By Richard Harroch and Andrew Miller
We’ve recently seen some blockbuster internet real estate acquisitions, in the form of premium dotcom domain names. NFTs.com was acquired for a reported $15 million and HubSpot acquired Connect.com for $10 million. In recent years, exact match keywords have become important, valuable digital assets and represent a transformative shift 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 a global one without walls. Initially, the focus was on one-word generic domain names that represent a huge global category, such as Sweepstakes.com or Home.com.
Recently, a new type of internet real estate has become incredibly valuable and strategically crucial for brands and emerging companies. These are called “exact match” domain names, some words that imply a powerful brand, such as Extend.com, Gala.com, Universal.com, Iconic.com, First.com, Recuperate.com and Gravity.com. To illustrate this, here is a link to various exact match domain name acquisitions by industry leaders and case studies of the most successful founders and executives.
Ways Companies Acquire Exact Match Domain Names
Early on, venture-backed companies often add a word to their domain name, even if their brand is just one powerful dictionary word. For example, the successful warranty company Extend started out as HelloExten.com. This was before savvy CEO and founder, Woody Levin, quickly realized that one of the most strategic steps he could make was to acquire the company’s exact match domain name, Extend.com, and say the “Hello”. drop.
Another tactic some companies use is to opt for a non-.com domain name, such as .io or .xyz, if the .com domain is not available. One problem with this is that customers can still go to the .com domain name instead of the .io or .xyz version, and end up on the wrong site. Another problem is that important emails are sent to the wrong address. Ultimately, a company may need to acquire the .com domain name, but may be in a precarious bargaining position.
Finally, some companies will make out-of-the-gate decisions to acquire an exact match domain name. Recent examples of this include Wonder.com and Candy.com, both led by some of the brightest operators and investors of the internet age.
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The value of exact match domains
If you’re a one-word brand and product, having your exact match domain assets is the single 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 dollars or more for a 30-second Super Bowl commercial, which is quickly over and measured. If it works, there’s a return on investment, and if not, it’s a significant blow to that company’s income statement.
If they bought their exact match or category .com domain name for a comparable price, they would have a balance sheet asset that is a valuable, depreciable, salable investment, while adding exponential business value and utility to the business. The same executives and investors who shun a seven-figure domain acquisition are probably spending P&L money to advertise their forgettable, mismatched domain name all over the internet.
Your domain name – a critical business asset
There’s an old real estate cliché, “Location, Location, Location”, about the importance of being on the best real estate. Your brand and the address to access it online is your company’s internet real estate. It is your address to the world.
A domain with an exact match category provides a company with authority, credibility, conversion and clicks – “hear once, remember forever” – all while providing an investment with valuable value and return.
Remember this very important fact: you only have one exact match .com domain name. It is the scarcest possession and therefore the most valuable. Once it’s off the market, it’s probably gone forever, and if you don’t have it, it could have a critical impact on your business in many ways, including all facets of your marketing, branding, fundraising, and any future sale. .
RELATED: Key Steps in Getting a Great Domain Name
About the Authors
Richard D. Harroch is Managing Director and Global Head of M&A at VantagePoint Capital Partners, a venture capital fund based in the San Francisco area. His focus is on the Internet, digital media and software companies and he was the founder of several Internet companies. His full bio appears here at AllBusiness.com.
Andrew Miller, General Manager of Hilco Digital Assets, a Hilco Global company, is a leading investor and expert in digital assets. Andrew founded the leading marketing companies CreditCards.com and InsuranceQuotes.com and is an early investor in the Bored Ape Yacht Club NFT and Thrasio. Contact him LinkedIn.
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