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Domain comparison using CPC and Search volume

Higher CPC Versus Higher Search Volume

     
7:00 am on Sep 19, 2016 (gmt 0)

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hello all,

Factoring in CPC and monthly search volume, I was wondering:

a) how you would compare the following 2 domains. Would you go for a higher CPC or higher search volume?

b) Also considering the second domain is a non-.com TLD [other extensions are not available and simply parked] would you consider trading the two domains although the CPC*Search volume for second domain is much higher?

c) Looking at the search volume and CPC, would you consider both domains premium?

First domain: .com
$2.73 (CPC) * 18,100 (exact monthly search) = $49,413
CPC varies from $1.50 - $12 based on location, Highest CPC ($8+) in cities such as SF, NYC, LA etc...

Second domain: .co
$0.98 (CPC) * 165,000 (exact monthly search) = $161,700
CPC is mostly within range ($0.80-$1.20)

Thanks in advance,
DP
Numbers for CPC and search volume are exact and haven't changed the past few months.
2:25 pm on Sept 22, 2016 (gmt 0)

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I've never considered a .Co - for Colombia - a premium domain. YMMV. The big players in business continue to rely, buy and build on .com, even those who initiate doing business on a fabricated .io / .ly / etc. domain.

Search volume is always a variable of some interest, but - if you intend to build - will the .Co affect conversion (cred, etc), localization, brand confusion, etc?

If you are looking at type-in traffic as a variable -> .Com.
8:43 pm on Sept 25, 2016 (gmt 0)

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Thank you Webwork :)

Well the .com and all other main extensions were taken and so I figured my best bet would be .co

The .com was for sale for $750K! In other words I had no option and was very happy to purchase the .co for reg price. He had secured almost all other extensions such as .tv, .ca, .net, org, info etc...

The problem with search volume is the keyword has meaning in different languages hence the search volume is scattered in multiple countries/locations. In other words I wont be able to get that much traffic even if I rank #1 within my own geolocation.
1:09 pm on Sept 26, 2016 (gmt 0)

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@DP I don't quite understand what you are calculating. Is this revenue you expect to generate? Or, is this cost of user acquisition?
10:52 am on Sept 27, 2016 (gmt 0)

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No, the value of the domain, factoring out other multiples that are similar in both cases such as CTR etc...

No absolute value but relative value only used for the sake of comparison.
12:54 pm on Sept 27, 2016 (gmt 0)

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The value of a domain is determined like the value of any other financial asset, that is the value of the revenue it can provide you. I think you are over simplifying your calculation.

From a customer acquisition perspective:
num of potential paid customers = number of searches x CTR(paid)
num of potential organic customers = number of organic impressions x CTR (organic)
CPC x num of potential paid customers = cost of acquisition
(num of potential customers + num of potential organic customers) * conversion rate * marginal gross margin = gross margin
gross margin - cost of acquisition = profit before everything else [PBEE] (other expenses, taxes etc...)

PBEE * 12 (assuming mothly figures) / some rate of return = value of business

note the rate of return must be relatively given the high risk nature of the web, 40% or 50% in in my opinion.

value of the domain <= value of the business - value of creating and operating the website

This is the value for you and your business, the market value of the domain maybe more or less. Also note that the value of the domain will most likely be far less than what you calculated above, unless you sell a high margin product.

Also note that the question is not an either or question, the options are not mutually exclusive. If the market value of both domains is less than your value, you would be best off buying both. With a few caveats, most importantly you have capacity to meet the demand and account for the fact that many of the searches will result in both domains being shown for the same search, so the monthly search figures are not directly additive ie: 10 + 10 will equal 12. not 20.

Finally you still need to account for the tips provided by @webwork.

One side note, having more traffic is generally better with a web business, even if you end up paying a little more for the added traffic. This because in most cases you variable costs tend be low, and your fix costs don't scale much even with significantly more users. If you build a website it can 1 users as well as 1000 users.


3:28 pm on Sept 27, 2016 (gmt 0)

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Also note that the value of the domain will most likely be far less than what you calculated above, unless you sell a high margin product.
I agree hence why I said its relative. I should have probably removed the dollar sign and used the numbers on a different scale.

Well I just sold the First domain and will develop a website on the second domain. I guess I solved my own issue by getting rid of one ;)