Inside the Mind of a Domain Name Investor
As you may already know, landing the perfect domain name for your business can be a great challenge.
The biggest hurdle to begin with is availability. Most of the time, your ideal domain name is already taken. But does this mean that it cannot be bought? Quite often, no –even an established business using the domain name may have a price they would be willing to accept if you decided you wanted it that much.
Of course, to have a good chance of success, your offer would need to be very compelling. This is true even if the name is not in use, but is considered strategically important to the business.
“What’s ‘very compelling’?” you might ask. The best way to answer this is to put yourself in their shoes. If you held the name and someone wanted to buy it from you, what would you sell it for? For serious and successful business people, the answer is usually not in the five figure range, but in the six figure range.
What if the name is held by a domain name investor? Does this make it any easier?
The answer is not always, especially if the name is in high demand.
How do you know if a particular domain name is in high demand?
A simple Google search should give you the answer:
- If you are chasing a single word domain that matches your brand name or trademark (eg. www.acorn.com.au), but there are a number of other businesses (in other industries) who use a similar name, then there is obviously high demand for that domain; or
- If you are chasing a single or multiple word domain that matches a major keyword or keyword phrase for your industry, or even other industries (eg. ‘lounge’ is a keyword for the furniture item, but also for a licensed bar), then there is obviously high demand for that domain (in this case, www.lounge.com.au).
A domain name investor is acutely aware of the level of demand for each individual name within their portfolio.
A domain name investor will usually hold a number of domain names, in various verticals (ie. industries), for which there are varying levels of demand.
Through diversification across many names and in many verticals, the domain name investor can comfortably reject five figure and even six figure offers where these do not reflect the underlying value of the name (‘value’ is a product of demand, remember).
One final consideration, that so many overlook when approaching a domain name investor about a particular name is this:
- Time. As in years. Time is the Z-axis (so easily forgotten!) when it comes to understanding demand for a domain name. With every month and year that passes, new demand for the name you want will emerge. Domain name investors understand this. They do not care whether you buy their name or not, because the reality is that sooner or later, everything good sells –more often than not at the price they want. Prices have only gone up. The ‘Law of Scarcity’ rules. Generational change (Gen-Y and Gen-Z in marketing and management jobs) will only amplify demand.
To summarise, most domain name investors understand the level of demand for each name within their portfolio, they use diversification to mitigate liquidity risk and retain bargaining power, and they appreciate the fact that new buyers emerge all the time.
Now that you’re inside the mind of a domain name investor, don’t be too surprised when your four or five figure offer on that great name you want is rejected.