By Richard Harroch and Andrew Miller
We’ve seen some blockbuster internet real estate acquisitions recently in the form of premium dotcom domain names. NFTs.com was acquired for an alleged $15 million and HubSpot acquired Connect.com for $10 million. Over the past few years, exact match keywords have become important, valuable digital assets and are transformative changes in the way premium domain names are valued.
In the BG era (before Google), most people navigated the web by typing a keyword or domain name into their browser. Having a world-class domain name and brand was almost like owning a “TV network” but one that was global and without walls. Initially, the focus was on generic one-word domain names that represent a huge global category, such as: B. Sweepstakes.com or Home.com.
Recently, a new breed of internet real estate has become incredibly valuable and strategically business-critical for brands and emerging businesses. These are called “exact match” domain names, single words that imply a strong brand, such as B. Extend.com, Gala.com, Universal.com, Iconic.com, First.com, Recuperate.com and Gravity.com. To illustrate, here is a link to several exact match domain name acquisitions by market leaders and case studies from the most successful founders and executives.
Ways businesses are acquiring exact-match domain names
In the past, venture-backed companies often add a word to their domain name even though their brand is just a powerful dictionary word. For example, the successful guarantee company Extend started out as HelloExtend.com. That was before savvy CEO and founder Woody Levin quickly realized that one of the most strategic moves he could make was to acquire the company’s exact-match domain name, Extend.com, and drop the “hello.”
Another tactic some companies use is to use a non-.com domain name like .io or .xyz when the .com domain is not available. One problem with this is that customers may still switch to the .com domain name instead of the .io or .xyz version and end up on the wrong website. Another problem is that important emails are sent to the wrong address. In the end, a company may need to acquire the .com domain name but may be in a precarious negotiating position.
Finally, some companies make spur-of-the-moment decisions to acquire an exact match domain name. Recent examples include Wonder.com and Candy.com, both run by some of the internet age’s brightest operators and investors.
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The value of exact match domains
When you’re a one-word brand and product, matching your domain asset exactly is the most important investment and decision you can make, and it’s strategic both offensively and defensively.
Consider the “Super Bowl” analogy. Some companies can spend $8 million or more on a 30-second Super Bowl commercial that’s quick and measured. When it works, there’s a return on investment, and when it doesn’t, it’s a significant hit to that company’s income statement.
Had they purchased their exact match or category .com domain name at a similar cost, they would have a book value that represents an accretive, amortizable and resellable investment while adding exponential corporate value and benefits to the business. The same executives and investors who shy away from a seven-figure domain acquisition are likely spending P&L monies promoting their forgotten, mismatched domain name across the Internet.
Your domain name – an important business asset
There’s an old “location, location, location” real estate cliché about the importance of being on the best properties. Your brand and the address to access it online are your company’s Internet properties. It’s your address to the globe.
A domain with an exact category match gives a business authority, credibility, conversion and clicks – “heard once, remembered forever” – and at the same time an investment with increasing value and return.
Remember this very important fact: you only have one exact match .com domain name. It is the scarcest commodity and therefore the most valuable. Once it’s taken off the market it’s most likely gone forever and if it wasn’t there it could profoundly impact your business in many ways including all facets of your marketing, branding, fundraising and an eventual future sale.
TIED TOGETHER: Important Steps to Getting a Great Domain Name
About the authors
Richard D. Harroch is the Managing Director and Global Head of M&A at VantagePoint Capital Partners, a San Francisco-area venture capital fund. His focus is on the internet, digital media and software companies and he has been the founder of several internet companies. His full biography is published here on AllBusiness.com.
Andrew Miller, Managing Director of Hilco Digital Assets, a Hilco Global Company, is a leading investor and expert in digital assets. Andrew founded leading marketing companies CreditCards.com and InsuranceQuotes.com and made early investments in Bored Ape Yacht Club NFT and Thrasio. connect with him LinkedIn.
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