moved away from relevancy toward promoting brands. As SEOs we don't control Google. We can only focus on promoting that which they reward.

The smart money is now saying that domain names are generally significantly overpriced, especially as an asset class valued based on SEO potential.

Where do you place your wager?

Published: May 26, 2011

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Comments

May 26, 2011 - 7:25am

...that I couldn't fit in the above post, the first because it is sorta unrelated to SEO & the second because it is more speculative:

  • Google also hit PPC parking revenues hard by being so dominant in search that they forced Yahoo!'s bean counter CEO to outsource search to Microsoft. Microsoft was not as reliant as Yahoo! is on trying to hit quarterly numbers, so Microsoft decided to reduce the value of clicks from search "partners" (that include domainers and some forms of arbitrage).
  • In one of Google's new (literally no more than a couple days old) beta search results, they show domain names above the meta description / snippet. That could slightly increase the perceived value of some domain names, but a brand can always leverage relevant subdomains & new domain extensions will soon flood the market, so ultimately any benefit here could end up coming up as a wash.

And if you are hoping that the "brand phenomena" will be a Google-only approach it isn't. Blekko starts with expert tags of the most popular & most well known sites in a niche.

Further, Bing's Stefan Weitz was recently interviewed by Eric Enge. In the interview Stefan pushes the concept of "a web of verbs instead of a web of nouns" and "seeing the web as a digital representation of the physical world." He further claims "Humans have this primal behavior around the social experience where we almost always ask our friends and acquaintances for advice."

If you unpack those messages (and read the surrounding context) he is basically selling the idea of brand, so Bing plans on playing a fairly similar game to Google, even if they use different words to describe it.

May 28, 2011 - 10:07pm

Not sure you really wanted to bring the domainers over but you succeeded. That and Berkins scraping just about your entire post and republishing it on his blog.

Once you're done with the "domainer" conversations (arguments), there's some good stuff here for SEO discussions. I suppose the best place for that is in the private forums though. See you in there.

PS: if it really is a domain investing issue, they ought to look at market pricing vs. end buyer types over the past 3 years. If the data were clean enough, I'm pretty sure they'd see excellent tracking of Google's manipulation of the marketplaces across the majority of domains (excluding the generics hyped by domain investor marketing efforts.. the ones with high dollar prior sales). I bet way better correlations than the normal BS I read e.g. Internet growth, companies coming online, "category killer" premium domains.

Show a domain to an SEO and he'll immediately have ideas for what you could do with it in the marketplace, and be able to estimate running value. Do the same to a "domainer" and the name is either worthless or worth millions. Until that changes, credibility is on your side.

July 31, 2011 - 10:58am

Awesome Analysis Aaron! But I would change the Title to Google Controls Its Results or something other than "Category Killer Domains" and then followed by an attack on Premium Name Domains or what I call Exact Match Domains {EMDs].

At the outset, I agree with you that if someone pays an inordinate amount of money for a domain that they are not the sharpest knife in the drawer. When we look at the words Category Killer, is it fair to elaborate on that and say that someone is purchasing a domain to dominate an entire commercial sector on the internet? If the answer to that inquiry is yes, then they are foolish to believe they can do that. They are foolish because Google places what they want in the best position and it has nothing to do with your name or how great your content or SEO is on the site. But the beauty of Google's internet, at least from a commercial perspective, is the in the detail, or granularity, of the probable search. Perhaps an example would assist in understanding:

Let's say that Joe wants to repair refrigerators in Spokane. So Joe runs to GoDaddy and tries to buy refrigerators.com Joe quickly finds it taken so he then tries to buy repairrefrigerators.com; but yet again, Joe has been beaten to the punch and it is also already taken. Now Joe has many options at this point but I would like to focus on three of them: (1) He can buy JoesRefrigerartorRepair.com for $10.00 because it is available; (2) Joe could hunt down the owners of the two previously taken domains and try to negotiate to purchase them; or (3) Joe can purchase something like RefrigeratorRepairinSpokane.com for $10.00 which is probably available [If it is not available, I am sure some variation is available]. I contend that option number 3 is the best approach for Joe.

Now, to Joe, the "category killer" is fixing refrigerators in and around the Spokane area and not fixing them nationally. Will Joe have to contend with AdWords? Yes. Will Joe have to contend with Google Places? Yes. But if Joe SEOs his EMD as he would [should] any other site, Joe's $10.00 purchase should kick butt!

I am an EMD believer but it is not a panacea as it must be supported with Content and other reasonable SEO.

My question to all of you individually, and especially Aaron, is do you agree with that Joe should use Option #3 or not? Because I have Read Aaron's work and I am unclear if you beleive that an EMD properly SEO'd and filled with good content [and bought for a normal domain price] has an "edge" in the internet space or not. I would really like to know Aaron's point of view on this.

Thank you for the opportunity to chime-in! Take care and everyone have a nice day.

Steve

July 31, 2011 - 2:59pm

So, my only excuse is I am on vacation but that is a poor excuse. Had I read the exchange between DomainLords & Aaron first, my question would have been answered. I would like to say that there is a new start-up named DotCO Law Marketing, LLC that has invested into an entire set of GEO lawyer domains that covers over 665 top populated cities over twenty-three legal practice areas. An example of it is HoustonDivorceLawyer.co and ElPasoDivorceLawyer.co or GalvestonTruckAccidentLawyer.co and AtlantaTruckAccidentLawyer.co. To be fair, I am one of the owners. I am not promoting the business to be clear; I am simply stating that for one person or entity to truly obtain the lion's share of a sector on the internet, you have to own a boatload of EMDs.

It will be an interesting process to observe how DotCO does. Once again, take care.
Steve

July 31, 2011 - 8:42pm

...one has to look at the existing search results before having an across-the-board opinion. Local vs nationwide are different. City vs city can be different. And even niche or vertical matters as well.

If there is no intent or desire to ever create brand and the market is small enough then sure a literal domain name can work. However it is worth noting that where a person starts off with less ambition they might have more later down the road...so that is another factor as well.

In the above example there isn't a lot of risk in the $10 EMD and it might be a good strategy. However the above blog post about the demise of "category killer" was more about the 6 and 7 figure domain names that (in spite of such investment) are often stuck on page 2 or 3 of the search results as brands passed them up.

Best of luck with your domain names. I am a bit skeptical of the model, but you are targeting a parasitic industry that is highly overpriced for consumers & heavily corrupted, so there should be plenty of ad Dollars to flow around.

May 26, 2011 - 11:18am

Certainly agree about Google improving visibility for brands. But basically, they both need and deserve it.

The new URL changes made by Google (URL's showing above description text) is certainly a step in that direction - favoring major brands. However, I kind of like it :)

May 26, 2011 - 11:57am

What does this mean?

"Google improving visibility for brands. But basically, they both need and deserve it."

Historically most economic innovation has come from smaller entities. Relying on the big brands simply retards that innovation.

May 26, 2011 - 1:00pm

Aaron, I like your honest and open thoughts on what Google is and shouldn't be doing. I'd like to give my 2 cents here: from the looks of it, competing in the SEO game just got harder and creating a profitable bizz that (for a large amount) depends on SEO just went from a medium long term to a looooong term gig because of brands and more, or so it seems. It will simply take much longer to rank AND more keywords to rank with...

But on the other hand: SEO is "professionalizing", meaning your competition finds it much more difficult to compete as well and find themselves going from having a good idea of what they're doing... to having half of an idea to no freaking clue.

Therefore, in the land of the blind the one-eyed man is king. I think it's actually a HUGE advantage when you're not in the SEO niche, because sure it may take long to be profitable thanks to SEO... but only if your rivals know just as much as you do. Thinking along those lines, I love how I force myself to learn more about (and practice more with) SEO every single day of the year.

May 26, 2011 - 3:11pm

...as SEO gets more complex it means that the marketing approach will need to become more holistic. Of course that will impact some players more than others & will impact some in positive ways while others in negative ways.

To a brand that already has many brand signals this will not force them to learn anything new. They simply were pushed into a top rank based on the virtue of their brand strength and the momentum of their company history (in spite of their ignorance of the SEO trade). To smaller players that are thrown under the bus: absolutely it is innovate or die / eat or be eaten.

I totally agree with you on their being an awesome multiplier effect. When you take a big brand AND strong SEO knowledge the SERP is your oyster. :D

May 26, 2011 - 1:39pm

This is precisely why I don't bother buying domains anymore.

May 26, 2011 - 3:15pm

...more that this sorta highlights some of the issues with the "category killer" domain name concept.

You can be a "category killer" market leader one day, and then the next you are displaced by a new type of vertical search, a brand-focused algorithm, or a new Google ad program.

I wasn't saying that domain names are worthless, but rather that many premium domain names have a price that is far more premium than their actual value.

May 26, 2011 - 1:48pm

Thanks for the shout-out, Aaron. Glad someone enjoyed my deranged scribblings :)

I've had mixed feelings about this progression. On the one hand, I do think big brands got where they are for a reason, in many cases, and the weight of exact-match domains has gotten out of hand (historically). On the other hand, it feels more and more like the "democratization" of the web is a thing of the past.

I suppose it was inevitable, but the days when a small business could compete on the web just by getting there early and getting a few aspects of SEO right are almost gone. Online and offline factors are converging, and we're going to have to go back to building businesses the old-fashioned way.

May 26, 2011 - 3:21pm

...is figuring out what "the old fashioned way" is in a global environment where leading search providers tilt the table against copyright (& original source attribution), tilt it toward brand, and in a world where more things are happening virtually.

Not sure if you saw this article, but now Chinese prisoners dig out coal mines during the day & farm virtual gold at night:

As a prisoner at the Jixi labour camp, Liu Dali would slog through tough days breaking rocks and digging trenches in the open cast coalmines of north-east China. By night, he would slay demons, battle goblins and cast spells.

Sorta humbling feeling for me to read that one!

May 26, 2011 - 6:54pm

No argument there. In theory, some big brands got where they are fairly and deserve authority. In practice, Google's implementation seems crude at best and deliberately unfair at worst. I don't want the online world to just become a 1-to-1 mirror of offline advertising dollars.

Perspective is a scary thing some days. I certainly don't like thinking about how people are literally killing themselves to build me an iPhone, let alone level up somebody's WoW character.

May 26, 2011 - 1:50pm

It's obvious that Google is working hard and unapologetically toward pushing sites ranking organically deeper into the SERPS in an effort to boost the value for their paying ad clients. But not all exact match domain names are worthless...for example, one of my clients I'm doing SEO for is getting beat for the keyword "faux wood beams" by...who else...fauxwoodbeams.com.

But the keyword only attracts about 2,400 searches a month, compared to say Arron's wine racks example. "Wine racks" generates about 110,000 searches a month, and wineracks.com is currently ranking below the fold. Half the page is dominated by ads, whether they are product or text ads. Further driving Aaron's point home, the top organic ranking goes to wineenthusaist.com, a domain name that was able to rank regardless of it's obvious distinction from the keyword.

May 26, 2011 - 3:25pm

...rather that the "premium" ones (especially those sold as "category killer") are often priced north of their intrinsic value.

May 26, 2011 - 2:45pm

Aaron,

I applaud you and your staff for your keen insight. Your blog articles never disappoint.

One day, when Big Brother comes knocking on Google's monopoly, they will only have to go as far as seobook.com for well-documented reference to their manipulative patterns & behavior.

Bravo.

May 26, 2011 - 3:33pm

History repeats itself and day will come when gravity will pull the apple. Google has been killing small business to an extreme level past few years and specially past few months.

They are trying to get every pie of it before it is too late. What I hate the most is that Google is getting into every single hot vertical.

When they will hit mine or yours? We don't know but it is in their Agenda.

Thanks for sharing your thoughts with us Aaron, you are one of those guys that speaks out the truth everything else out there is brag about billion dollar brands that can do whatever they want.

May 26, 2011 - 5:52pm

Aaron, you're missing the big picture here. Most companies of any real size will be doing paid advertising in tandem with their SEO efforts. And that's an area where exact-match domains have played and will continue to play a key role, since the right exact-match domain will generate a higher CTR (and correspondingly more traffic/a lower CPC) than "branded" alternatives, assuming we're not talking about a case where there's a clear "household name" company in the mix.

I covered this in my case study, where I pitted "electric bicycles" against 2 branded alternatives, and managed to generate a near-doubling of CTR for the same ads, bids, keywords, etc. In other words, the ONLY difference was the domain name. http://www.memorabledomains.co.uk/ppc-generic-domains.html

This is down to the fact that Google will bold the URL if it is an exact match to the search in question, so you've got one ad where the URL is lit up like a christmas tree and therefore stands out from the crowd. At the same time, there's a psychologically compelling "click" of recognition when people see and take note of the URL, since it matches their train of thought at the time they conducted that search.

Because the CTR improvements have literally nothing to do with Google's algorithm, they're not going to go away - if anything, the owners of exact-match domains are having a field day right now as Google is experimenting with adding the domain name at the end of the ad title, and also moving the URL up to be the second line of the ad (thus bringing the highlighted text into even more prominence).

So any company spending a reasonable amount on PPC should sit down and do a bit of math, and see what this kind of CTR improvement might mean to their ad budget, sales, ROI and bottom line.

And that's before we even start to consider the roughly 90% of advertising that takes place offline, where an exact match domain can really help because it makes the URL to be visited (when such a call to action is desired) much, much easier to remember. Instead of forcing somebody who is being bombarded with marketing messages and who has an extremely limited attention span to 1) learn what your company does and 2) remember a contrived URL, they instead only have to remember a URL that fits into their existing thought pattern. A frictionless process, that again will pay huge dividends in terms of ROI.

Beyond that, there's also the "credibility boost" which, while unquantifiable, is nevertheless very real. If you're competing against 100 other companies to sell a particular product/service, the fact that you have THE domain name that EXACTLY describes that product/service helps to make you look like the leading player in the market rather than just another also-ran.

So even if there was literally ZERO SEO benefit to be wrung out of an exact match domain (which will never be the case, since the credibility factor alone makes it easier to build links, for example) there is still massive value in securing the right domain name for companies savvy enough to look beyond the very narrow issue of Google's possible dialling-down of some nebulous "SEO boost" given to exact match domains.

Oh, and then there's Bing - but I think I've made my point!

May 26, 2011 - 7:50pm

assuming we're not talking about a case where there's a clear "household name" company in the mix.

In most areas where there would be what someone would call a "category killer" domain name (where someone is spending deep into 6 or 7 figures) then there likely is going to be branded competition.

Please note in the above blog post I am not discussing spending a couple thousand Dollars here or there, but rather the "category killer" names...especially any such names without a strong pool of type-in traffic.

So any company spending a reasonable amount on PPC should sit down and do a bit of math, and see what this kind of CTR improvement might mean to their ad budget, sales, ROI and bottom line.

If it is just for the one-off sales of a near commodity, can't many of these advantages be had by building on a weaker and cheaper domain extension? Can't they test proof of concept on this with a few hundred Dollar purchase of the .biz or .info or .co domain, before buying the "category killer" which might be priced above market?

And if it is for building a relationship with recurring customers, isn't building a unique brand going to lead to more repeat sales than being overly generic?

And that's before we even start to consider the roughly 90% of advertising that takes place offline, where an exact match domain can really help because it makes the URL to be visited (when such a call to action is desired) much, much easier to remember.
...
A frictionless process, that again will pay huge dividends in terms of ROI.

To some degree the lack of friction on the way in is also a lack of friction on the way out.

When I look at actual offline advertising I may see an occasional TV ad for CreditCards.com or Hotels.com, but I have seen way more commercials for Snuggie, Priceline, or even Education Connection. Brand makes it memorable & means that if they look for you then they will find you. If you are generic (and search engines put ads above the organic results while replacing browser address bars with search boxes) you could still end up having to pay a fee for the "organic" traffic demand your ads generated.

the fact that you have THE domain name that EXACTLY describes that product/service helps to make you look like the leading player in the market rather than just another also-ran.

And what should they do if they can't afford all of them, or they miss one, or 500 new domain extensions are created and a competitor later buys one of the other extensions to clone a lot of what they have done?

If they are generically descriptive they can trademark their logo, but they can't have trademark protection over the words.

Oh, and then there's Bing - but I think I've made my point!

In my first comment on this post I highlighted how Bing is moving more toward a web of verbs & the web as a digital representation of the physical world. To me that highlights they are also following the 'brand' playbook.

May 26, 2011 - 5:55pm

I started moving away from an automation-heavy strategy to a brand-heavy strategy in the summer of 2008. Schmidt is right.

Some guy sent me an e-mail the other day about how he wanted to me to evaluate a very complex product. I told him that it would a few thousand dollars of my time to evaluate the product and this his "free" offer wasn't free at all.

I've sat on both sides of the table for enterprise software sales and what's frustrating is that the process takes so long. Often when you add up the time of all the executives at both companies, you find that $70,000 was spent to decide to buy a $20,000 product.

Brands are awfully appealing when you look at how crowded the marketplace is; looking at all the choices is exhausting and going with a brand you know is a good answer to information overload. It's a winner-take-all situation, but that's the way it is.

May 26, 2011 - 6:56pm

...the more people will rely on social cues and signals of trust.

I have turned down some SEO projects where they could have been a worthwhile engagement without the legal team and such. But you get legal & accounting & etc etc etc ... and all these folks want to justify their own existence & pull a power play move, to where it can literally add an order of magnitude difference to the actual price (and moreso if you figure that there will be some churn anywhere into the sales process). And no value is being delivered for a lot of that extra cost, it is just more cost that needs to be passed on to make up for the associated inefficiency.

May 26, 2011 - 5:57pm

Sorry, forgot to add: the more Google makes it hard for companies to get traffic organically, the more important it becomes for them to seek out an edge - any edge - in the paid PPC advertising race.

So as Google clutters the results with maps, photos, images, in-house results from group companies, places, etc. etc. merchants are going to HAVE to turn to PPC to replace the lost traffic (Google's plan all along, of course - it's as clear as daylight) and the one un-replicable edge they can secure for themselves is the exact-match domain for their main keyphrase, since all other aspects of the PPC process (keywords being bid on, landing pages, ads, budgets, bids etc.) can be replicated by competitors, but the exact match bonus - the one Google really CAN'T take away - will accrue to them and them alone.

May 26, 2011 - 7:30pm

the one un-replicable edge they can secure for themselves is the exact-match domain for their main keyphrase, since all other aspects of the PPC process (keywords being bid on, landing pages, ads, budgets, bids etc.) can be replicated by competitors, but the exact match bonus - the one Google really CAN'T take away - will accrue to them and them alone.

The reasons I disagree are:

  • Those operating at the brand level generally have higher lifetime customer value. Sure a person can rip off landing pages & other concepts, but one can't easily re-create a brand. Branding is why the iPhone market is still so big in spite of Google trying their best to clone as much as they could with Android. It is also what allows easy cross-selling & testing the boundaries of a market. Apple was computers then music players then phone & they didn't have to start from scratch on each iteration, as they were natural extensions.
  • Currently people generally do not pay as much attention to domain extension as we give them credit for doing. In spaces where a "category killer" .com name can cost a million Dollars or more there is likely a similar .info or .biz domain name for a few hundred Dollars. (Saving a million Dollars upfront makes for an awful lot of margin savings.)
  • Soon there will be a flood of near-match domain names from alternate extensions entering the marketplace, which will likely be used by lots of seedy players to sorta fake the perception in quality, which in turn could taint a user's perception of the importance of domain name matching & the quality of matching domain names
  • Advertisers can use faux subdomains in display URLs to give themselves much of the perceived relevancy juice that an EMD would have. And they would have all the benefits of being a brand as well.
May 26, 2011 - 6:10pm

BTW Aaron, I've been consistently skeptical about high-priced exact match domain names, even after you brought some industry heavyweights in to smack me down. ;-)

I like exact match domain names as much as the next guy, but putting on my search engineer hat, it's pretty clear that the signal from an exact match domain name is "80% probability that this is a worthless domain parking site." Had domainers spent some of their $ on developing their sites and producing serious destinations, they could have changed this, but instead they tied all their capital up in their names and now it's too late.

If the market in domain names was healthy, then you might think that owning an expensive domain name would be a sign that the domain name is owned by somebody who's got capital to invest in making a good site and for whom it is worth a lot because they monetize it well. The fact that so many high-priced domains are on domain parking pages shows that the opposite is the case, and has always been at the cornerstone of my argument that domains are overvalued.

People don't buy Manhattan real estate to fill it up with worthless junk.

Why is the domain name market broken? I really don't know, it would be a good subject for an economics grad student to investigate, but economists don't seem to believe that markets fail. My impression is that there are two kinds of buyers on the domain market: (i) domainers who want to buy CHEAP (really cheap!) and sell high, and (ii) people who've got more $ than brains. Sometimes I see domains that I think are a good deal, where the $2000 for the domain probably is worth more than $2000 of content development and/or link building, but most of the "web developers" (like real estate developers) that I know hate domainers and wouldn't even buy a domain from one for $50 or $500.

May 26, 2011 - 7:21pm

...is largely driven by a parking model which made hoarding highly profitable. That coupled with the perceived scarcity allowed prices to jump up. (I use the word "perceived" because they absolutely are scarce, but a flood of new extensions in the next few years will likely dilute many existing extensions).

Then people hear stories of domain x going for $y & that makes them think one of their names might be worth that as well.

There was a domain name my wife wanted that I was comfortable spending about $5,000 to $10,000 on & she wanted it bad enough to go up to $50,000 on it. The guy countered with $5 million, and it wasn't even a .com domain name! :D

You generally only get to sell a given domain name once. The fear of loss is a powerful human motivator. What if you say that you accept $5,000 and eventually someone would have paid 10x, 100x, or 1000x that.

Of course waiting on the big payday lotto ticket isn't practical or rational, but then people lose billions of Dollars a year buying physical lotto tickets as well. A well known economic concept: people tend to overweight low-probability events. It is the same reason why so many Americans think that they themselves will become one of the few rich folks, even though the odds are stacked against them.

The difference between a lotto ticket and a domain name is that a domain name is more like a prize linked savings account. One holds it to keep some of their savings in place, & patiently waits with the hopes for an anomaly to become reality.

About the only marketplace built around having significant domain name turnover is BuyDomains. All the other large domain collections of premium .com's have either been cobbled together by end users over time, or are owned by some people who have limited need for cashflow and lots of savings from nearly a decade of running a high margin business. There were only 4 big portfolios created: Kevin Ham, Frank Schilling, Mike Mann, and Yun Ye. Yun Ye sold his portfolio to Marchex for $165 million & Marches doesn't really sell many names (though I think they sold creditcards.net pretty cheap a few years back). Mike Mann's BuyDomains has already sold off many of their best names. I believe Frank Schilling is slowly selling some (but likely buying way more than he sells still) and Kevin Ham has been doing some development & isn't in any rush to sell either.

I think the biggest difference between real estate & virtual real estate comes down to taxation. If you own websites or domain names those are not taxed unless it is the profits being taxed (and for Frank in the Caymans I think that tax is $0). Whereas if you buy expensive physical real estate you immediately have to pay taxes on it. Some spots charge something like a couple percent a year of the land's appraisal value. Thus sitting on expensive land immediately costs large sums of money, whereas sitting on domain names only costs less than $10 per name per year.

May 26, 2011 - 6:29pm

I agree. Please email me immediately and I gladly will help anyone get rid of their category killer domain names. Out of the goodness of my heart I will be more than happy to help them unload their premium domain names ASAP :)

May 26, 2011 - 7:01pm

I highlighted 3 in the above post. Then yesterday I think there was WorkFromHome.org @ $175,000 and today there was something like StopSmoking.org @ $90,000.

If you buy any of those and manage to make a profit please let me know!

My point is not that they are of no value at all, but rather that the prices they are trying to sell them for far exceed risk-adjusted potential returns. Some of the above names were brought to end users in those niches that know SEO as well as I do, and even they turned them down. When the price is north of end-user price for an end-user who is already highly successful & knows SEO then the price doesn't make sense.

In any investment there is a risk that you won't get your money back. And if the algorithms are moving in the direction of brands, when your spend gets in the mid-six to seven figure range then sometimes it is better to go the branded approach right from the start.

May 27, 2011 - 8:08am

Very good Post Aaron, in terms of content & Juice.
The EMD examples used are all quite low level ( I agree overpriced, market rules) would your rationale be the same for what I consider premium domains (verticals) Toys.com AutoInsurance.com LifeInsurance.com ?
The price you pay is your gain or loss, so ignoring $$$ are you saying that the premium EMD will have little advantage to the SEO professional in the future Google ?
IMO the EMD is soon to be the only way to compete with the established brands.

May 27, 2011 - 9:28am

The price you pay is your gain or loss, so ignoring $$$ are you saying that the premium EMD will have little advantage to the SEO professional in the future Google ?

I disagree entirely that one should ignore the purchase price. Domain names are a highly illiquid market. In some cases money is made the day the domain is purchased. In some other cases, the purchase price is so high that one can only make money if they sell it to a greater fool. A lot of the most famous big money domain name purchases (Sex.com, Business.com, CreditCards.com, Beer.com, Deposit.com, Beauty.cc, YP.com, Call.com) have either led to bankruptcy, have been resold later at a lower price, have simply been used as a redirect, or have not evolved beyond a parking page.

There are some that have surely been home runs (especially if purchased by a larger company that trades at a higher multiple & is funding growth through acquisition). I am sure Quinstreet has done well with their recent insurance acquisitions. But it is absolutely critical that you concern yourself with the price paid, because it is literally the only way to compare the value of the domain against potential returns & against the potential returns of other investment opportunities available in the same price range.

IMO the EMD is soon to be the only way to compete with the established brands.

Of course there is also the option of creating a brand ;)

May 27, 2011 - 10:05am

Aaron@ I ignore the purchase price as a entirely separate comment from the mechanics of SEO . The markets will dictate values, gold bar or black tulip.
"are you saying that the premium EMD will have little advantage to the SEO professional in the future Google ?"
"Of course there is also the option of creating a brand " I agree but it seems to me that the EMD can be a very cost effective way to market the brand? a stand alone authoritative site (DMV.) carries a brand comparison platform, effectively creating a brand. Quinstreet could have used the EMD's to create a new brand comparison model.
I simply ask if in your opinion the premium EMD will have little advantage to the SEO professional in the future Google ?

May 27, 2011 - 12:53pm

Aaron@ I ignore the purchase price as a entirely separate comment from the mechanics of SEO . The markets will dictate values, gold bar or black tulip.

In shallow illiquid markets this is not true.

Even in broadly traded deep markets (like the US stock market) there are times when the market increases in price by nearly 100% over a couple years, & other times when it loses over half of its value in a year.

Efficient market theories are often false when it comes to determining value. Another horrible example was the hair dye people would pay to use which gave them cancer...or an asbestos apron!

"are you saying that the premium EMD will have little advantage to the SEO professional in the future Google ?"

If the market is deep enough that a top domain would sell for a half-million Dollars or more. then it is likely deep enough that there are brand advertisers playing in the market. Geico spent something like $900+ million a year on advertising. That creates a lot of brand signals that almost no exact match domain can compete with.

"Of course there is also the option of creating a brand " I agree but it seems to me that the EMD can be a very cost effective way to market the brand? a stand alone authoritative site (DMV.) carries a brand comparison platform, effectively creating a brand. Quinstreet could have used the EMD's to create a new brand comparison model. I simply ask if in your opinion the premium EMD will have little advantage to the SEO professional in the future Google ?

The answer isn't really a flat yes or no...one has to look at costs. But generally, I think in markets that are smaller with fewer signals then in some cases they could be somewhat under-priced. In large markets where there are many signals that search engines can track they are often significantly over-priced.

May 27, 2011 - 3:33pm

Think we are talking at cross purposes, or perhaps I'm misunderstanding the comment. By stating "I ignore the purchase price" I mean to isolate the value of the EMD in SEO terms only, What you would do for the client as an SEO professional, what the client paid is not relevant to you, health & safety is an outside influence as is the federal reserve.
"Geico spent something like $900+ million a year on advertising."
> Google North America search term Auto Insurance (not paid)
> (1) Geico.com
> (2) AutoInsurance.com
> -------------------------
> Search term AutoInsurance
> (1) Progressive.com
> (2) AutoInsurance.com
I do not know how much AutoInsurance.com ad spend is but I am willing to bet it is not $900+ million a year.
Ref: "The answer isn't really a flat yes or no" That contradicts much of your excellent post.
Two stalls is a market place. The markets decide the sale value Gold Bar, Black Tulip or American $ financing government bonds through the artificially low yen : )

May 27, 2011 - 5:18pm

I see

...

statefarm.com
geico.com
esurance.com
[local block]
progressive.com
allstate.com
safeauto.com
nationwide.com
thegeneral.com
libertymutual.com
travelers.com

And this in spite of Quinstreet recently paying something like $50 million for CarInsurance.com.

I saw CarInsurance.com ranking #19 for "car insurance"

The big issue is these brands not only clean up / dominate CarInsurance.com for it's own core keyword, but they also rank well across the tail of search too.

Sometimes non-branded / generic sites manage to rank well, but the general trend is pushing toward brand & away from generics.

Think we are talking at cross purposes, or perhaps I'm misunderstanding the comment. By stating "I ignore the purchase price" I mean to isolate the value of the EMD in SEO terms only, What you would do for the client as an SEO professional, what the client paid is not relevant to you, health & safety is an outside influence as is the federal reserve.

But to me, what the client pays would be relevant. I can't suggest they spend unlimited sums of money if I am uncertain of its potential.

In some cases I might suggest a client buying a domain name just to keep it off the market, but if they already have a strong brand then a good number of key domain purchases would be more as a defensive insurance policy than as an offensive SEO tool.

Ref: "The answer isn't really a flat yes or no" That contradicts much of your excellent post.

Not really. I stated that "category killer" branded domains are generally overpriced given current market conditions & trends. That does not mean that there are no deals to be had if people have asymmetrical information advantage, knowledge of certain growth markets that are less established, and are willing to hunt through the bargain bins to find something good.

Markets are rarely overpriced everywhere at the same time. Like when stocks cratered during the great recession some fell harder than others, whereas some others (Green Mountain Coffee, Netflix, etc.) stayed fairly strong due to improving fundamentals in spite of deteriorating market conditions.

Two stalls is a market place. The markets decide the sale value Gold Bar, Black Tulip or American $ financing government bonds through the artificially low yen : )

There is a difference between trading commodities with thick and deep markets than there is trading one off collectibles. I used to collect baseball cards & it was all about mass production in the late 80s & early 90s. Then they started making rarer cards, where a limited run of 10,000 was special. And then they started autographing them and putting a piece of jersey in the card and limiting them down to 25 pieces (or even less in some cases). At some point the popularity breaks down as the scarcity makes the market too thin. So a lot of people own rare things which may (or may not) have value...depending on how & if supply and demand manage to meet.

Some collectors hold their baseball cards until after the player retires & when he is no longer in the news the value drops. Will that happen to domain names? Some yes, others not so much. ;)

May 27, 2011 - 6:25pm

the reason smart money is getting on insurance.com and carinsurance.com

those in the know have been writing for a while now about the real costs of geo cpc for these terms, it's way above what google estimates shows

so the smart money knows, eventually, one of the huge insurance companies will have to control the top .com's for one reason, it's one of the cash cows now of google, insurance sem

a top insurance company may very well end up with 1B + invested eventually in a few top level .com's for all the top insurance terms, so investors are now sinking huge bucks into the top .com's

the end user(s) will be the top insurance companies in the world soon, since cpc on all insurance terms are now through the rough

then you will see the content google wants on these .com's and they will be #1 and they will all have huge sem budgets on them

and all the leads will go to what will become the global insurance company in the world

the company that controls 5 or so .com's for insurance will become the top insurance company in the world

insurance.com
carinsurance.com
autoinsurance.com
lifeinsurance.com
homeinsurance.com

those are the jewels

and yeah, eventually an insurance giant will wake up and put 1B+ into them

so 35M or 50M here and there is cheap, once you understand that 50M people a month look for these terms

May 27, 2011 - 8:13pm

...there are less than 50 million searches for keywords with "insurance" in them (according to Google's keyword tool). A little over half of that volume is in the United States. When you get to the exact match volumes for those core keywords the volumes become closer to 100,000 to 160,000 searches a month. Google likely sends over half of that search volume out through the AdWords ad clicks. And then for most of those keywords the exact match domains do not rank #1.

May 27, 2011 - 7:44pm

Aaron Do not play games, it devalues your personal integrity : My comment I used the listed comparison Auto Insurance which I believe is the natural search term for a U.S. citizen. I see (UK based) =

http://www.google.com/#hl=en&sugexp=ldymls&xhr=t&q=auto+insurance&cp=6&q...

http://www.google.com/search?q=auto+insurance&btnG=Google+Search&hl=en

The client would not inform you what they paid, why would they? you would be company employee doing your best in SEO terms.

Where did "one off collectibles" come from? (baseball cards) or any other commodity The market economy rules. Why on earth would you debate that of all things? I started off enjoying the post but I am losing faith in your integrity.
I cannot understand your comment "willing to hunt through the bargain bins to find something good."
In SEO terms EMD are valuable or they are not "The answer isn't really a flat yes or no" means nothing and does contradicts much of your excellent post.
Google is about about authoritative websites, brand or charity IMO Google will not lose sight of that ideal.

May 27, 2011 - 8:30pm

Aaron Do not play games, it devalues your personal integrity

I find the comment insulting that someone comes on my site and tells me that I am "playing games" and that it "devalues your personal integrity"

In short, that is rude.

That post took hours to write & so have all my responses. All of that work was done for free. And it wasn't a bunch of random loose assertions, but rather points made backed up by screenshots.

My comment I used the listed comparison Auto Insurance which I believe is the natural search term for a U.S. citizen. I see (UK based) =
google.com/#hl=en&sugexp=ldymls&xhr=t&q=auto+insurance&cp=6&q...
google.com/search?q=auto+insurance&btnG=Google+Search&hl=en

What you see in the UK and what I see in the US are different. This was my point about localization in the above post. The results can be VASTLY different on a city-by-city basis. Read the part about localization again.

Did you NOT see the above post where I highlighted StateFarm having 5 listings on the first page of search results?

The client would not inform you what they paid, why would they? you would be company employee doing your best in SEO terms.

So in the above scenario I arbitrarily go from being a boss who runs multiple profitable operations to a marketing employee who is ignorant about key marketing decisions?

No thanks on that.

Yet another "opportunity" I would choose to pass on!

Where did "one off collectibles" come from? (baseball cards) or any other commodity The market economy rules. Why on earth would you debate that of all things? I started off enjoying the post but I am losing faith in your integrity.

The collectibles analogy is almost a perfect fit. Everything in the world has value curves which rise & fall. A baseball player retiring is not much different than a domain lander page which has failed to evolve with a web (and search algorithms) that are closing in on being a couple decades old. Domains will always have some amount of value (just like a baseball card), but once a player is out of the lime light (or a domain goes unused for too long and the algorithms get more complex) the potential value is diminished.

I write the above as a person who collected baseball cards for many years & as a person who has many domains. Likely more than the average domainer does (but certainly not at Frank Schilling or Kevin Ham levels though). :D

I am not concerned that everyone trusts and understands me...mainly only that I do & people like me see where I am coming from.

A line which comes to mind here (when thinking about the black and white nature you propose answers for to subjective markets that frequently change:

"It is difficult to get a man to understand something when his job depends on not understanding it." - Upton Sinclair

I cannot understand your comment "willing to hunt through the bargain bins to find something good."

I have bought domains for $2,500 that are better than some of the names which webmasters are trying to sell for $100,000 or more. In that case I hunted through the bargain bin and made good profits for my efforts. Other times domains were priced at nuts levels that would never back out profitably, so I did not buy them.

In SEO terms EMD are valuable or they are not "The answer isn't really a flat yes or no" means nothing and does contradicts much of your excellent post.

When you look across the web there are some easy wins in some markets that won't work at all in other markets. Taking that into account (and pricing, which can't be ignored, when one cares about profits & expenses) it is clear that there are some areas where there is opportunity and some areas where the relative cost can't be justified based on market metrics.

May 28, 2011 - 7:21am

I do not mean to be rude, just factual.
Last comment as we see different things. I type in Auto insurance and you see car insurance? strange.
Try typing in Auto Insurance again (Google.com & Google North America) as per my links.
For some reason CarInsurance.com has never ranked ranked High and now it is part of the Quinstreet stable it's possible that position might change or get demoted as AutoInsinrance.com is primarily the same content.

"I arbitrarily go from being a boss" You simply delegate the SEO work to your SEO proffessional Why would the CEO inform the the SEO / Marketing team what was paid for the EMD, or the new office after the event.
"some areas where the relative cost can't be justified based on market metrics." I agree but that is all about values and The markets decide the sale value = the highs, lows & mean average, overall or categorised in whatever form over however long. Two stalls in a market place. (you drive the traffic&rent more stalls)
Bottom line is "The answer isn't really a flat yes or no" means you do believe EMD are not valuable in SEO terms.
Still opportunities in foreign language markets (line that comes to mind)

“Willy Brandt, a former German chancellor, once said: “If I’m selling to you, I speak your language. If I’m buying, dann muessen Sie Deutsch sprechen [then you must speak German].”

May 27, 2011 - 8:32am

How much of a virtual DICTATOR can google become before awareness strikes? How much money can they milk off of searchresults before users see that they are skewed, and choose an alternative? Google can´t reign for eternity right? They should be bound to make the mistakes every behemoth eventually does. Although it seems hard to imagine.

Questions, questions.

May 27, 2011 - 9:09am

... most people are generally lazy and apathetic. As long as the central network is something like 90% as good as other options (and/or introduces other switching costs like: personalization, email, security, cell phone bundling, payment handling, etc.) most people will play right into without questioning it (beyond wondering how it got to be so convenient).

Societies are very good at getting people to not see the hidden costs of certain behaviors. Apathy means that most people don't care until after it is already too late!

May 27, 2011 - 12:13pm

Just look up any Geo Lawyer or Geo Attorney search now on google. First view is 5 ppc ads and 2 maps associated with ppc budgets, and you know what EMD gets right to the head of the line with content and a ppc budget jumping ahead of all other domains. So the only difference now is you have to associate PPC to EMD and then you own google in your market. Shhhhhhhhhhhhhhhh

May 27, 2011 - 12:46pm

I would love to see a screenshot of the 5 PPC ads above the fold layout.

May 27, 2011 - 5:48pm

just look up

los angeles injury lawyer

3 ppc ads top left
2 ppc ads right side under map
2 maps

if you view in the 'average res'

5 ppc ads and 2 maps is all you are supposed to see now on google for high cpc terms

http://www.google.com/#sclient=psy&hl=en&source=hp&q=los+angeles+injury+...

so you let some putz post lies about me that's a member for 2 hours

amazing

May 27, 2011 - 3:53pm

Aaron DomainLords is, how to put it delicately...... A psycho. He's been spamming the domain boards for months now with random crazy talk. Personal attacks against people in the business. Wild accusations, mini SEO wars, some connection to SOLLOG... It's been a train wreck, but amusing to watch for sure.

I've seen his entire portfolio and I'm not impressed. What's amusing is that his methodology is clearly in violation of Adwords TOS and yet he's still running his little SEM business uninterrupted. He claims to be do millions a year in revenue...

He's doing garbage SEM for some local businesses. Stuff like [edited out this bit]. Then there's the real classy sites like greatwhitefirevideo.info and fuckbarackobama.com. I think if you check any of those sites out you'll find he's clearly not anyone who knows anything about marketing and might be off of his meds.

On a side note, Aaron if you're going to start dumping the KW match domains you own contact me because I'm buying.

~~~~~~

[I edited out his client sites, as I didn't feel sharing those was needed to get the point across, given the other examples & whatnot. It is not fair to put his clients under risk simply because of altercations with him.]

May 27, 2011 - 5:45pm

Nothing but lies, some don't like me calling spades as spades.

a. I'm not sollog
b. I'm not on meds
c. I do high end SEM for lawyers and doctors and other professionals.

And yeah, I call spades a spade.

So ibuy, why don't you link to your site so I can sue your dumb ass for libel.

May 27, 2011 - 7:49pm

Domain Lords,

A. Domain registration records prove otherwise. Genius, you know there are historical records that allow people to go back and see who a domain was first registered to? Even if you have domains in private registration there's a trail.

B. I don't really need to say anything, I think you put it best.

C. I wouldn't classify anything you do as high end.

Hey why don't I just post a list of your entire network of 1600+ sites so everyone can see the high end services you're offering. I don't have to do it here, there are plenty of other places. Or maybe I'll register DomainLordsSites.com and post it there. I don't think I'll have to worry about your TM on "Domain Lords" since you've never actually applied for one.

You should just crawl back into your hole and shut your mouth. Everyone in this industry is sick of seeing your garbage posted everywhere. And libel, really? People who live in glass houses..

I can think of half a dozen people you've said far worse about with no justification. If someone disagrees with your views you bash them, create pages calling them vulgar names. It's like seeing the guy with the sign that says the end of the world is coming, then telling him you disagree. Then he shows up everywhere you are and berates you for not believing him. "This guy is a jerk! He's a pussy! The end is nigh!" "Oh and do you sell floor waxers in Coral Gables? I've got some high end SEM services I'd like to offer you."

I honestly can't believe that anyone does business with you. Do your clients know about what you do with your time when you're not providing them with your "services"?

Crawl back into your hole, no one cares.

May 28, 2011 - 11:54am

Get lost punk, I'm not sollog

Sollog's a recluse

So post your site and I'll prove to you I'm not sollog when I sue the F* out of you

get lost wanker

May 28, 2011 - 9:39am

Aaron, I think by focusing on the domains at the very very very top of the market, the 7-figure names (of which only a few dozen sales have ever been made public) you're missing the huge iceberg that is the "category killer exact match for a niche" for want of a more approachable expression.

By this, I mean that every main product/service will have one or at worst a small handful of ways of being described in a "category killing" way.

And when both the companies selling that product/service and the customers who are interested in buying it - whether individual consumers, B2B, large organisations, whoever - would agree that it can be described in the same way, that's the "category killer" term for that niche.

A few examples, pretty much at random, to illustrate what I mean...
maple syrup, electric bicycles, merchant accounts, helpdesk software, marzipan, chocolate fountains, camping furniture, recording studio, process automation, noni juice

Each of the above represents a "niche". Most of those niches have large numbers of companies fighting it out, in the organic SERPS, in PPC, online and offline, to try and take market share from their competitors. And in every case the .com or .cctld (of the appropriate English-speaking country) is THE category killer for that niche...

There are hundreds of thousands of equivalent niches, and in every single case, securing the exact match domain name will give ONE of the companies fighting for that niche an advantage over their competitors, be that in SEO, in reducing PPC costs, in trust-building and credibility enhancements, in memorability and in all the other ways that the right exact-match domains share their goodness.

Your argument is rather like arguing against cars on the basis that the Bugatti Veyron is over priced, out of reach to the average buyer, and ultimately unnecessary. It may be "true" for a certain value of true, but it ignores the much bigger picture that WE NEED CARS.

(Aside: for every genuine "category killer" there are going to be almost infinite ways of describing that product/service in non-definitive terms. It's only the PERFECT term for that niche that deserves the term "category killer" - but every niche has at least one!

May 28, 2011 - 12:18pm

there's really very few high cpc terms that are established, categories over 20 bucks cpc

you find out where the real cpc money is, and you invest in all the geo20buckkeywords.com/net/org you can

all the 20 buck+ cpc terms are now showing huge sales for major geo areas and the keywords.com are hitting all time highs

insurance.com 35M+
carinsurance.com 50M+

google estimates are way off too, anyone that really works in sem management and handles high end cpc terms over 20 bucks a click, knows what google is showing is often double or triple and even quadruple in real life to buy the terms

try to buy a major geo on car insurance

over 100 bucks now cpc

so 'domainers' really have no clue as to guage the real numbers now within google, as to what is making google all their cpc dough

a few major industries are driving googles cpc income

so the companies that end up with control of a small amount of mega keywords will end up in position in its ability to buy into the first view of google for the mega buck terms

the whole 'tweak' at google was done to do one thing, drive local professionals into ppc

it did

guys that had minor results from old school seo, ended up with nothing on page 1 after the 'tweak'

so they all flooded ppc, and stuff that was 20 bucks in some professions last year, is not close to 100 in some markets

yet the 'estimates' of google doesn't reflect that

you look for 'lawyer' you can see category killers

you look for GEO lawyer or GEO niche lawyer

you see no organic seo

ZERO

that's the new tweak

google killed local seo

so now it's finding end users to sit on high end terms to get discounts with google for using geo keywords and maybe get some map exposure

google knows where they can make money

professional terms, it's the new yellow pages, google is

professionals get new clients from

a. word of mouth
b. google first view

all the bs radio, billboards, print, tv

it's so saturated the ROI stinks

you show a professional you bought 200 clicks this month at google and 80 called you

wow 40% response ratio

X dollars per call

that's all you can do in sem management is prove you are converting clicks into calls

then it's up to the end user to convert into clients

no professionals sell a new client from the net, it's all lead generation, and the old days of hitting first view for most professional terms is GONE

so the value of all these domains now, are only to developers that can marry an end user to a keyword

so large portfolio domainers are done, no revenue from google for free rides anymore

the only domains with income now of any substance all have end users using them

that's the growth area of 'development'

you see ferber's new project, crap, but it shows the concept, domain holdings, what's their pet project

handyman.com and mortgage.org

marrying end users to leads from sub domains

now do it on real industries (not handymen)

lawyers
doctors
surgeons
car dealers
realtors
tradesmen
mechanics

you chase the geos for professions and trades now

you land one client locally, they pay 500 to 50K a month to use your services

that's 'income' from domains not all this bs on parking and adsense

sure you have low grade category domains

there's relative few major industries in the world, if you think about it

travel
banking
casinos
home builders
home sellers (realtors)
medical
law
auto sales
auto maintenance
food

you understand where most 'business' is done in the world, you try to get keywords and you dominate geo keywords

you have the assets worth owning

abc company has a low ctr on google ppc ads since their domain is abc company

you put keyword.com in the ad or .net or even .biz

bingo the ctr opens up

google knows that, so that's why they want keyword buyers

an end user in new york can be a 'tenant' on your keyword.com

his ads say keyword.com

yet they redirect to newyork.keyword.com

so automatically in NY he's the player with google since he's sitting on a golden .com

that's the future of 'domains'

and you're seeing it with big money moving into insurance.com and carinsurance.com

what do you do everyday in life

you pay rent or own a home (housing)
you pay utilities (no domains)
you buy food (local niches geo genre)
you vacation (travel geos)
you buy cars (auto geos)
you fix cars (mechanic geos and niches brakes, tires, etc)
you have insurance (insurance geos)
you do entertainment (maybe casinos online or in person so casino geos)

very few 'domainers' hold these type of assets in bulk

only a few do

those are the money terms

there's a few more

but if the root keyword isn't a billion buck industry

it's not a real 'category'

May 28, 2011 - 3:38pm

There are hundreds of thousands of equivalent niches, and in every single case, securing the exact match domain name will give ONE of the companies fighting for that niche an advantage over their competitors, be that in SEO, in reducing PPC costs, in trust-building and credibility enhancements, in memorability and in all the other ways that the right exact-match domains share their goodness.

Your argument is rather like arguing against cars on the basis that the Bugatti Veyron is over priced, out of reach to the average buyer, and ultimately unnecessary. It may be "true" for a certain value of true, but it ignores the much bigger picture that WE NEED CARS.

There is plenty of buying budget for domains in the say $50 to $5,000 range, but the main point of this post was that the high-six and low-seven figure domain names are at this point often becoming malinvestments.

I think a lot of people may have interpreted my blog post as saying all domain names are done, when rather I was saying in the deepest & most saturated markets (where there are tons of signals for search engines to use) being literal & generic has shifted from being a strong competitive advantage to in many cases being a disadvantage.

For all the flames Domain Lords tends to attract from the domaining community, I think his post expressed along the lines of what I am seeing as well. However the 2 points where we may differ are that:

  • I would add health/drugs/education to that list of core categories (and maybe even self-improvement, though it is composed of many sub-verticals).
  • I am not convinced that the broadest generic domain names + niche relevant subdomains is going to be able to compete in generating enough signal against the big brands when more end user signals are baked into the algorithms.
    • In some cases they will be able to compete, but in many cases they will not be able to compete organically. What is worse is that even with PPC to leads it seems Google is coming from the top down in many finance verticals, hotels & fights, etc.
    • Further, the general model of having the regional subdomains sounds an awful lot like having chain stores with franchises. If that is the case, then where those chain stores are strong (say Chipotle, Starbucks, McDonalds, etc.) then I think one is better off growing one of those than trying to turn MexicanFood.com, Coffee.com or Food.com into something that probably won't be able to compete.
    • Another way to tackle the geo-local vertical is through reviews (Yelp, Avvo, even RipOffReport, etc.) though Google does seem to be pushing hard to displace 3rd party reviews with things like Google Places pages.
June 18, 2011 - 7:53am

I think a lot of people may have interpreted my blog post as saying all domain names are done, when rather I was saying in the deepest & most saturated markets (where there are tons of signals for search engines to use) being literal & generic has shifted from being a strong competitive advantage to in many cases being a disadvantage.

Thanks for that clarification. I had certainly misinterpreted your post that way.

So an EMD could still be a good investment in some cases, especially less-saturated markets.

June 18, 2011 - 10:02am

So there is still a case for the $500 to $5,000 domain name, but the case for the multi-million Dollar domain name keeps diminishing with each new search vertical (that chops search traffic into new streams) and each new search signal that is somehow related to brand (like brand searches, query refinement to the branded version of a keyword, high user engagement, repeat visits, and so on).

May 28, 2011 - 4:03pm

Aaron said: "I think a lot of people may have interpreted my blog post as saying all domain names are done, when rather I was saying in the deepest & most saturated markets (where there are tons of signals for search engines to use) being literal & generic has shifted from being a strong competitive advantage to in many cases being a disadvantage."

Thanks for the clarification. You're right, I read your blog post - and especially the follow-up comments you made - as being pretty much anti-exact match domains in general, so it's good that you made that clearer.

At the same time, isn't it in exactly those ultra-competitive markets that the PPC battles are the most fiercely fought? And as such, why wouldn't companies want the edge (higher CTR, lower CPC, and more traffic) that an exact-match generic can give them? (this is a PSYCHOLOGICAL edge, not an algorithmic one, since it has to do with how searchers view and react to ads, and not to how Google rates and ranks them)

Take two companies bidding on "car insurance". If one owns the domain CarInsurance.com and the other is using a brandable domain, then CarInsurance.com WILL GET MORE CLICKS if the other aspects of the proposition (ad title and text, keywords being targeted, bids and so on) are the same. This applies even more if the competing companies aren't already huge household names.

And if the companies in question are spending 6-7 figures monthly on PPC (which some certainly are, at the top end) that exact-match edge translates into hefty savings and/or an ability to out-rank competitors in the PPC listings at a lower cost per click than those competitors are paying.

So the exact-match domain proposition is more like a jigsaw. SEO is one piece, and that piece may have shrunk a little in importance. But there's also a PPC piece, a memorability piece, a trust piece, a perception-of-market-leader-status piece, a easier-to-seal-partnerships piece, etc. etc. I think last time I tried to make a list, I ended up with 37 defensible benefits to exact-match domains (though some overlapped a bit) of which SEO was just 1!

May 28, 2011 - 4:42pm

isn't it in exactly those ultra-competitive markets that the PPC battles are the most fiercely fought? And as such, why wouldn't companies want the edge (higher CTR, lower CPC, and more traffic) that an exact-match generic can give them?

Ultimately one competes on margins, and keeps getting squeeze as the profits from innovation & such get shipped off to Google in larger batches over times. The answer for many businesses is going to be brand (so you can get repeat visits, greater lifetime value, etc.). That allows you to operate outside of the Google ecosystem, such that when you innovate & create more profits you get to keep those extra profits. A literal domain name (especially only one for paid search) might boost the initial CTR...but then you still have the issue of lifetime customer value...it is hard to build that memorability & an emotional bond with a generic name.

I marketed an ecommerce website where at our peak we were over 10% of the business for the brand they were reselling for...entirely through SEO & PPC. None of the competitors were as efficient as we were (we had the business owner, me sharing in revenues, and a part-time employee who answered the phone). Outside of that we had virtually no expenses that were unique to us (everyone pays for cheap hosting, transaction processing, AdWords ads, etc.).

As Google extended the brand result downward with a triple listing & 8 sub-links our #2 organic listing was virtually pushed off the page on large monitors, and certainly pushed off the page for small monitors. And as far as AdWords goes, everyone was playing Google's game in terms of even using Google checkout to squeeze out an advantage (which ultimately just becomes another technical barrier & required cost rather than an advantage when everyone in the niche is doing it).

The companies that were able to consistently outbid us in AdWords were not the ones with a more relevant URL, but rather those with a wider variety of stock, better pricing power with the merchants (due to doing more volume with their offline stores), a stronger brand, and greater customer lifetime value (due to the wider stock and the offline shopping options).

So the exact-match domain proposition is more like a jigsaw. SEO is one piece, and that piece may have shrunk a little in importance. But there's also a PPC piece, a memorability piece, a trust piece, a perception-of-market-leader-status piece, a easier-to-seal-partnerships piece, etc. etc.

I think you are not appreciating the "memorability" piece from the same perspective I am.

Here is a quick project in terms of memorability:

  • List the top 50 web companies. How many of them are exact match domains for the category they are in?
  • List your 10 favorite restaurants. How many of them use generic names?
  • Look at your checkbook records. How many of the checks that you write are sent to people which primarily conduct their online business through a generic domain name? (eg: domainnames.com, webhosting.com, rent.com, electricity.com, etc.)
  • List the advertiser for the 20 TV ads you remember most. How many of them use generic names?
  • List the last 10 newspaper or magazine ads you remember seeing. How many of them use generic names?
  • Look at who is advertising on the domain lander pages. How many of them use generic names?

If these companies with generic names are so memorable, then why don't we come in contact with them very often in our daily lives?

When people discuss SEO what names & sites get mentioned the most? When people discuss domaining what names & sites get mentioned the most? It is almost never really the category killer, is it? Rather it is typically a person with a decent brandable domain name.

May 28, 2011 - 7:52pm

What is memorable? The Keyword / What is profitable? The Established brand.
The net is still "young" Digital generations are still growing up. As you know Toys.com was not bought to promote. Generic names are not registrable trademarks. The keyword is the only way to compete with the brand or help a create a brand with a low marketing budget. That, as you well know why don't we come in contact with them very often in our daily lives.

May 28, 2011 - 8:22pm

What is memorable? The Keyword / What is profitable? The Established brand.

The keyword concept is somewhat memorable & so is the brand. But the established brand (and loyalty to that brand) is where most of the marketing profits come from.

As you know Toys.com was not bought to promote. Generic names are not registrable trademarks. The keyword is the only way to compete with the brand or help a create a brand with a low marketing budget.

I am not sure how "low budget" it is to spend over $5 million. But Toys-r-us buying that as a defensive registration sorta highlights my point that the big domains are often more a defensive move by established/entrenched leaders than they are a good investment for a new market competitor.

On my localized search result set I see both Toys-r-us & eToys ranking on the first page of Google's search results for "toys" but the domain name toys.com ranks back on page 3 for the single word "toys."

May 29, 2011 - 9:06am

Aaron you queeze the asset (blog post) well & I keep biting : )
You well know that Toys.com will not rank high with Toys-R-Us products centre stage + Toys-R-Us being the registrant. Back to SEO "NOT THE PRICE PAID" as an independent website like 4 like comparison Toys.com would be top of the pile for the single word "toys."

"I am not sure how "low budget" it is to spend over $5 million. But Toys-r-us buying that as a defensive registration sorta highlights my point that the big domains are often more a defensive move by established/entrenched leaders than they are a good investment for a new market competitor."

$5 million certainly Highlights my point that in SEO / Marketing terms the keyword Toys.com was a very serious threat to the brand, this was not a ransom, the brand paid what MARKET FORCES valued the domain to be (2 stalls is a market place) Toys.com would be the brand if $5 million was not paid. (the.com is the brand)

J&J developed baby.com - baby.co.uk very successfully the ROI on Baby.com is huge in terms of monetary, social, & PR.
The brand example (less than ten years old) hoovering up keywords:
Money Supermarket.com Group PLC in the United Kingdom recently acquired Financialservices.net and whose main site is Financialservices.co.uk for a total of £4.6m, rising to up to £9m depending on performance. Moneysupermarket said the acquisition would provide “a platform for the group to broaden its brand offering to a wider range of customer segments in the money and insurance (divisions)” these domains will give them additional traffic and ownership of the verticals: Mortgages.co.uk Investments.co.uk CreditCards.co.uk LifeInsurance.co.uk HealthInsurance.co.uk CarFinance.co.uk Savings.co.uk OnlineLoans.co.uk HomeInsurance.co.uk.

I hold the Italian language registration for autoinsurance.com motoinsurance.com lifeinsurance.it houseinsurance.it carsales.com carsales.it and will use the group strategy to promote (once I find one) a comparison platform under white label partnership. It is the only way to create a new brand presence on a low budget.

The leading Italian comparison Italian language for insurance.it The keyword is well ahead of the pile brands or comparison new brands, one and two under insurance & care insurance.
They have also bought up (cheap) the Spanish for assurance (insurance) Seguros under the .com & .es to build & develop with I am sure the same results as the Italian ranking.

India long (very poor but 900 million speak Hindi) term bet. Turkey & other European asian nationals EMD registration are not millions of $ or give up as Google will rule the world, I do not think so.

May 29, 2011 - 2:57pm

You well know that Toys.com will not rank high with Toys-R-Us products centre stage + Toys-R-Us being the registrant.

Explain that to the likes of Bankrate, which owns: Bankrate.com, CreditCards.com, CreditCardSearchEngine.com, CreditCardGuide.com, Interest.com, and Nationwide Card Services.

I see those sites ranking on the first page of search results 3 different times for "credit cards" and 3 more on page 3, another on page 4, etc.

Back to SEO "NOT THE PRICE PAID" as an independent website like 4 like comparison Toys.com would be top of the pile for the single word "toys."

In some cases sure. But in many other cases not. Oh, and don't forget 3 AdWords ads above the organic search results, a 4th "Advisor" ad on some keywords, localization, product search, personalization, and other factors that slice and dice search traffic.

$5 million certainly Highlights my point that in SEO / Marketing terms the keyword Toys.com was a very serious threat to the brand, this was not a ransom, the brand paid what MARKET FORCES valued the domain to be (2 stalls is a market place) Toys.com would be the brand if $5 million was not paid. (the.com is the brand)

I agree that one was actually sold & priced based on market forces, rather than say a domainer thinking his domain is worth 20x to 200x its actual value to an end user & sitting for a decade or more unused because they are simply north of market on pricing.

But even with that purchase, I view that purchase as an insurance policy by an already dominant market leader. Their lack of effort with the toys.com site also proves my point...it was a defensive move rather than an offensive one. Few start ups are going to drop $5 million on a domain name & then try to create a brand off the generic. Only the biggest of the bigs (Toys-R-Us, Disney, KB Toys, FAO Schwartz, Amazon.com, etc.) could justify buying that domain at that price. But then all those sites already rank well in Google's organic search results even without that domain.

J&J developed baby.com - baby.co.uk very successfully the ROI on Baby.com is huge in terms of monetary, social, & PR.

I just searched Google for "baby" and the top 2 results were a song by Justin Beiber & some Youtube video of a baby laughing.

That's right: even if you spend a lot of money on a generic keyword & think you can brand it, you still have to compete with viral cultural forces & the promotional efforts of heavily hyped "musicians."

What is worse, is that after the 2 Youtube videos the BRANDS Babys-R-Us & BabyCenter rank #3 & 4. Then I get a local result listing of 7 local sites. I have to scroll BELOW THE FOLD to find Baby.com for their own core keyword. From a branding standpoint that is an EPIC FAIL. The site may be successful, but give the above, it is successful based on non-SEO factors, as it is clearly sucking at SEO.

And Baby.com is a subsidiary of BabyCenter. So once again, the generic is a back up defensive move, rather than being the core strategy.

The brand example (less than ten years old) hoovering up keywords:
Money Supermarket.com Group PLC in the United Kingdom recently acquired Financialservices.net and whose main site is Financialservices.co.uk for a total of £4.6m, rising to up to £9m depending on performance. Moneysupermarket said the acquisition would provide “a platform for the group to broaden its brand offering to a wider range of customer segments in the money and insurance (divisions)” these domains will give them additional traffic and ownership of the verticals: Mortgages.co.uk Investments.co.uk CreditCards.co.uk LifeInsurance.co.uk HealthInsurance.co.uk CarFinance.co.uk Savings.co.uk OnlineLoans.co.uk HomeInsurance.co.uk.

Once again, we are seeing the established BRAND market leader buying down the stream for incremental distribution (like Bankrate has done). However it is worth noting that:

  • these are viewed as additional incremental distribution (rather than the core of the business)
  • the brand threw off enough profits to easily buy these (rather than the other way around)
  • even in that purchase, nearly half of the potential price was held back on "earn out" as a safety protection
  • in the last couple years Google has launched financial comparison ads/Advisor AND bought BeatThatQuote.com. (and BeatThatQuote.com was purchased for £37.7 million, far more than all those juice EMDs combined...by a factor of about 4x to 8x...and that is even with BTQ losing money to build distribution: "BeatThatQuote was founded in 2005, and in the year to 31 January 2010 – the last year for which accounts are available – the company generated £8.5m in turnover and a loss of £2m.")

Beat That Quote is now currently penalized by Google for paid links, but if they were not under regulatory review and/or if I hadn't blogged it, they would now be ranking better than ever after the media threw them millions of Dollars worth of free links writing reports of the Google purchase. Once Google allows that site to rank again I wish Money Supermarket the best of luck, as they are going to need it!

I hold the Italian language registration for autoinsurance.com motoinsurance.com lifeinsurance.it houseinsurance.it carsales.com carsales.it and will use the group strategy to promote (once I find one) a comparison platform under white label partnership. It is the only way to create a new brand presence on a low budget.

So let me get this straight, you think you can tie a generic keyword + a white label platform = brand?

Generic = not brand.
White label = not unique = not brand.

There is no real competitive strategy there. That is a case of 0*0=0.

May 29, 2011 - 6:13pm

Show me the link you used.
Baby .com top of the pile under the search term baby:
http://www.google.com/#hl=en&sugexp=ldymls&xhr=t&q=baby.com&cp=2&qe=YmE&...

"And Baby.com is a subsidiary of BabyCenter." Total Rubbish it is BabyCenter.co.uk it redirects to in the U.K. a smart SEO move.

White label = not unique = not brand.??? Already in talks, the white label will be jointly owned trademarked new name (easier, cheaper,faster than building a brand from scratch)

"Once again, we are seeing the established BRAND market leader buying down the stream for incremental distribution"
For a total of £4.6m, rising to up to £9m The Market Value At The Time - this was based on existing and future turnover established by the keywords !!!

"it was a defensive move rather than an offensive one. Few start ups are going to drop $5 million on a domain name & then try to create a brand off the generic. Only the biggest of the bigs (Toys-R-Us, Disney, KB Toys, FAO Schwartz, Amazon.com, etc.) could justify buying that domain at that price. But then all those sites already rank well in Google's organic search results even without that domain."

Again:
$5 million certainly Highlights my point that in SEO / Marketing terms the keyword Toys.com was a very serious threat to the brand, this was not a ransom, the brand paid what MARKET FORCES valued the domain to be. Are you saying the under bidder was 1-2 mill lower???
"But then all those sites already rank well in Google's organic search results even without that domain." Not if Toys-R-Us had made the defensive move, or are you saying Toys-R-Us were badly advised ???

May 29, 2011 - 7:06pm

Show me the link you used.
Baby .com top of the pile under the search term baby

Here is the link & here is a screenshot.

If a person is in a large city inside the United States there are more relevancy signals for Google to leverage than in smaller cities & smaller cities outside the US. You can see similar SERPs to people in big-city US by using the Google AdWords ad preview tool.

After you view that search result please do yourself a favor & change your underwear. ;)

"Once again, we are seeing the established BRAND market leader buying down the stream for incremental distribution"
For a total of £4.6m, rising to up to £9m The Market Value At The Time - this was based on existing and future turnover established by the keywords !!!

Yes, but look how many domains (as established websites that were generating cashflow) they had to sell to get to that number, and this was in big money markets, before Google started competing directly with publishers via the Beat That Quote purchase.

$5 million certainly Highlights my point that in SEO / Marketing terms the keyword Toys.com was a very serious threat to the brand, this was not a ransom, the brand paid what MARKET FORCES valued the domain to be. Are you saying the under bidder was 1-2 mill lower???
"But then all those sites already rank well in Google's organic search results even without that domain." Not if Toys-R-Us had made the defensive move, or are you saying Toys-R-Us were badly advised ???

Insurance policies protect from risk. You don't know if an insurance policy was overpriced the day/week/month it was purchased. And you can't be certain of the exact risk or cost (especially when markets are propped up in bubbles due to low interest rates & investors seeking yield).

As it currently sits, Toys-R-Us is *not* going to have their $5 million investment in that domain name back out anytime soon. However, it was bought as an insurance policy (the lack of effort put into it *proves* this point of reference).

Just because you lose money on an insurance policy it does not mean it was a bad purchase...after all, the main point of insurance is to pay $x for $yy or $yyyy of coverage. When you are protecting against the unknown with some % of your profits you are making a conscious decision. As an outsider someone can say they were ill-informed, but it is just as easy to make the opposite case. If Google bought Toys.com & promoted it the way they do Boutiques.com, Youtube.com, or Google Advisor then certainly Toys-R-Us would have wished they bought the insurance policy rather than giving Google another tool to screw them.

The main points I am trying to drive (and likely unsuccessfully for some, given the obvious optimism of the invested) are:

  • Super-premium domains are not typically a strong point of leverage for new companies. The same pile of cash invested in other ways would often/typically yield greater returns.
  • Most of the big domain purchases (outside of domainers selling to other domainers) are done by established market leaders, either for defensive purposes or as an incremental distribution path. They are not key points of leverage for these companies, rather they are incremental distribution and/or insurance policies.
  • Consistently we see that brands have significant leverage over the generic/specific keyword domain participants in the marketplace. As Google brings more signals into their graph this leverage will only accelerate.

I am not suggesting anyone has to agree with me. You don't. And maybe that is good for you, because investing does take conviction. It is hard to consistently beat the market (especially when large monopolies & insiders heavily rig the game).

However in the past I was a big promoter of exact match domain names, and as the game has changed, I felt it was only fair for me to publicly update the market with my thoughts, so anyone reading my old advice still gets to see some of the potential changes in the markets & doesn't get stuck burning cash investing near the top of a bubble on a one-way trade that soon has the ability to strongly retrace the momentum with an equivalent drop off in value.

If there was an investment vehicle to short domain names (without using leverage) I absolutely would throw money at that right now. Unfortunately there is not one.

May 30, 2011 - 7:42am

The link (yours) shows me Baby.com in top spot (unpaid) 2 & 3 record & video (silly misplaced listings) BabyCenter comes on at No/ 4 : I can but tell you what I see.

"As it currently sits, Toys-R-Us is *not* going to have their $5 million investment in that domain name back out anytime soon. However, it was bought as an insurance policy (the lack of effort put into it *proves* this point of reference). "
Agree with the insurance policy ref which translates to a good investment $5 million investment without having to spend on the development or marketing !!! : ) *proves* my point.

"short domain names" There is a whole world of tribal languages - dual keyboards.

"As Google brings more signals into their graph this leverage will only accelerate."

Agreed. Until I can fit the hot wire the chip into my brain to process the info directly. I will have to use the language anchors that have evolved to the best of my advantage and react to change as best I can. The other consumer is only human : )
Enjoyed the debate, my regards

May 28, 2011 - 4:47pm

Thanks for prizing that out ref "so it's good that you made that clearer." I was of the same mind. Agree with your comment post.

May 28, 2011 - 7:37pm

Aaron, the problem is that you're completely right, and missing the big picture at the same time.

You're right in that the very largest web companies use brandable domains. But they're not big BECAUSE they're using brandable domains - they're big because during the course of their growth tens or hundreds of millions of dollars were pumped into BRANDING them.

And of course you can brand pretty much anything if you start with the assumption that you'll have mega-millions to do so.

Your analogy is like starting with the finalists of the Olympics 100m, then working erroneously backwards to the conclusion that "Everyone can run a 10s race". In other words, it's a flawed sample, suffering from built-in selection bias.

But for every one of those mega-companies there will be thousands that most people have neither heard of nor care about, yet which in many cases can boast turnovers in the hundreds of millions or billions of dollars. And those "only" doing millions a year are much more plentiful still.

And they all have one thing in common: competitors.

So within a given niche - and that's all most companies care about, growing their market share within a niche (whether it's a "large" niche or a very "narrow" niche depends on the company, the industry, the product/service etc. but they're all still niches) - one company can propel itself ahead of its competitors by securing the exact-match domain that maps perfectly to its niche.

A good test might be to ask "Is this company really, truly, hand-on-heart a household name to its customers and POTENTIAL customers within its chosen niche?"

If the answer's "yes" then congratulations, they've succeeded through advertising, marketing, smarts, ambition, good luck and a myriad of other factors in building a real name for themselves!

But if the answer's "no" (as it will be for most companies in most industries, if they're brutally honest with themselves) then why shy away from the fact that a strong exact-match generic domain will give them "automatic credibility" with their audience (since that audience is not familiar with the individual companies in that niche in any case)

NOTE: Of course there's no need for the company to rebrand - they can call themselves one (branded) thing, but use a generic URL in their marketing materials, either as a redirect to their existing site, or as their core URL, or as a stand-alone mini-site or brochureware type site.

AN EXAMPLE
For most companies looking for a content management system, it's likely they're not familiar with the key content management software providers. There are several hundred companies competing in that space and spending significant amounts on doing so - there were 31 content management firms at the recent Internet World tradeshow in London, for example, and in each case they occupied stands that cost them high $xx,xxx-xxx,xxx to rent for 3 days!

And they've got the most obscure names (Active Edition, Alterian, Auros, e-Spirit, Ektron, EPiServer, Keepeek, Kentico, Sitecore, Sitefinity etc)...

So how much of an impact would it have for one of them to be able to direct potential customers and partners to "ContentManagementSystem.co.uk" or have that on one of their huge ($x,xxx) banners that hung above their stands? And how refreshing for those potential customers to finally, instantly UNDERSTAND what on earth one of the companies they're dealing with actually does!

BONUS TEST: (Don't look up) 5 minutes from now, how many of the content management companies I listed above can you still remember? Did you get ANY? And can you remember the alternative URL I suggested?

May 28, 2011 - 8:46pm

You're right in that the very largest web companies use brandable domains. But they're not big BECAUSE they're using brandable domains - they're big because during the course of their growth tens or hundreds of millions of dollars were pumped into BRANDING them.

And of course you can brand pretty much anything if you start with the assumption that you'll have mega-millions to do so.
...
In other words, it's a flawed sample, suffering from built-in selection bias.

So at the largest of scales online, are you saying that...

  • nobody has tried to brand a generic industry keyword, OR
  • nobody has been successful in branding a generic industry keyword

I have seen brands become the industry keyword (iPod, Kleenex, Xerox, etc.) but I haven't see it the other way around.

Why is it that there are literally no counter examples? I am not asking for dozens or hundreds of examples, only 1.

Keep in mind I am not talking about spending $500 or even $5,000 on a domain name & then building the brand...I am mainly talking about the repeated failures of the 7 figure hail mary pass domain purchases.

Sure there are a few bigger generic purchases that worked well (hotels.com, phone.com, coupons.com, savings.com), but none of them have been able to turn that organic traffic stream into a brand the way that Priceline, Skype, or RetaiMeNot.com($8 domain name) have.

But for every one of those mega-companies there will be thousands that most people have neither heard of nor care about, yet which in many cases can boast turnovers in the hundreds of millions or billions of dollars. And those "only" doing millions a year are much more plentiful still.

I agree. And I am not faulting SanDiegoLawyers.com or anything like that. Nothing wrong with being descriptive when your business model doesn't support having a brand budget. But the above blog post post is about those high 6 and 7 figure domain names...it is not about the smaller niche players.

NOTE: Of course there's no need for the company to rebrand - they can call themselves one (branded) thing, but use a generic URL in their marketing materials, either as a redirect to their existing site, or as their core URL, or as a stand-alone mini-site or brochureware type site.

This I totally agree with. I am not faulting owning generic domains in case they may in some case help. All I was suggesting is that in the largest of markets (where Google is monetizing from the top down & tilting the algorithms toward established brands) that the ROI will never back out for many expensive generic domains. Over time as Google gets better at pulling more signals online (Google Wallet, etc.) that will ultimately lead to even more of a push for brands even further down the brand curve.

So how much of an impact would it have for one of them to be able to direct potential customers and partners to "ContentManagementSystem.co.uk" or have that on one of their huge ($x,xxx) banners that hung above their stands? And how refreshing for those potential customers to finally, instantly UNDERSTAND what on earth one of the companies they're dealing with actually does!

When a person says "content management system" I think of Drupal, Wordpress, Blogger, MediaWiki, MovableType, etc. For e-commerce CMS tools I think of Yahoo! Stores, Volusion, BigCommerce, osCommerce, etc. But in my gaining knowledge of that vertical, I don't think I have ever come across a generic that I trusted.

Another issue is that perceived demands (and values) change with market conditions. Now a lot of folks toot "social media" as an elixir, but lets say a person registers "SocialCommerce.com" ... when the market moves can that generic brand reposition in a way that is still meaningful? Will it be able to shift the way a Groupon could?

can you remember the alternative URL I suggested?

Which one was that again?

  • CMS.com
  • CMS.co.uk
  • ContentManagement.com
  • ContentManagement.co.uk
  • ContentManagementSystem.com
  • ContentManagementSystem.co.uk
  • ContentManagementSystems.com
  • ContentManagementSystems.co.uk

(Not to mention .org.uk, .ltd.uk, .me.uk, other gTLDs & other ccTLDs....and the flood of new extensions soon coming online, likely to include .software and .news and so on.)

In some ways generic names suffer from some of the same problems than branded but poorly marketed solutions do. That said, if I was spending 6 figures on a booth for 3 days I would try to lock up every online angle I could (even if some of it was just for defensive reasons). For those CMS services I would try to get the relevant domain names if the price was right, offer my service free to a few charities to get the word out, participate where people making those decisions are, maybe have an open-source version, offer tips & guides, etc.

May 29, 2011 - 12:08am

Hey,

Spent about 5 hours reading this post since yesterday. But worth every minute. For the author(s) of this article, comments and everything in between -- thank-you (Edwin, awesome insight as always). This post is an eye opener for online business owners like me who is looking for 'knowledge advantage'. Great for 2-4 year business planning.

My main takeaway of this whole post can be summed up as : "CAPTURE Internet Leads through SEO and generic domains (easier, cheaper,faster than building a brand from scratch), CAPTIVATE and RETAIN LEADS through our company's strong brand."

As a holder of some solid geo real estate domains, this post is a brutal reminder that I can't sit pretty with my 'easy' profits. What's stopping Google from unleashing Google.com/RealEstateGuide. Heck they've already done it with weddings.

Start acting as if you don't need google to bring traffic and revenues (build other streams -- offline, social,etc.,), but JUICE google traffic while you can.

May 29, 2011 - 7:11pm

just searched for exact "Dr. Pete shared examples of the marketing funnel, highlighting how we must overcome hurdles (or break through barriers to conversion) in order to make a sale." and SEO BOOK seems to be somewhere down at 8 or 9th spot, amazing

May 29, 2011 - 7:33pm

...of Google's flagrant disregard for personal property rights. That they could put out something like Panda without even putting any serious effort into original source attribution is pretty flagrant. And them monetizing many of the copies with AdSense is added salt in the wounds. ;)

May 29, 2011 - 8:13pm

almost 8 years ago:
http://googleworlddomination.com/ols-master.html

~~~~

The original source of that video (with no ads) is here. Here is a Youtube-hosted version.

May 30, 2011 - 9:06am

Thanks a lot Aaron for this post! This is a perfect investigation - you just said things that many of us were thinking about but didn't take seriously till time. This will certainly influence the choice of further direction in online marketing strategy for me.

But I'd like to share one assumption. Currently it's admitted that people have sort of blindness to ads. With time they will get used to the upper space of SERP crowded with promotional ads and will scroll the page down to where organic listing starts. Commercials will still get a big chunk of clicks, but the upper organic positions will be still beneficial. I agree though that the 6-7 figure prices for category killers are completely unreasonable, I never understood how they can be justified.

Maybe while Google becomes more ad-focused at the expense of relevancy in results, the shift will begin to other SEs. I understand that Yahoo! and Bing may also move in that direction, but they might also want to extend their potential customer (searcher) base first and will stay quality-focused for a while. And this can born competition potentially weakening Google's monopoly. Google now starts treating its users as brainless source of income, this can be a big mistake in perspective. People loved Google first due to their innovative and open approach, this can change easily as G continues thinking more about its pockets than users.

May 30, 2011 - 9:37pm

But I'd like to share one assumption. Currently it's admitted that people have sort of blindness to ads. With time they will get used to the upper space of SERP crowded with promotional ads and will scroll the page down to where organic listing starts.

I disagree with this thesis. It applies to banner ads, but it does not really apply to search:

Commercials will still get a big chunk of clicks, but the upper organic positions will be still beneficial.

The issue is not whether there is value, but rather if the cost/price exceeds the potential value.

I agree though that the 6-7 figure prices for category killers are completely unreasonable, I never understood how they can be justified.

At some point in time (pre-brand push & fewer ads above the organics & non-localized search results) they would actually back out in many cases. But they are much worse at backing out today.

Maybe while Google becomes more ad-focused at the expense of relevancy in results, the shift will begin to other SEs. I understand that Yahoo! and Bing may also move in that direction, but they might also want to extend their potential customer (searcher) base first and will stay quality-focused for a while.

I wish this were true, but ultimately they are all playing the same game, shifting from being the search engine to becoming the affiliate & publisher as well.

Google now starts treating its users as brainless source of income, this can be a big mistake in perspective. People loved Google first due to their innovative and open approach, this can change easily as G continues thinking more about its pockets than users.

Most people probably don't even realize that Google owns Youtube & how Google manages to squeeze partners out of the search ecosystem. People trust Google & distrust businesses...so it is going to take a number of years of negative momentum before it matters to them.

May 31, 2011 - 7:44am

Thanks again for your time to write that detailed reply. I agree with your points, looks search engine world is changing.
As to people, they are really inert in general, so it will definitely take time till they become more picky in what they are seeing on their screens. Then probably some keel effect can take place.
For now the worst thing of all this stuff is the negative impact on multiple small businesses that don't have budget for strong brand building. It will become harder for them to compete with branded giants on their own. Not rosy perspectives indeed.

June 1, 2011 - 2:28pm

Visitor counts do not depend on the domain name of the website.

But maybe the same site with different domain name (a bad and a good one) cause different (direct) visitor number.

June 21, 2011 - 3:03pm

No one else has mentioned Google +1 in their comments, so I wonder if I'm the only one in the dark here, but I can't see how a merchant could offer discounts for a Google +1 vote. Certainly they can trade in other social signals like review postings, facebook likes, tweets, etc., but how can the merchant verify that a user has +1'ed him/her/it?

June 21, 2011 - 4:43pm

have the customer send in a screenshot.

June 24, 2011 - 4:13am

...came to the same conclusions I did, except he largely looked at a lot of general web trends outside of the search algorithms. Combining his post with the above one should be cause for alarm for people who think that undeveloped domain names always go up in value & such.

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