Despite being in the information age, the common understanding of domain names is still quite low. People “kind of” know that domain names cost money. Or “all the good ones are taken”. But they rarely know that there is actually a whole domain name industry with dedicated marketplaces, podcasts, brokers, investors and even conferences.

To help educate people, domain names are often described as like Digital Real Estate. While this isn’t wrong I like to be more specific and consider domain names to be more like Digital Commercial Land. Domain names derive their value from the commercial value they bring to a business. Not everyone needs a domain name like everyone needs somewhere to live. But every business needs a domain name

A domain name could be like a corner block of land in the middle of a large city. Or it could be a block of land on the main road of a small country town. While a successful business can be built anywhere, location can make a massive difference in the long run.

The following points describe the parallels of Physical Land Vs Domains:

• Organic road or foot traffic passing by the land. People organically typing in domain name to see what’s there.
• Convenient location. Memorable word and easy to type.
• Any size business could build on a block. Small office building vs. corporate sky scraper. Mortgage Broker vs a Bank could use the same URL.
• Different uses for land. Park vs Apartment Building. Ad click landing page or billion dollar social network site.
• Land purchased years ago before a population boom. Domain name registered in the 90s and now worth millions.
• Real estate investors hold portfolios of property they don’t necessarily plan to occupy themselves. Domain investors hold portfolios of thousands of generic domain names for resale.
• Real estate agents. Domain Brokers.
• Real estate listing websites. Domain aftermarket platforms.
• Cheaper land in regional areas. Cheaper domains that are longer and/or harder to spell.
• Real estate price bubbles. Domain name market bubbles such as 2015 China bubble.

The 2020 COVID pandemic made it clear that domain names are Digital Commercial Land. As physical shop fronts and office buildings were vacated, the volume of domain names sold and registered boomed. More brick and mortar businesses realised they needed a digital shop front. A physical shop front is limited to that geographic location. A domain name is global.

The analogy of domain names being like Digital Real Estate isn’t the best. Domain names aren’t dwellings or buildings on lots. They are more like empty lots where anything could be built on it. The best domain names get snapped up for commercial reasons. Domain names are like Digital Commercial Land and this helps to conceptualise why they are such valuable assets.

Domain names are extremely important for businesses. A domain name is a business’s identity and location online. Without a domain name, a business is just renting space online. A domain name gives a business their own premises and voice online.

Offline – in the real world – domain names are great for advertising on physical media like billboards, signage and print. But one might not consider that a domain name is a meme. It’s like a virtual business card spread by word.

Once upon a time, at the end of a meeting business partners would often exchange business cards. But now this is almost superfluous if you have a great domain name. “Hey great chatting with you. What’s the best way to contact you?”, asks Peter. “Just reach out via titus.com.au”, replies Alan. No more exchanging business cards with all the phone and fax numbers. Everything is found by visiting titus.com.au, which Peter will likely remember later.

They are so valuable for ‘word of mouth’ endorsements. For example: “Hey Jim, who do you use for your bond cleans?” asked Mary. “I always use Dream Clean, they’re amazing. You can find them at dreamclean.com.au”, replies John. After this exchange it’s highly likely that Mary is going to remember that address later because the rhyming is memorable. Or she might type it straight into her smartphone because it’s easy to spell and unambiguous.

Of course all this only works for good domain names. It doesn’t really work as well for ambiguous spelling, lengthy, hyphened and non .com extensions (with a few exceptions).

Quality

The quality of a domain name has similarities with business cards in terms of the impact and impression. With both, quality gives the impression that the business is trustworthy and serious. It’s hard to get a high quality domain name these days. One needs to be profitable and serious to acquire one. It’s unlikely a scammer in a third world country is running their scams using a single dictionary word .com.

Memorability

The point of a business card is that a business can be contacted easily later via the printed contact details. People aren’t good are remembering phone numbers. This is why business cards and vanity phone numbers were invented. A great domain is memorable and can be used like a business card, doing away with printed contact details.

Advantages of a domain name over a business card

– One address. Website details can be updated. Business cards require reprinting.

– If a business card is lost, that’s probably it. Lots more effort required to get back in contact.

– Having domain name means it will probably have a website, so the business will be indexed and can be found in a Google search.

– As long as a domain is memorable you can be found anytime later. It’s much harder if the business card is lost

– Authority and legitimacy. Anyone can print a business card. Good domains are difficult to acquire and show that you are a serious business.

A good domain is easy to remember, a great domain is hard to forget.

Simply put – the best domain name for your business is your exact business name in .com. That’s why the world’s biggest companies all own their name in .com. Think apple.com – amazon.com – tesla.com.

When it comes to a domain name, it’s extremely important what’s on each side of the dot.

Right of the dot is the extension (.com, .com.au, .org, etc). The default extension in everyone’s mind is .com. This is the best extension. If it is already taken you have to settle for the next best thing.

Left of the dot is ideally your exact business name. Hopefully your business name is a good brand in general (short, easy to spell, memorable, etc).

Say for example you’re a computer repair service and your business name is “Compucare”. If compucare.com is taken – you will need to compromise left, right or both sides of the dot.

Examples of possible compromises if your .com is taken:

• compucare.net << Not too bad, but traffic will be lost to the .com.
• compucare.com.au << OK if you’re an Australian based business and always will be Australian based.
• CompucareSystems.com << OK but you will always be in the shadows of the Compucare.com brand. Customers will sometimes try to find you at compucare.com,
• KompuKare.com << Mis-spellings create another barrier for customers to find you. They have to remember your brand plus which letters are mis-spelled.
• compu-care.com << Much like the above two compromises. Stay away from hyphens.
• compucare.site << New extensions on the right side of the dot (like .blog, .horse, .whatever) create an awful barrier where most people don’t even know this is a thing yet. This might be acceptable however if the words flow well like home.loans, real.estate, etc.
• compu-care.xyx << Very bad. Looks untrustworthy.

From this you can see the point of having the best possible domain name is to make it as easy as possible for customers to find you online. The value comes from reducing the lifetime cost of customer acquisition.

So with a better domain name:

• Your marketing will be more effective. Your domain name is on everything including word of mouth recommendations.
• Better conversion rates. You appear more trustworthy as people can tell compromised domain names.
• Better click through rates. Quality domain names stand out.
• It’s expensive to rebrand later should you upgrade. Time cost and the domain will likely cost more by that point.

The thing is, it’s not always possible to have the best domain name. It might already be in use or too expensive to acquire from the current owner.

If the domain you want is for sale, then this is a good thing. Chances are the price is negotiable. Don’t ask yourself if you can afford it. Ask yourself how you can afford it.

No one ever regrets purchasing a better domain name.

• Domain names are appreciating in price as scarcity grows.
• If you don’t own the .com for your brand. A little part of everyone wonders why. The top brands all own their dot com because they either got it early or they’re successful and they could afford it.
• DNC.com.au is fine for this Australian company. But if DNC.com was available, would we want it? Absolutely. But it likely won’t available any time soon. Maybe never.
• If you can grab your domain brand. Do it today. Before someone else does.

In the domain name industry, “Premium Domain Names” is a term thrown around a lot. There are even “Super Premium” and “Ultra Premium” domain names whatever that might mean. For purpose of this article we will consider premium domains to mean scarce and highly desirable domain names that fetch 5,6,7 and even 8 figure price tags. They are usually english dictionary words, involve keywords for lucrative industries or short (1-4 characters). And they are usually dot com.

The following are facets of why one should invest in the best possible domain name they can afford for their business.

Positioning and Authority

The best domain name creates a sense of instant authority. Owning the best domain name positions a company globally and for that industry as the best.

SEO

There are hundreds of factors that go into a website’s search engine ranking. Domain keywords, age and historical links are a piece of this pie and often come with premium domains. A premium domain name will make people more likely to link to your website. Click through rates increase for better domain names as there is a higher sense of trust.

Marketing

Consider how much marketing has been done on the domain extension. Billions of dollars have been spent on marketing of .com domain names. After decades of people seeing .com on billboards and television makes it the assumed extension.

A domain name doesn’t just match a brand – it very much is a brand. The best domain name takes control of the mindshare of that word. When you buy your exact match domain name, you’re investing in your Brand Equity.

Length and memorability matter most with domain names. Both of these constraints make it easier for customers to find a website from advertising or with word of mouth.

Security

When a high quality premium domain name is used, customers can feel more assured that they are dealing with a legitimate website. Spoof websites are less likely on say a 3 letter .com. Email security is increased with premium domain names with less chance of emails being lost, sent to competitors or worse.

Cornerstone

A domain name is the cornerstone of a business. It’s like the physical store front of a store but more. When you tell someone your domain name it’s like giving a virtual business card. A business has to work really hard in terms of marketing with a bad domain name. Inversely, a business’s efforts are amplified with the best domain name.

Lesser domain names such as composite words can pigeon hole the business. Owning the more generic, shorter brand name allows the company flexibly to pivot in its business without changing the domain name.

Capital Asset

Domain names are digital assets and hold value. For example,  if your company is sold, the domain name is an asset and included in the sale. The value of the domain name assets is factored into how much the company is worth. If a company is shut down, the domain name(s) still remain and can be resold.