Written by Richard Harroch and Andrew Miller
Recently we have seen some massive acquisitions of internet real estate, in the form of premium dot com domain names. NFTs.com was acquired for $15 million, and Connect.com was acquired by HubSpot for $10 million. Over the past few years, exact match keywords have become important and valuable digital assets, and signal a transformational shift in the way premium domain names are valued.
In the BG era (before Google), most people would navigate the web by typing a keyword or domain name into their browser. Having a global domain name and a brand was almost like owning a “TV network,” but it’s global and without walls. Initially, the focus was on generic one-word domain names that represented a huge global category, such as Sweepstakes.com or Home.com.
Recently, a new type of online real estate has become incredibly valuable, and an important strategic task for brands and startups. These are called “exact match” domain names, which are single words that imply a strong 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 Several acquisitions of exact match domain names by market leaders, and case studies from the most successful founders and CEOs.
How companies get exactly the same domain names
At an early stage, venture-backed companies often add a word to their domain name, even though their branding is just one strong dictionary word. For example, the successful warranty company Extend initially started with the name HelloExtend.com. This was before veteran CEO and founder Woody Levine realized that one of the most strategic moves he could make was to get the company’s exact matching domain name, Extend.com, and drop the word “Hello.”
Another tactic some companies use is to use a domain name other than .com, such as .io or .xyz, if a .com domain is not available. A problem with this is that clients may keep going to the .com domain name instead of the .io or .xyz version, and end up in the wrong site. Another problem is sending important emails to the wrong address. Ultimately, the company may need to acquire the .com domain name, but it may be in a risky negotiating position.
Finally, some companies will make decisions out of the gate to get an exact identical domain name origin. Recent examples are Wonder.com and Candy.com, both of which are led by some of the smartest operators and investors of the internet age.
More articles from AllBusiness.com:
Exact match ranges value
If you represent a brand and a product in one word, having an exact identical domain asset is the most important investment and decision you can make, an offensive and defensive strategist.
Consider the Super Bowl analogy. Some companies can spend $8 million or more on a single 30-second commercial in a Super Bowl, which ends up being quickly measured. If it works, there is a return on the investment, if not, it will be a huge blow to that company’s profit and loss statement.
For a similar cost, if they purchase an exact match or a category .com domain name, they will have an asset on the balance sheet that is a discretionary, depreciable, and resale investment, adding exponential enterprise value and benefit to the business. It is possible that the same CEOs and investors who avoid acquiring a seven-figure domain are spending P&L money advertising the forgotten and mismatched domain name all over the Internet.
Your domain name – an important business asset
There’s an old real estate cliché, “location, location, location” about the importance of being in the best real estate. Your brand and the address to access it online is your company’s online real estate. It is your address to the world.
The company’s exact match category scope provides power, credibility, conversion and clicks – “hear it once, remember it forever” – all while being a high value, return investment.
Remember this very important fact: you only have one exact domain name. It is the rarest asset, and therefore the most valuable. Once they are out of the market, they are likely to be gone for good, and their absence can critically impact your business in many ways, including all aspects of marketing, branding, fundraising, and eventual future selling.
About the authors
Richard de Harroch is the managing director and global head of mergers and acquisitions at VantagePoint Capital Partners, a venture capital fund 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. Show his full CV Here on AllBusiness.com.
Andrew Miller, Managing Director of Hilco Digital Assets, A Hilco Global Company, a leading investor and expert in digital assets. Andrew founded the leading marketing firms CreditCards.com and InsuranceQuotes.com, and is an early investor in Bored Ape Yacht Club NFT, as well as Thrasio. Connect with him on LinkedIn.
Copyright © AllBusiness.com. All rights reserved