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I have someone I am helping with their site.
They sell a high ticket item. The average sale is between $4,000 and $6,000 dollars. It is a very competitive area in their location, such as would be in a big city, home remodeling, lasix eye ball correctors, or used car sales lots. The city is two words like New York, or Los Angeles, and the profession is one word, such as plumber, or contractor.
If you type in the three word search combo into google, of which the first two words make up the city name, and the last word is the profession, there are about a million matches.
The three word domain,
CityNameProfession.com is available for my client to buy.
The three word combo is searched for around 1,000 times per month per my estimation.
He already has a well established site, good ranking, fair number of links, lots of content.
The question is, how many people would type in,
CityNameProfession.com directly into their browser address line?
If a high qualified new customer was worth $4,000 to $6,000, what would you pay for the domain name?
The idea would be simply to 301 redirect that domain to the already established site.
If any of you would like to know the actual domain name, just sticky me. I trust you guys! I know Brett won't allow any riff raff on this site!
Feel free to throw out estimates as to amount of type in traffic expected, and what you would pay for it and why.
I suspect that in the near future local businesses will be grimmacing about how they failed to secure the localized version of the "generic reference to their service", just like people today regret how they didn't register CityHotel or Hotel.tld.
The most realistic valuation model for type-in traffic isn't the PPC revenue model. That only makes sense if one is forever going to rely on a parked PPC valuation model. Even that model doesn't make sense in that it assumed that the domain is forever bound to the limits of traffic from type-in action.
The most robust valuation model for many domains, especially professional service domains, is the 'converted lead' model of value. Why? If you get the type-in traffic from the professional service domain then you get the first crack and likely best chance to convert the leads. (You also don't pay for all those leads that don't convert, like PPC leads. ;)
I find it a fair inference, based upon my own direct experience, that people who type-in generic 'subject matter domains' are often people very focused on getting x-service in y-city/state. In other words, when it comes to direct navigators, your website has to un-sell the lead to not convert it.
The converted lead model of valuation is just beginning to be sorted out. In retrospect, I think the will prove to be the most robust model for valuing type-in traffic.
To respond to your question, if your friend converts 3 leads a year that yield a net income of $2,000 then spending $15-20,000.00 for a domain that will likely continue to produce such leads for the indefinite future will - in retrospect - likely look like a bargain.
A 3-4 multiple doesn't seem that far removed from a realistic enduser value to lock in a reliable referral stream.
How can I say this with any confidence? Allow me to offer a bit of history and personal experience.
What first got me started in the domain realm in 1998 was the fact that my local yellowpages was charging me $15,000.00 a year for ads, My ad was one amongst many in a very competitive local advertising space (read lots of $15,000+/year ads). The ads were fast becomming a barely a break even proposition, with my ad rep each year selling me some new advertising angle 'so I could remain competitive' . . and he could sell more ads and make a bigger commission.
I eventually did the math and determined that I could buy quite a few domain names and host quite a few websites for that cost.
Would you believe that I was anxious - and, to the man, my peers considered my actions ill-advised? To give up my yellowpage advertising? Absurd! Dangerous! Risky! No guarantees! No kidding. LOL, all the way to the bank. ;)
It might take some nerve to take the plunge since the valuation model is far greater than the 'cost of the domain model (circa 1999) but then again, I acquired some domains in 1999, 2001, 2002, 2003 - even 2005-2006 - that most people - the vast majority of people - never would have paid as much as I paid for them . . and right now many of those domains are recouping that investment cost within 1-2 years on PPC alone.
Buying real estate is about caculating future reality, risk and reward. What may seem like an expense today may seem like a bargain in a few years. You have to think through these issues in some detail. For instance, what happens when, in a few years, local PPC costs start to skyrocket as everyone starts catching on to local search?
A great deal of what has been going on in the domain space has always been speculative and has required measures of vision, courage, ability to absorb risk and a sense of judgment about market direction. In 2001-2003, when many were declaring the WWW an over-hyped wannabe and domainers were cashing out I was buying. It wasn't easy, seeing a generally negative marketplace consensus - in part confirmed by domain valuations at the time - but I was confident. Then along came the direct navigation domain parking PPC model for the domain holding masses. Voila! Instant tightly focused miniwebsites that made money, 24/7/365. Who woulda thunk?
Your client-friend may have to bite down hard before ponying up a sum such as I mentioned and will only know relief, if ever, in a few years. Then again, if you pick the right domain, he might know relief in only a year or two. It may well even be the case that by chosing this model, as one channel amongst many, that your client will be able to sustain his or her business in the future.
Did I ever tell you the story about the domain that made me $140,000+ . . .? To borrow from my favorite accordian playing icon of stand-up comedy, Judy Tenuta: "It could happen . . " [judytenuta.com] In my case it did.
[edited by: Webwork at 4:08 pm (utc) on Jan. 15, 2007]
Edit: Oops. Sorry I misunderstood. You are inquiring about a price estimate for a pre-owned domain right?
[edited by: Webwork at 5:03 pm (utc) on Jan. 15, 2007]
[edit reason] Charter [webmasterworld.com] [/edit]
There's may be a few other approaches to get a real time sense of the domain's type-in traffic value. Development might be a double-edged sword, but if you have first dibs on the domain (lease with option), you're on somewhat safe ground assuming there's an enforceable contract.
Even if the current traffic is low you have to ask "Is this domain billboard ready" (and very likely easily memorable, without a notepad, if it's a pure City+Service domain.
Even low traffic domains, if they relate to high value services or products, may have considerable "converted lead" value, so traffic isn't the final arbitor of value.
[edited by: Webwork at 4:02 am (utc) on Jan. 17, 2007]
"One of them said, it is confusing though when I type something in and it takes me somewhere else. So I just type it in again. If it gets me to the same place again, I just accept it and look at the site." :) Which of course is a 301 redirect.
There are a number of cases where a visit to your website will not pass a REFERRER, which makes a lot of people incorrectly assume that all of that traffic is from directly typed URLs. So, it's understandable that people might believe there's a higher value based on that.
But, complex multi-word phrases are far, far less likely to be directly typed-in by internet users. Very few people would be inclined to type in "sanfranciscocardiologist.com", for instance.
HOWEVER, I believe there *is* value to registering those mult-term names for the purposes of SEO keyword optimization. Keywords within the domain name are quite valuable for ranking on MSN Live search, and a bit less valuable though still impactful on Yahoo! and Google.
So, this can be worthwhile, but not for the reason mentioned earlier.
Oh, and despite the good-intentioned yellow pages bashing earlier in the thread, there are still substantial referrals available in that medium. Online optimization and presence doesn't have to replace yellow pages advertising. If you're getting enough referrals to make a profit off of your YP advertising, there's no reason to ditch it. Optimizing for print yellow pages should be done just like in the online world so you don't pay more in ad fees than the value you're getting back. For instance, if your in a less-contested category/locality, you wouldn't need to buy the premium advertising treatments -- smaller ad products could get you sufficient placement and attention.
Small businesses which ignore print and online yellow pages risk missing out on a significant amount of business referrals and their associated conversions.
[edited by: Webwork at 8:08 pm (utc) on Jan. 18, 2007]
[edit reason] Charter [webmasterworld.com] [/edit]
I did a little informal research with non Internet savvy patients, and about half of them will type stuff into the address bar, just to see what pops up.
Then after finding myself having just paid 500 bucks for a domain name, I registered another 20 or so that were not taken yet.
It reminds me of collecting coins, or baseball cards.
Maybe at Pubcon we can all sit on the floor and trade domain names, I will give you 3 citynameprofession.com for one of your smalltowniniowa.com's
an have bought a few domains consequently,
I am finding type ins nare clearly more likely to happen with .coms, yet there is a little stream coming the way of the others
I mean as the world gets more internet savvy, surely all the international tlds might become mainstream knowledge,,#
Like we all know the continents North & South America, Africa, Europe , Asia, Australia & Antarctica,, did I miss any :-)
Why not know off, .com , .net, .org, .info, .biz, .mobi districts of tha worldwide web