To most people a million dollars is a life changing amount of money. More than they’ll make it 10, sometimes 20 years. To a corporation trying to reach millions if not billions of users, it’s a drop in the bucket. Think of all the commercials, print ads, and sponsorships that you see daily and you’ll realize that many companies spend millions A DAY. A domain that makes it easier to reach those customers is worth hundreds of thousands, if not millions of dollars in saved advertising expenditure. It is also a great way for a new company to instantly become recognizable in the chaos of what is presently very spread out marketing channels. While I’m not saying that companies should go out and spend a million dollars on a domain, what I am saying is that companies have the financial ability to get a name that they see best serves their marketing purposes.
Take a look at a few of the corporate US marketing budgets from 2010 and tell me if you think a domain purchase is going to cause an impact on their financials. You may not even find out how much they spend on a domain because they will consider even a few hundred thousand an inconsequential amount and won’t legally have to list it in their corporate reports.
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Berkshire Hathaway
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$1,153.6 million
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American Express Co.
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$1,294.2 million
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Anheuser-Busch InBev
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$1,467.2 million
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Apple
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$376.9 million
AT&T
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$2,797.0 million
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Ford Motor Co.
$1,516.8 million
General Electric
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$1,575.7 million
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General Mills
$993.4 million
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General Motors Co.
$2,214.9 million
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GlaxoSmithKline
$1,394.9 million
Johnson & Johnson -
$2,060.9 million
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Kraft Foods
$1,748.4 million
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Microsoft Corp.
$1,058.6 million
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Nestle
$1,332.6 million
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News Corp.
$1,117.0 million
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Nike
$592.8 million
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Procter & Gamble Co.
$4,188.9 million
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Sony Corp.
$1,219.3 million
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Sprint Nextel Corp.
$1,500.0 million
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U.S. Government
$1,034.1 million
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Unilever
$1,294.3 million
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Verizon Communications
$3,020.0 million
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Viacom
$932.1 million
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Walt Disney Co.
$2,003.8 million
And these numbers are just dollars spent for US advertising. There’s more for worldwide advertising. The net is worldwide. So next time you question why anyone would spend that kind of money for a domain you should ask yourself the same question when they spend $200,000 to produce and run ONE ad on a television show you never even watched. They need eyeballs and a solid domain name is just another way to get eyes. AND have you ever tried to spend a billion? It’s not as easy as you think. Unless you’re the government.
Source of info. Ad Age
Agreed, 100%. The industry is still young though, so there are many out there who still don’t believe a good name could be worth hundreds of thousands or even millions of dollars. It’s just a name, after all, and if a company can’t get yours for a reasonable price, ($500-$2,000?) they’ll register something similar that’s not taken, for $10.
But as you infer, what would be considered a boatload of money to the typical owner of a domain name, would be like far less than a penny to a corporation who wants to buy their name. Just building and maintaining a great website that attracts millions of visitors will cost a ton of money, so why would they want to invest that much work and cash on a second or third-choice $10 name, when they could have gotten the great name they really wanted in the first place for what still would be considered “a drop in the bucket” to them?
I suspect within a few years, we’ll see prices on domains go to places never seen so far. Especially with the Asian market heating up and eager to spend all the money they’ve got just sitting around. People who know what their domains are worth today, ask for it, and get what they ask for in many cases. While others are happy if they sell a similar, high-quality name for $5K-20K. (And then are surprised when the buyer turns around and sells it for 10-20x or more that amount in a year.)
You only get what you ask for in life. But first you have to truly understand the value of what you have, and how your view of what a lot of money is, doesn’t necessarily come anywhere close to the view of how a corporation sees that same amount.
You always have interesting articles. You even have a few of my company’s clients on there.
With those marketing budget before we agency people spend it we have to give a very clear projection on how much the client is going to get back.
If those with premium domains could create case studies showing factual influences on better domains and consumer sales it would be a different market.
Remember the people that are working at all of those companies listed above in marketing that make decisions are really the top people there are. They want you to prove what you say.
Good post
Olney, just a comment… I know there are many “top” people out there who want “you to prove what you say,” but the best of the very best don’t need that kind of assistance or encouragement. They’ll research, have gut feelings, and decide for themselves what to do and don’t need anyone trying to convince them one way or another.
I always look at those who want you to prove something as needing a little help, because they’re either not totally in their element, or they’re not completely sure what they should do. Unfortunately that includes a lot of people, but the ones at the very top usually aren’t like that at all. They have strong convictions and an attitude of just knowing what they want and doing it. You can look at nearly any highly successful company leader, past or present, to find these traits. That’s how they got there, while others, less sure, get left behind.
Olney,
Thanks for the comment. I do believe it is often hard to quantify the importance of a domain but companies such as Apple realize that a successful launch of a new product can be greatly improved with a corresponding domain. iCloud was an important purchase. Data.com works perfectly for Salesforce. It’s not about “getting it”, it’s about a company knowing where to invest their money to get the best public response. And that doesn’t take market studies, it takes intelligent leadership.