Domain Name Investment

The fundamental basis of value underpinning a domain name is traffic and marketing potential:

So what makes a good domain name investment?

Traffic:

Any "eye count" (Which is the internet equivalent to retail foot count) that is obtained without the need for advertising spend is a saving of that spend and therefore of value.

If you had a domain that received 10 unique people a day typing in your address. And you knew it cost $0.15 to get one advertising click through from a paid advertising program. And you estimated that you required a 20% return on your domain. Then the domains' value attributable directly to the "free traffic" would be [(10x0.15x365)/0.20] i.e. worth $2,738.

Obviously this "free traffic" can be manipulated by a seller of a domain so caution (and some fundamental analysis) is required when accepting the legitimacy of any figures presented. (Refer to "Domain Name Scams" article, also I will be writing an article about different traffic streams, in this article I am just focusing on "natural traffic" and not historical back links and so forth that can in the short/medium term provide above normal activity).

Marketing Latency (Potential):

This basically revolves around its value as a marketing tool.

It should always be remembered that traffic can be bought but you can't change your address. (You should never build the best house on the worst street, similar too with a website on an internet address).

Advertising spend to build a successful business should never be underestimated, In order to ensure that advertising stays in easy recollection within the consumers mind, the domain needs to fit the profile of the market and have some general fundamental criteria.

1) Generally short domains are easier to remember

2) Most consumers generally remember the name and assume it's a .com. Watch out for advertising and then losing the benefit because they just type in the .com. (Your own country code like .co.uk is an exception to this though).

3) A domain that has some other merit e.g is funny or has a twist (word play) can also aid "stickability" Obviously you have to keep the name within some bounds/convention of what the industry you are in expects.

Please refer to your legal advisor where necessary - This does not constitute professional advice Copyright UFO.ORGTM(c) 2005